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HUD issues mortgagee letter regarding Section 223(f) underwriting mitigants for multifamily housing projects
On April 10, HUD released Mortgagee Letter 2020-11 to Multifamily Regional Directors, Production Directors, Operations Officers, and FHA MAP Lenders regarding Section 223(f) underwriting mitigants for multifamily housing projects due to the economic impact of Covid-19. Specifically, HUD takes the position that the Covid-19 emergency constitutes a “material change” that requires underwriting mitigants to reduce this additional risk. As such, the letter provides instructions to HUD staff about mitigants that may be included in the Firm Commitment for Section 223(f) loans that are in process, as well as for projects where a Firm Commitment has been issued. Among other things, HUD imposes certain debt service reserve requirements for both market rate transactions and affordable transactions. HUD also requires that, at endorsement, cash out proceeds in excess of 250% of the non-critical repair escrow be used to fund the debt service reserve account. The letter is effective immediately and lasts until HUD determines that additional mitigants for Section 223(f) transactions are no longer required.
HUD issues mortgagee letter on implementation of CARES Act forbearance
On April 10, HUD issued Mortgagee Letter 2020-09 to FHA Approved Multifamily Mortgagees regarding implementation of CARES Act forbearance. The letter includes guidelines on CARES Act forbearance for FHA insured mortgages, 542(b) and (c) risk share mortgages, and HUD-held loans. Among other things, the guidance notes that HUD will not participate in the negotiation of forbearance repayment between multifamily borrowers and lenders. However, if the forbearance agreement contains actions requiring HUD approval, a copy of the forbearance agreement must be provided to HUD.
The letter also provides guidance on continuing program obligations and the post-forbearance period. Mortgagees are reminded that during the forbearance period, all other material terms and conditions of the HUD Loan Documents and the FHA Regulatory Agreement remain in effect. The letter notes that Lenders should use Multifamily Delinquency and Default Reporting System to record post-forbearance delinquencies and defaults. Finally, the letter notes that HUD has reviewed the MBA’s sample forbearance agreement drafted in April 2020, and stated that forbearance agreements that follow this format would not be submitted to HUD prior to execution and implementation by the lender and borrower. HUD is also developing its own form for lenders and borrowers to use.
Fintechs can now apply to be lenders under the PPP
The Small Business Administration (SBA) and the Treasury Department released a lender agreement for non-bank and non-insured depository institution lenders seeking to make SBA-guaranteed financing under the Paycheck Protection Program (PPP) as part of the CARES Act. The agreement sets forth attestation requirements for two subsets of eligible lenders. Group A attestation requirements relate to depository or non-depository financing providers who have, among other things, “originated, maintained, and serviced more than $50 million in business loans or other commercial financial receivables during a consecutive 12 month period in the past 36 months.” Group B attestation requirements relate to service providers of insured depository institutions, who among other things: (i) must have a contract to support an insured depository institution’s lending activities; and (ii) within the past three years, must have been subject to an examination by the Federal Reserve, OCC, or FDIC in connection with that role. Unless an earlier termination occurs, lenders under the agreement will have “authority to make covered loans” until July 1, 2020.
As previously covered by InfoBytes, the SBA, in consultation with the Treasury Department, recently updated PPP frequently asked questions to provide additional clarifications to lenders and borrowers.
Please see Buckley’s dedicated SBA page, which includes additional SBA resources.
NCUA increases urgent needs grant funding to $1.4 million
On April 10, the National Credit Union Administration (NCUA) increased funding to nearly $1.4 million for low-income credit union grants to cover costs resulting from Covid-19. As previously covered by InfoBytes, on March 23, the NCUA announced urgent needs grants to low-income designated credit unions, originally committing $800,000 in funding. The NCUA will award grants for up to $10,000 to eligible credit unions. Low-income credit unions must submit grant applications by May 22, and grants will be provided on a “first-come, first-serve basis until the earmarked funds are fully exhausted.” To apply for a grant, visit the CyberGrants portal here.
CFPB announces regulatory flexibility after remittance transfer rule exception expires
On April 10, the CFPB announced the release of a policy statement “Supervisory and Enforcement Practices Regarding the Remittance Rule in Light of the COVID-19 Pandemic” addressing the implementation of the Electronic Fund Transfer Act (EFTA), and the Regulation E Remittance Rule (Rule). EFTA’s consumer protections, implemented by the Rule, require financial companies handling international money transfers, or remittance transfers, to disclose the exact exchange rate, fees, and amount delivered to the consumer making the transfer. However, it also provides a temporary exception, which allows institutions that provide remittance transfers to estimate these fees to consumers. (Covered by InfoBytes here.) The temporary exception is set to expire on July 1, and section 919 of the EFTA does not authorize the Bureau to extend it past that date. Accordingly, “[i]n order to minimize the impact of the pandemic on the remittances market…the Bureau will neither cite supervisory violations nor initiate enforcement actions against certain remittance transfer providers” for disclosing estimated fees and exchange rates from July 1 until January 21, 2021.
District of Columbia prohibits certain debt collection activity
The District of Columbia has enacted the Covid-19 Response Supplemental Emergency Amendment Act of 2020. Under the Act, among other things, for the duration of the public health emergency and 60 days after its conclusion, debt collectors are prohibited from, among other things: (i) initiating, filing, or threatening a new collection lawsuit, garnishment, seizure, attachment, or repossession; or (ii) initiating any communication with debtors via written or electronic communication, such as text, email, or telephone, subject to certain exceptions.
Louisiana Office of Financial Institutions declares emergency for repossession and escrow agents
On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for repossession agents and bond for deed escrow agents due to the Covid-19 crisis. The order: (i) granted authority to temporarily close or relocate operations, services, and products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of operations, services, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.
Louisiana Office of Financial Institutions declares emergency for residential mortgage entities
On April 9, Louisiana Office of Financial Institutions (OFI) Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-licensed residential mortgage brokers, lenders, and originators in response to the Covid-19 crisis. The order: (i) granted the authority to temporarily close or relocate operations, services, and products; (ii) permitted mortgage loan originators to work remotely from home, even if their home isn’t registered with OFI; (iii) waived the standard prior notification requirements pertaining to closures or relocations of operations, services, and products; and (iv) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.
Louisiana Office of Financial Institutions declares emergency for state-licensed lenders and brokers
On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-licensed lenders and brokers in response to the Covid-19 crisis. The order: (i) provided guidance for temporarily closing or relocating operations, services, and products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of operations, services, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.
Louisiana Office of Financial Institutions declares emergency for check-cashing entities
On April 9, Louisiana Office of Financial Institutions Commissioner John Ducrest declared a state of emergency and issued guidance for Louisiana-based check-cashing entities in response to the Covid-19 crisis. The order: (i) granted check cashers the authority to temporarily relocate and close operations, services, or products; (ii) waived the 30-day notification requirement pertaining to closures or relocations of services, operations, and products; and (iii) provided guidance for reporting operational changes and temporary relocations. The declaration expires April 30, unless otherwise extended or renewed.