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New Jersey passes legislation permitting remote notarization during state of emergency
On April 14, New Jersey passed legislation permitting remote notarization using communication technology for the duration of the public health emergency and state of emergency, provided certain requirements stipulated in the legislation are met.
Louisiana Office of Financial Institutions issues guidance to non-depository licensees regarding Covid-19 relief
On April 14, the Louisiana Office of Financial Institutions issued guidance to non-depository licensees regarding Covid-19 relief. Although sections 4021 and 4022 of the CARES Act are specific to federally-backed mortgage loans, the OFI encourages all lenders to follow the terms of the provisions for all non-federally-backed mortgage loans as if they were federally-backed. Licensed lenders that offer deferred presentment transactions, small loans, or consumer loans are encouraged to provide certain relief options to borrowers, such as accepting partial payments, waiving fees, deferring payments and suspending negative credit reporting. Check cashers are also encouraged to offer discounted fees to customers during the crisis. Finally, non-depository licensees that temporarily close their locations are urged to post a notice at the location containing their contact information to assist customers with any questions.
Washington governor issues temporary moratorium on garnishments and accruals of interest
On April 14, Washington Governor Jay Inslee issued an executive order temporarily prohibiting certain garnishments and accruals of interest statewide. Governor Inslee noted that garnishments and other collect judgments could hinder consumers from paying for basic necessities, thereby, endangering the lives of individual consumers and risking further negative impacts on public health. Inslee’s statewide order is in place through May 14.
New York Department of Financial Services issues FAQs for emergency insurance regulations
New York’s Department of Financial Services has published FAQs for the property/casualty emergency regulation adopted on March 30. The FAQs address which policyholders are eligible for the 60-day moratorium on policy cancellation or non-renewal and other concerns pertaining to implementation of the moratorium.
Maine Supreme Court revises court guidelines amid Covid-19 crisis
On April 14, Maine Supreme Court Acting Chief Justice Andrew Meade issued a revised emergency order providing court guidelines for navigating the Covid-19 crisis. The guidelines pertained to the types of cases the courts will schedule and hear; exceptions and motion-filing procedures; postponement of jury trials and grand jury proceedings; boards, committees, and continuing legal education; and hearing of oral arguments. The revised order supersedes the initial order issued from March 30, and is effective until May 1, unless otherwise changed, revised, or lifted.
Fannie and Freddie extend URLA implementation timeline
On April 14, Fannie Mae and Freddie Mac issued a joint statement to announce that—due to the Covid-19 pandemic—the effective date of the revised Uniform Residential Loan Application (URLA) and Automated Underwriting Systems—is extended to January 1, 2021. Lenders must begin use of the redesigned URLA by March 1, 2021, and the current URLA will be retired on March 1, 2022. The revised URLA implementation timeline may be found here. Additional URLA information may be found on Fannie Mae’s URLA FAQs web page here, and on Freddie Mac’s URLA web page here.
Additional InfoBytes coverage on URLA can be found here.
OCC to host info sessions on PPP
On April 14, the OCC announced that the Office of Innovation will host three Paycheck Protection Program (PPP) listening sessions in April. The sessions will discuss questions and possible solutions for three PPP related topics. The first session covering payroll verification will be held on April 16, from 11:00 am to 1:00 pm (EDT), and will discuss how to make payroll verification quicker and more efficient for PPP loans. The second session, fraud identification, will be held on April 20, from 1:00 pm to 3:00 pm (EDT), to discuss possible methods for financial institutions to detect instances of fraud regarding the PPP. The third session will discuss backend processes, including identifying possible issues that may arise for financial institutions in monitoring PPP loans and in PPP loan forgiveness. This last session will be held on April 21, from 1:00 pm to 3:00 pm (EDT). Participants may share PPP concerns prior to the sessions by contacting the Office of Innovation here.
