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Arizona authorizes remote online notarization
On April 8, Arizona issued an executive order authorizing the use of remote online notarizations. The state had passed legislation legalizing remote online authorization in 2019 and the law was scheduled to take effect on July 1, 2020, but is now in effect due to the Covid-19 crisis.
Washington securities regulator provides relief to franchisors
On April 8, the Washington Department of Financial Institutions, Securities Division, announced that it would reduce filing fees for franchisors who are unable to timely submit audited financial statements in their year-end disclosure documents due to Covid-19. Fees for the registration of a franchisor that has not included audited financial statements for the most recent year in their required year end franchise disclosure documents are reduced from $600 to $100 in recognition that Covid-19 may impact the ability to obtain or finalize audited financial statements.
Colorado banking regulator will not criticize “any” efforts to adjust loan terms
On April 8, the Colorado Division of Banking issued guidance to state-chartered banks encouraging them to take measures to assist borrowers impacted by Covid-19, including halting foreclosures and providing a 90 day deferment on payment for all consumer loans. The division noted that while state-chartered banks are not required to comply with these requests, any efforts to modify existing loan terms will not be subject to examiner criticism.
Ohio regulator provides guidance for credit unions
On April 8, the Ohio Department of Commerce, Division of Financial Institutions issued updated guidance for credit union operations during Covid-19. Among other things, the guidance addresses accommodations for annual and board meetings, branch closures, filing deadlines for call reports, liquidity challenges, and conducting supervisory examinations.
Michigan governor issues temporary order enabling remote notarization
On April 8, Michigan Governor Gretchen Whitmer issued an executive order enabling remote notarization in response to the Covid-19 crisis. Whitmer’s order allows for the use of electronic signatures, remote notarization, remote witnesses and attestations, and remote visitations in necessary transactions and interactions. The order took effect immediately and will be in place through May 6.
Delaware directs check sales and money transmitter licensees to use NMLS
The Delaware Office of the State Bank Commissioner issued a directive that, beginning on April 15, all Chapter 23, Sale of Checks and Transmission of Money Licensees are advised to use the Nationwide Mortgage Licensing System for applications, renewals, surrenders and amendments.
Lawmakers want accountability for colleges receiving CARES Act funds
On April 8, Senators Elizabeth Warren (D-MA), Dick Durbin (D-IL), Sherrod Brown (D-OH), and Richard Blumenthal (D-CT) sent a letter to the Department of Education urging the Department to focus the CARES Act funding for institutions of higher education on public and nonprofit schools. In addition, the lawmakers call for “strong accountability polices” if for-profit colleges are eligible for the funds. The recommended policies “to protect students and taxpayers” include: (i) requiring that all funding must be used for “student instruction, emergency financial aid to students, and student support services”; (ii) preventing for-profit colleges from using the funds for executive compensation and freezing executive compensation; (iii) preventing publicly-traded for-profit colleges from buying back their stock; (iv) preventing for-profit colleges from using the funds for recruiting, marketing and advertising; (v) preventing for-profit colleges that receive funds from receiving other CARES Act funds; (iv) “[c]onsider[ing] CARES Act funding as federal funding for 90/10 compliance”; and (v) requiring that Congress receive a report detailing “how for-profit colleges used the funds.” The letter requests replies to the questions by April 21.
Treasury and SBA release PPP updates
On April 8, the Small Business Administration (SBA), in consultation with the Treasury Department, updated the Paycheck Protection Program (PPP) frequently asked questions to provide clarification concerning the SBA’s interpretation of the CARES Act and the PPP Interim Final Rule. Newly released Questions 2 through 20 discuss topics including the following:
- Businesses may be eligible for PPP loans even if they have more than 500 employees, provided that they meet certain criteria and satisfy the existing definition of a “small business concern.” However, businesses with fewer than 500 employees do not have to qualify as a small business concern in order to participate in the PPP.
- Lenders may rely on borrower certifications as to the applicability of affiliation rules, and borrowers must apply the affiliation rules under the SBA’s Interim Final Rule on Affiliation and certify on the application form that they are eligible to receive a PPP loan and meet the required criteria.
- The exclusion of employee compensation in excess of $100,000 does not apply to non-cash benefits, including coverage of health care, insurance premiums, state and local taxes, and paid leave. The CARES Act provides for a separate paid sick leave refundable credit.
- Methods and guidance concerning seasonal operational activity, the use of third-party payroll providers and authorized signers, the impact of criminal information or criminal charges on PPP eligibility, and whether lenders may use their own online systems and forms to collect information required by the Borrower Application.
- When calculating aggregate payroll costs to determine the maximum loan amount, borrowers can generally use data from either the previous 12 months or from calendar year 2019. Seasonal business exceptions are provided and borrowers are instructed to omit independent contractor or sole proprietor costs from the calculation. Guidance is also provided on how to account for federal taxes when calculating payroll costs.
- Borrowers and lenders who processed applications based on the April 2 PPP Interim Final Rule may rely on the laws, rules and guidance available at the time.
- Lenders are not required to re-verify beneficial ownership information for existing customers. In addition, if participating federal depository institutions and credit unions have not yet collected beneficial ownership information on existing customers, they are not required to do so for those customers applying for PPP loans unless otherwise instructed.
- Lenders may use either their own promissory note or an SBA form.
- The eight-week period starts on the date the lender makes the first PPP loan disbursement to the borrower. Lenders are required to make the first disbursement no later than 10 calendar days after the loan is approved.
Additionally, the SBA also released a promissory note form for use with PPP loans and unveiled the Paycheck Protection Lender Gateway (available here) to assist lenders in submitting loan authorization requests. Lenders can also contact the SBA hotline at 888-572-0502 if they experience technical difficulties.
Please see Buckley’s dedicated SBA page, which includes additional SBA resources.
California’s attorney general advises tenants of new rights
On April 7, the California attorney general issued updated guidance for California tenants that encourages them to take control of their rights under the state Judicial Council’s April 6 emergency eviction rule. The guidance alerts tenants that nothing in the emergency rule stops landlords from filing new eviction cases but it prevents them from proceeding for 90 days after the ongoing state of emergency is lifted. It also encourages tenants to research local eviction moratoriums that may provide additional protections.
New York regulator issues guidance to insurance companies on complying with notice obligations
On April 7, the New York State Department of Financial Services issued guidance to state-regulated insurance companies and fraternal benefit societies, indicating that these insurers may comply with state law notice requirements by emailing notices to consumers for which the insurers have an email address. Insurers do not need to obtain prior consent of the consumers to receive such notices via email. The department also urged insurers to disseminate notices by supplemental means, such as social media, and maintain records of their communications with consumers.