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NCUA provides urgent needs grants to credit unions during Covid-19 emergency
On March 23, the National Credit Union Administration (NCUA) announced that “[f]ederally insured, low-income designated credit unions” that have been adversely impacted by costs related to Covid-19 may apply for urgent needs grants. The NCUA can provide grants for such things as (i) “[h]ardware, software, or other equipment to help them provide financial products and services from remote locations”; (ii) “[c]onsulting services to develop programs…to assist those affected by COVID-19”; and (iii) “marketing materials to assure members their insured deposits are safe.” Applications for the grants may be found here.
Special Alert: Fed offers billions through emergency credit facilities
On March 23, the Federal Reserve announced that it is establishing and expanding a number of facilities to provide powerful support for the flow of credit to large U.S. employers and other businesses and families in the midst of the Covid-19 pandemic.
The Fed’s facilities and related actions are rooted in its authority related to financial markets under Section 13(3) of the Federal Reserve Act, but creatively expand the reach of the assistance the Fed may provide relative to the financial-crisis era legislation last addressed by the Dodd-Frank Act, including by using special purpose vehicles (SPVs) backed by the U.S. Treasury to purchase assets, which now include corporate bonds. In the COVID-19 crisis, we see the Fed’s use of Section 13(3) not targeted principally at systemically important financial institutions, but rather at the broader economy, including financial and nonfinancial businesses, large and small. Eligibility under these programs involves factors in Section 13(3) itself, as amended by the Dodd Frank Act, the Fed’s respective term sheets, and the economic stimulus legislation pending in Congress.
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Click here to read the full special alert.
If you have any questions regarding the Fed’s new facilities or other related issues, please contact a Buckley attorney with whom you have worked in the past. You can also visit our Covid-19 News & Resources page for a compendium of issuances by federal and state agencies, as well as GSEs and other sources.California Department of Business Oversight issues guidance to permit licensees to work from home
On March 22, the California Department of Business Oversight (Department) issued guidance to escrow agents, finance lenders and servicers, student loan servicers, residential mortgage lenders and servicers, and mortgage loan originators in light of Covid-19 permitting employees of licensees to conduct activities from home that normally would require a branch license, provided that appropriate measures are taken to protect consumers and their data. Further, the Department will not criticize student loan servicers or licensees sponsoring MLOs who permit their respective employees to work from home, provided that certain data security and other conditions are met. Escrow Law licensees may also follow this guidance, however the licensees must still comply with the Fidelity Corporation or the licensee’s surety bond. Additionally, licensees are encouraged to assist consumers including through, among other things, offering payment accommodations.
Iowa suspends foreclosures, declares state of emergency
On March 22, the governor of Iowa proclaimed a state of emergency throughout Iowa. The proclamation prohibits the commencement of new foreclosures and suspends ongoing foreclosure proceedings on residential, commercial, and agricultural real property in Iowa, authorizes remote notarial acts, and provides a wide range of regulatory licensing relief.
Iowa issues remote notarization guidance
On March 22, Iowa issued temporary remote notarization guidance and FAQs to assist notaries public in working remotely during the Covid-19 crisis. A set of more-stringent provisions is scheduled to take effect on July 1, 2020.
Oregon governor calls for moratorium on residential evictions
On March 22, Oregon Governor Kate Brown issued an executive order placing a moratorium on residential evictions for reason of nonpayment during the Covid-19 crisis. The order called the moratorium "both a moral and a public health imperative" for those unable to make payments during the pandemic, and stipulated that evictions will be put on hold for a 90-day grace period.
Iowa suspends foreclosures, declares state of emergency
On March 22, the governor of Iowa proclaimed a state of emergency throughout Iowa. The proclamation prohibits the commencement of new foreclosures and suspends ongoing foreclosure proceedings on residential, commercial, and agricultural real property in Iowa, authorizes remote notarial acts, and provides a wide range of regulatory licensing relief.
OCC issues interim rule and order to extend short-term investment fund maturity
On March 22, the OCC announced the release of a short-term investment funds (STIF) interim final rule. The rule—which is effective immediately—revises the OCC’s STIF rule “for national banks acting in a fiduciary capacity” and “allows the OCC to authorize banks to temporarily extend maturity limits of these funds” for financial market disruptions that prevent banks from complying with required STIF maturity limits. Comments on the interim rule must be received by May 9.
Along with the interim final rule, the OCC issued OCC Bulletin 2020-22 regarding its March 21 order which temporarily extends maturity limits for STIFs that have been affected by financial market disruptions as a result of Covid-19. According to the order, a bank will be considered to be in compliance if (i) “the STIF maintains a dollar-weighted average portfolio maturity of 120 days or less”; (ii) the STIF maintains a dollar-weighted average portfolio life maturity of 180 days or less”; (iii) “the bank determines that using these temporary limits would be in the best interests of the STIF under applicable law”; and (iv) “the bank makes any necessary amendments to the written plan for the STIF to reflect these temporary changes.” The temporary limits will be in effect until July 20, unless extended by the OCC.
Agencies issue joint statement on loan modifications and reporting for financial institutions
On March 22, the Federal Reserve Board (Fed), CFPB, FDIC, NCUA, OCC, and Conference of State Bank Supervisors (CSBS) issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” to address the “unique and evolving situation” created by Covid-19. Guidance covered in the statement includes, among other things (i) “encourage[ing] financial institutions to work prudently with borrowers” negatively impacted by disruptions in the economy caused by the virus, to include providing loan modifications to borrowers and mitigating credit risk; (ii) advising that in “accounting for loan modifications” the modifications “do not automatically result in [troubled debt restructurings] (TDRs).” The agencies assert that “short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs”; (iii) reporting loans as past due as a result of a payment deferral is “not expected”; (iv) reporting short-term loan arrangements, such as deferrals, as nonaccrual assets is temporarily not required; and (v) reminding financial institutions that restructured loans “continue to be eligible as collateral at the [Fed’s] discount window.” The statement adds that “the agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk,” and “agency examiners will not criticize prudent efforts to modify terms on existing loans for affected customers.” (See Fed press release; OCC press release; FDIC press release and FIL-22-2020; NCUA press release; CFPB press release; and CSBS press release.)
South Carolina regulator issues MLO work location guidance
On March 13, 2020, the South Carolina State Board of Financial Institutions, Consumer Finance Division (division) released guidance for mortgage origination and servicing companies regarding working remotely due to Covid-19. The division’s interim guidance allows licensed mortgage loan originators (MLO) to work from home provided that certain criteria are met including (i) the company establishes temporary supervisory policies and procedures; (ii) the MLO has secure access to the company’s origination system; (iii) the security of the MLO’s computer is maintained; and (iv) the MLO does not keep physical company records at the remote location.