SBA provides additional guidance on PPP loans for self-employed, independent contractors
On April 14, the Small Business Administration (SBA) released an interim final rule to supplement the first Paycheck Protection Program (PPP) Interim Final Rule issued April 2 (covered by InfoBytes here). This interim final rule provides additional guidance for filers of IRS Form 1040 Schedule C (individuals with self-employment income), information concerning eligibility issues for certain business concerns, and requirements for certain pledges of PPP loans. Specifically, self-employed individuals who filed Schedule C—such as independent contractors or sole proprietors in operation on February 15, 2020—are eligible for PPP loans, provided they meet specific criteria. The interim final rule provides instructions for calculating maximum loan amounts and states that self-employed loan recipients may use the proceeds for, among other things, owner compensation replacement, mortgage interest payments, and interest payments on debt obligations incurred prior to February 15, 2020. Details and clarification on restrictions, PPP loan forgiveness eligibility, and the types of permitted eligible businesses are also included.
The interim final rule takes effect upon publication in the Federal Register and applies to PPP applications submitted through June 30, 2020, or until funds designated for this purpose are exhausted. The SBA will also accept comments on the interim final rule for 30 days following publication.
Agencies defer real estate appraisals and evaluations affected by Covid-19
On April 14, the FDIC, Federal Reserve Board (Fed), CFPB, NCUA, and OCC (agencies), in consultation with the CSBS, issued an interagency statement addressing challenges related to appraisals and evaluations for real estate financial transactions impacted by the Covid-19 pandemic. The statement outlines flexibilities for physical property inspections and appraisals of residential properties underwritten to Fannie Mae and Freddie Mac (covered by InfoBytes here). The agencies also remind financial institutions of existing exceptions outlined in appraisal regulations previously issued by the OCC, Fed, and FDIC. “The agencies encourage financial institutions to make use of these exceptions,” the statement stresses. “The use of an existing appraisal or evaluation for subsequent transactions may be particularly relevant during the COVID-19 emergency.”
The same day, the OCC, Fed, and FDIC also issued an interim final rule to amend and temporarily defer interagency regulations that require real estate appraisals for certain transactions. Specifically, regulated financial institutions will be allowed to defer completion of appraisals and evaluations for all residential and commercial real estate transactions, with the exception of those involving the acquisition, development, and construction of real estate. Financial institutions will be allowed up to 120 days from the closing date to obtain the required appraisal or evaluation in order to expedite the liquidity needs of borrowers during the Covid-19 pandemic. However, the OCC, Fed, and FDIC expect financial institutions to “make best efforts to obtain a credible valuation of real property collateral before the loan closing, and otherwise underwrite loans consistent with the principles in the agencies’ Standards for Safety and Soundness and Real Estate Lending Standards.” The interim final rule takes effect upon publication in the Federal Register and will expire December 31, 2020.
SBA, Treasury release additional PPP FAQs
On April 15 and 14, the Small Business Administration (SBA) and the Treasury Department (Treasury) provided additional guidance to the Paycheck Protection Program (PPP) frequently asked questions (FAQs) to address lender concerns about, among other things, application submissions, signature requirements, and applications from SBA employees and family. Some of the FAQs include the following guidance:
- Lenders may submit loan applications through E-Tran only after collecting the same borrower information and certifications contained in the application form, and performing a good faith review of the borrower’s payroll calculations.
- Lenders that submitted applications prior to April 14 without collecting the required borrower information and certifications must do so as soon as possible before loan closing.
- Lenders may accept scanned copies of loan applications, borrower certifications, and other required documents. E-sign compliant electronic signatures and consents may also be accepted.
On April 13, one of the SBA and Treasury FAQs—also included on FinCEN’s website along with FAQ 18—discusses beneficial ownership requirements for PPP loans. For new customers, lenders meet their beneficial ownership obligations by collecting the following information from natural persons with ownership stakes in the applicant of 20 percent or greater: “owner name, title, ownership %, TIN, address, and date of birth.” SBA and Treasury also released an FAQ that addressed lender submission requirements prior to issuing PPP loans. FAQ 21 states that lenders are required to sign the lender application form for the PPP (SBA Form 2484) in order to issue PPP loans, but lenders do not need a separate SBA Authorization. Terms and conditions in the lenders’ promissory note must be consistent with CARES Act sections 1102 and 1106 as well as the PPP Interim Final Rule. Additional FAQs from this date address nonbank lenders, the $10 million loan cap, and the affiliation rules applicability to various kinds of businesses.
Please see Buckley’s dedicated SBA page, which includes additional SBA resources.