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SBA issues notice detailing remittance of EIDL advances
On January 8, the Small Business Administration (SBA) issued a procedural notice discussing the repeal of Section 1110(e)(6) of the CARES Act, which required the SBA to deduct the amount of any Economic Injury Disaster Loan (EIDL) advance received by a Paycheck Protection Program (PPP) borrower from the PPP forgiveness payment from the SBA to the PPP lender. According to the notice, effective immediately, the SBA will no longer deduct EIDL advances from PPP forgiveness payments and will apply this change to any SBA forgiveness payments that were confirmed by December 29, 2020 or later.
Additionally, for any forgiveness payments that were already reduced by an EIDL advance, the SBA will automatically remit a reconciliation payment to the PPP lender that will include the advance amount, plus interest through the remittance date. The SBA notes that the PPP lender does not need to request the reconciliation payment, but must notify the borrower of the payment, re-amortize the loan, and notify the borrower of the next payment amount or whether the loan has been paid in full.
FinCEN warns financial institutions about Covid-19 vaccine-related scams and cyberattacks
On December 28, the Financial Crimes Enforcement Network (FinCEN) issued a notice to financial institutions concerning the potential for Covid-19 vaccine-related fraud, ransomware attacks, and other types of criminal activity. Specifically, FinCEN warns financial institutions to be aware of the potential sale of unapproved and illegally marketed vaccines, as well as fraudsters offering vaccines sooner than allowed for a fee. Financial institutions should also look out for ransomware targeting vaccine delivery operations and supply chains. The notice provides instructions for filing suspicious activity reports regarding the aforementioned activity.
Illinois reissues and extends several Covid-19 executive orders
On January 8, the governor of Illinois issued Executive Order 2021-01 extending numerous executive orders through February 6, 2021 (previously covered here, here, here, here, and here). Among other things, the order extends: (i) Executive Order 2020-07 regarding in-person meeting requirements, (ii) Executive Order 2020-23 regarding actions by individuals licensed by the Illinois Department of Financial and Professional Regulation engaged in disaster response, (iii) Executive Order 2020-25 regarding garnishment and wage deductions (previously covered here), (iv) Executive Order 2020-30 regarding residential evictions (previously covered here and here).
New York attorney general instructs law enforcement on eviction role
On January 7, the New York Attorney General James issued guidance for the state’s Sheriffs’ Association regarding law enforcement’s role in the eviction process during the Covid-19 public health crisis. The guidance reminds law enforcement that tenants may provide a declaration of hardship at any point in the eviction process to obtain an automatic stay of eviction until May 1. The guidance further notes that upon receipt of such a declaration law enforcement are prohibited from evicting the tenant and occupants and must notify the court.
Another court dismisses PPP agent fees suit
On January 6, the U.S. District Court for the Central District of California issued an order dismissing a putative class action against two national banks alleging that the banks owe fees to agents that helped businesses file applications for the Paycheck Protection Program (PPP). The named plaintiff, a consulting company that aided borrowers in applying for federally guaranteed loans through the PPP, argued that its agents were entitled to fees from the banks that provided PPP loans. The court disagreed, finding that the CARES Act and its implementing regulations do not require lenders to pay agent fees absent an express agreement between an agent and the lender. The court further found that “nothing behind language in the CARES Act suggests that Congress intended to create an implied private right of action.”
The court’s decision follows rulings issued by other federal courts, which have also dismissed similar agent fee actions (covered by InfoBytes here, here, here, and here).
Washington extends garnishment protection to federal stimulus payments
On January 4, Washington Governor Jay Inslee issued a proclamation, extending the state’s moratorium on garnishments related to consumer debts (previously covered here, here, here and here,) and adding federal stimulus payments to the list of funds that are protected from garnishment. Protected funds already included state and federal unemployment payments. These protections were set to expire by January 19 until the governor issued an additional proclamation, extending the moratorium “until the termination of the Covid-19 State of Emergency or until rescinded.”
New York enacts moratorium on Covid-related evictions and foreclosures
On December 28, the New York enacted the Covid-19 Emergency Eviction and Foreclosure Prevention Act of 2020 (see the press release here). Among other things, the act imposes a moratorium on residential evictions for tenants that experienced Covid-related hardships through May 1, 2021, in addition to mandating specific disclosures regarding evictions. It also suspends residential foreclosures until May 1, 2021, enabling Covid-impacted homeowners and landlords with 10 or fewer residential dwellings to file hardship declarations with their mortgage lender to prevent foreclosure. The act also contains provisions prohibiting certain tax lien sales and Covid-related discrimination by lenders.
VA re-extends foreclosure and eviction moratorium for borrowers affected by Covid-19
On December 28, the Department of Veterans Affairs issued Circular 26-20-40, 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 February 28, 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.
HUD re-extends procedures to address Section 232 mortgage insurance issues
On December 28, the U.S. Department of Housing and Urban Development issued Mortgagee Letter 2020-50, which extends interim procedures regarding site access issues related to Section 232 mortgage insurance applications during the Covid-19 pandemic (previously covered here, here and here). The guidance provides temporary modifications pertaining to third-party site inspections conducted for Section 232 FHA-insured healthcare facilities. The modifications are effective through March 31, 2021. The letter also provides guidance on other aspects relating to Section 232 properties, including regarding lender underwriter site visits, appraisals, and inspections on new construction, among other things.
Fannie Mae extends Covid-19 forbearance delegation for multi-family units through March 2021
On December 22, Fannie Mae issued Supplement 20-16 extending the expiration of its Covid-19 forbearance delegation for servicers of multi-family units until March 31, 2021. The forbearance delegation authorizes servicers to grant initial forbearances of up to 3 months, and extensions for an additional 3 months, subject to various requirements. Specific forms are provided for servicer’s use in granting forbearances and extensions.