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  • Federal Reserve announces temporary revisions to Capital Assessment and Stress Testing Reports

    Federal Issues

    On July 8, the Federal Reserve announced revisions to its Capital Assessments and Stress Testing Reports, Form FR Y-14A/Q/M; OMB No. 7100-0341. The temporary revisions implement changes in response to the Covid-19 pandemic, including the incorporation of data related to certain aspects of the CARES Act, the Paycheck Protection Program, and Federal Reserve lending facilities. The changes apply to reports beginning with July 31, 2020, or September 30, 2020, as-of dates. Additionally, the Federal Reserve has temporarily revised the submission frequency of FR Y–14Q, Schedule H (Wholesale) from a quarterly basis to a monthly basis for Category I–III firms, effective July 31, 2020.

    Federal Issues Covid-19 CARES Act SBA Stress Test Federal Reserve

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  • Oregon enacts bill providing notarization relief

    State Issues

    On June 30, the Oregon governor signed HB 4212, which provides relief relating to wage garnishment and notarization, among other things. The bill exempts certain recovery rebate payments under the CARES Act from garnishment requirements applicable to financial institutions. The bill also permits electronic notarization, provided certain requirements are met. The bill took effect on June 30.

    State Issues Covid-19 Fintech ESIGN Notary Debt Collection CARES Act Financial Institutions

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  • VA issues lender guidance on Covid-19

    Federal Issues

    On June 30, the Department of Veterans Affairs issued Circular 26-20-25, which provides guidance on the impact of the CARES Act foreclosure protections on VA-guaranteed purchase and refinance transactions. The circular states that for purchase and cash-out refinance loans, the “VA will not consider a Veteran as an unsatisfactory credit risk, based solely upon the fact that the Veteran received some type of credit forbearance or experienced some type of deferred payment during the COVID-19 national emergency.” With regard to Interest Rate Reduction Refinance Loans (IRRRL), the Circular notes that the VA is waiving certain prior approval requirements for delinquent loans if (i) the lender is approved to close loans on an automatic basis; (ii) the loan being refinanced is under CARES Act forbearance protections; (iii) the borrower is no longer experiencing the financial hardship caused by the Covid-19 pandemic; and (iv) the borrower qualifies for other IRRRL credit standards. Moreover, the Circular details additional IRRRL considerations for lenders, including maximum loan amounts, loan seasoning, and valuation requirements. Lastly, the Circular encourages lenders to waive origination fees and consider discount points and premium pricing offsets for veterans impacted by the Covid-19 pandemic.

    Federal Issues Covid-19 CARES Act Department of Veterans Affairs Refinance IRRRL Foreclosure

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  • Small business owners previously excluded from PPP granted application extension

    Courts

    On June 29, the U.S. District Court for the District of Maryland issued a memorandum to address two similar suits, which will provide several small business owners with criminal records three additional weeks to apply for loans through the Paycheck Protection Program (PPP). The court ruled that previous versions of the Small Business Administration’s (SBA) rule that excluded felony convictions of applicants or owners of applicants were “arbitrary and capricious” because the rules contained no explanation for the criminal history exclusion. The ruling extends the PPP application deadline for the business owners to July 21 following the SBA’s issuance of an interim final rule (IFR)—effective June 24 (covered by InfoBytes here)—that, according to the court, “provides a reasoned explanation for a more limited criminal history exclusion.” The court rejected the SBA’s argument that the case is now moot, stating that even though the business owners are now eligible to apply for PPP loans, they “still face difficulties in applying at the last minute either because banks are no longer accepting applications or because banks are still using old forms with the prior criminal history exclusion. Therefore, the plaintiffs continue to face ongoing harm because of the allegedly unlawful prior iterations of the rule.”

    However, the court disagreed with one of the business owner’s claim that the criminal history exclusion violates the CARES Act, finding that the SBA is within its rights to consider borrowers’ ability to repay PPP loans. “While the court agrees that the PPP functions differently than the SBA’s other loan programs, it is not unreasonable to consider ability to repay, because if the loans are not used for specified purposes, then they are not forgivable,” the court wrote. The court also declined to extend the PPP application deadline to all newly eligible individuals who were previously excluded, stating that “past harm cannot justify an injunction extending the application deadline,” since it is unclear “what harm to [the business] resulting from prior iterations of the criminal history exclusion will continue past June 30.”

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  • SBA updates PPP FAQs

    Federal Issues

    On June 25, the Small Business Administration (SBA) updated the Paycheck Protection Program (PPP) FAQs to include new details about the maturity dates of the PPP loans. Specifically, the FAQs note that if a PPP loan received an SBA loan number on or after June 5, the loan has a five-year maturity. Any loan that received an SBA loan number prior to June 5 has a two-year maturity, unless the borrower and lender agree to extend the term to five years. Additionally, the SBA updated two additional questions to reflect changes made by the Paycheck Protection Program Flexibility Act of 2020 (the Flexibility Act), previously covered by InfoBytes here. First, the Flexibility Act extended the covered period for loan forgiveness from eight weeks after the date of loan disbursement to 24 weeks. The FAQs note that the 24-week period applies to all borrowers, but any borrower that received an SBA loan number prior to June 5, may still use the eight-week period. Finally, the FAQs now reflect the new felony conviction standards of PPP eligibility. On June 12, the SBA reduced the look-back period from five years to one year for any felony conviction that does not involve fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance of any owner of 20 percent or more of the equity in the applicant (covered by InfoBytes here).

