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FHA issues Covid-19 measures to protect borrowers
On February 3, FHA issued a series of temporary measures in its Single Family Housing Policy Handbook, which waive provisions that, among other things, normally require in-person contact between mortgage servicers and borrowers. These waivers, FHA states, are intended to allow mortgage servicing activities to continue in a safe manner during the Covid-19 pandemic, and augment FHA’s recent extension of its foreclosure and eviction moratorium for borrowers through March 31, as well as the agency’s decision to extend the deadline for impacted borrowers to request a new forbearance (covered by InfoBytes here). Specifically, the waivers build upon previous waivers and will allow the following provisions through December 31, 2021:
- Rather than conducting face-to-face borrower interviews, the waiver will allow substitute methods (such as phone interviews, email, video calling services, and other conference technology) for servicers to conduct borrower interviews for FHA-insured forward and home equity conversion mortgages (HECM) when performing early default interventions for borrowers in danger of foreclosure.
- FHA is waiving the $5,000 property charge payment arrearages cap for HECM borrowers who are behind on their property charge payments.
- FHA is waiving the requirement for servicers to obtain a physical signature on an occupancy certification from a HECM borrower.
New York continues to postpone collection on certain debts
On February 1, the attorney general of New York announced an extension of its previous order to halt the collection efforts on certain debts through February 28, 2021. Consumers with student loan debt and medical debt owed to the state will receive an additional 28-day hiatus on payments including a freeze on the accrual of interest on the debts—in order to allow them to deal with the effects of Covid-19. Specifically, the moratorium on collection applies to: (i) “[p]atients that owe medical debt due to the five state hospitals and the five state veterans' home[s]”; (ii) “[s]tudents that owe student debt due to State University of New York (SUNY) campuses”; and (iii) “[i]ndividual debtors, sole-proprietors, small business owners, and certain homeowners that owe debt relating to oil spill cleanup and removal costs, property damage, and breach of contract, as well as other fees owed to state agencies.” New Yorkers who have other types of debt that are owed to the state and who are referred to the Office of the Attorney General may apply for a temporary freeze on collection by submitting an application which can be found here.
Court dismisses PPP discrimination claims against national bank
On February 1, the U.S. District Court for the District of New Jersey issued an opinion letter granting defendants’ motion to dismiss for failure to state a claim in a matter concerning whether a national bank retaliated against minority- and women-owned businesses when they stopped honoring checks and electronic payments related to the businesses’ involvement with the Paycheck Protection Program (PPP). The plaintiffs (who operate companies that “provide ‘cash flow and investment opportunities to small and diverse businesses and individuals’”) obtained approval from the Small Business Administration to issue PPP loans to minority-owned businesses and deposited approximately $100 million into one of their business accounts at the defendant bank. The plaintiffs alleged discrimination and retaliation claims under 42 U.S.C. § 1981 and the New Jersey Law Against Discrimination and the New Jersey Civil Rights Act, claiming the bank began refusing to honor checks or electronic payments drawn from the account. In addition, the plaintiffs claimed the bank notified them that it was unable to support their efforts to participate in the PPP program but “‘never provided a legitimate, lawful or non-discriminatory reason’” for refusing to honor the plaintiffs’ checks and electronic payments. The plaintiffs claimed that they are members of a racial minority, and alleged, among other things, that the bank later froze and closed their business and personal accounts. The court disagreed, concluding the plaintiffs “fail[ed] to plead facts that show that Defendants intended to discriminate against them because of their race.” According to the court, the plaintiffs “do not plead that they were treated differently than any other individuals or businesses who are not members of a protected class. Rather, they conclude, without support, that [the bank’s] decision to decline Plaintiffs’ PPP Loan transactions was motivated solely by discriminatory intent. This is insufficient.” Because the federal claim was dismissed, the court declined to exercise jurisdiction over the plaintiffs’ state law claims of breach of contract.
Illinois regulator releases educational one pager on Covid-19 relief
In January, the Illinois Department of Financial and Professional Regulation issued a one-pager setting forth eviction, mortgage, and student loan information for consumers. The flyer addresses the eviction moratorium, forbearance of mortgage payments, and student loan borrower relief.
Washington Department of Financial Institutions once again extends “work from home” guidance
On January 29, the Washington Department of Financial Institutions issued interim regulatory guidance to licensed mortgage loan originators and companies that sponsor them relating to temporary remote work. The guidance extends earlier interim guidance (previously covered here, here, here, and here) permitting mortgage loan originators to work from home, provided certain data security obligations are met. The guidance extends through December 31, 2021.
Colorado amends and extends executive order setting forth tenant protections
On January 29 , the Colorado governor issued Executive Order 2021-029 amending and extending Executive Order 2020-307, which set forth certain tenant protections. Executive Order 2020-307 prohibits a landlord, mobile home park owner, property management entity, and others from charging a fee or penalty against a tenant or mobile home owner for failure to timely pay rent. Executive Order 2021-029 extends the moratorium on late fees until 30 days after January 29, 2021, unless extended further by executive order.
California governor signs legislation extending tenant protections
On January 29, the California governor signed SB 91, which provides relief to tenants and small property owners, and extends the eviction moratorium established under AB 3088 (previously discussed here), which is set to expire at the end of January. Among other things, under SB 91, a housing provider and similar entities are prohibited from using an alleged Covid-19 rental debt as a negative factor for evaluating a prospective housing application. In addition, the bill would prohibit a person from selling or assigning unpaid rental debt or charging or increasing fees related to late payment of Covid-19 rent. The bill also extends other eviction protections to July 1, 2021.
Washington Department of Financial Institutions once again extends “work from home” guidance
On January 29, the Washington Department of Financial Institutions issued interim regulatory guidance to licensed mortgage loan originators and companies that sponsor them relating to temporary remote work. The guidance extends earlier interim guidance (previously covered here, here, here, and here) permitting mortgage loan originators to work from home, provided certain data security obligations are met. The guidance extends through December 31, 2021.
VA extends Covid-19 foreclosure and eviction moratorium
On January 29, the Department of Veterans Affairs issued Circular 26-21-2, which further extends foreclosure and eviction relief for borrowers affected by Covid-19 (previously covered here). Specifically, all properties secured by VA-guaranteed loans, including those previously secured by VA-guaranteed loans but currently in the VA’s REO (real estate owned) portfolio, are subject to a moratorium on foreclosure and eviction through March 31, 2021. With the exception of abandoned or vacant property, the moratorium applies to the initiation of foreclosures, the completion of foreclosures in process, and evictions.
SBA addresses BSA compliance obligations in updated PPP FAQs
On January 29, the Small Business Administration (SBA) updated its Paycheck Protection Program (PPP) frequently asked questions to further address borrower and lender questions. Among other things, the updated FAQs clarify that FinCEN’s April 2020 PPP FAQs are applicable to Second Draw PPP loans. In addition, for purposes of Bank Secrecy Act (BSA)/anti-money laundering compliance, SBA states that PPP lenders can rely on the same information received from a borrower during a First Draw loan application for a Second Draw PPP loan provided the borrower is an existing customer. Accordingly, FinCEN, as administrator of the BSA, published updates to its FAQs to include SBA’s newest clarifications. Additionally, SBA notes that FAQs 1-53 are currently being revised and do not reflect changes made by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act enacted on December 27, 2020 (covered by InfoBytes here).