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  • SBA will release names of most PPP borrowers

    Federal Issues

    On June 19, the Small Business Administration (SBA), in conjunction with the Treasury Department, announced that it will release the business information of certain Paycheck Protection Program (PPP) loan recipients. The SBA responded to bipartisan requests from the leaders of the U.S. Senate Small Business Committee and agreed to release the business names, addresses, NAICS codes, zip codes, business type, demographic data, non-profit information, jobs supported, and the loan amounts in general ranges for borrowers receiving loans between $150,000 and the maximum of $10 million. The SBA notes this accounts for nearly 75 percent of the program’s loans. For loans under $150,000, the SBA will release more generalized information about the recipients.

    Federal Issues Covid-19 CARES Act SBA Small Business Lending

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  • SBA’s Lender Match connects small businesses to small asset lenders

    Federal Issues

    On June 19, the Small Business Administration (SBA) released a dedicated online tool that will match small businesses and non-profits impacted by the Covid-19 pandemic with Community Development Financial Institutions (CDFIs), Minority Depository Institutions, Certified Development Companies, Farm Credit System lenders, Microlenders, and traditional smaller-asset size lenders participating in the Paycheck Protection Program (PPP). Lender Match, which was paused due to CARES Act implementation priorities and loan volume, is being reinstated as an additional resource for small businesses that have not applied for or received approval for a PPP loan. Leads will only be forwarded to CDFIs and lenders with less than $10 billion in assets until the PPP program ends on June 30, 2020, at which point Lender Match will open to all participating SBA lenders. Applicants that are matched with lenders through the tool will receive an email within in two business days, which will allow them to immediately begin the application process for PPP loans and other SBA lending products. SBA notes, however, that Economic Injury Disaster Loan (EIDL) applications will not be accepted through Lender Match. Qualified small businesses and agricultural businesses must apply for EIDLs through a recently reopened portal (covered by InfoBytes here).

    Federal Issues SBA Covid-19 Small Business Lending CARES Act

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  • Kraninger emphasizes need for FCRA and CARES Act compliance

    Federal Issues

    On June 19, CFPB Director Kathy Kraninger spoke during a Consumer Data Industry Association webinar, warning information furnishers and consumer reporting agencies (CRAs) that the Bureau has dedicated significant resources toward enforcement of certain provisions of the CARES Act and the FCRA. Specifically, Kraninger emphasized the Bureau’s reliance on consumer complaint data to inform its supervisory and enforcement activity and noted that April and May had the highest monthly complaint volumes in the Bureau’s history, with approximately 7,200 complaints mentioning Covid-19 related terms during that time. Kraninger referenced the Bureau’s April policy statement, which stated the Bureau would take a “flexible supervisory and enforcement approach during this pandemic regarding compliance with the [FCRA] and Regulation V” (covered by InfoBytes here). However, Kraninger warned that furnishers are still required to comply with the CARES Act, and that the “Bureau expects CRAs and furnishers to make good faith efforts to investigate disputes as quickly as possible.” According to Kraninger, due to the unique challenges the Covid-19 pandemic has created, the Bureau will evaluate each CRA and furnisher’s respective efforts and circumstances on an individual basis to determine whether it made the good faith effort to investigate as quickly as possible.

    Federal Issues Covid-19 CARES Act FCRA Consumer Reporting CFPB

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  • New York regulator issues guidance to state financial institutions regarding consumer relief

    State Issues

    On June 17, the New York State Department of Financial Services issued guidance to state-regulated financial institutions, urging them to support consumers that have been negatively impacted by Covid-19. The department urged furnishers of credit information to, among other things, report accommodations reached under the CARES Act as “current,” unless the credit was delinquent prior to the accommodation; report certain Covid-19 related delinquencies as forborne, deferred, or affected by a natural or declared disaster consistent with the furnisher’s treatment of the account; and promptly conduct reasonable investigations of consumer-disputed credit information.

    State Issues Covid-19 New York Consumer Finance Financial Institutions NYDFS CARES Act Consumer Credit

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  • CFPB issues CARES Act credit reporting FAQs

    Federal Issues

    On June 16, the CFPB released a set of Frequently Asked Questions (FAQs) concerning the Bureau’s previously issued policy statement addressing consumer reporting agencies’ (CRAs) and furnishers’ credit reporting responsibilities under the CARES Act amendments to the Fair Credit Reporting Act (FCRA). The policy statement also emphasized that the Bureau is taking a “flexible supervisory and enforcement approach during this pandemic regarding compliance with the [FCRA] and Regulation V,” including refraining from citing in examinations or bringing enforcement action against CRAs or furnishers acting in good faith. (Covered by InfoBytes here.)

    Addressed within the FAQs are topics for furnishers to consider when complying with the CARES Act requirements. These include: (i) reporting as current certain accounts for consumers affected by the Covid-19 pandemic; (ii) citing or suing furnishers that violate the FCRA by failing to investigate disputes; (iii) defining an “accommodation” for purposes of the FCRA amendments, and clarifying whether furnishers are required to provide accommodations to impacted consumers, and if so, what their consumer reporting obligations will be; (iv) clarifying that “using a special comment code to report a natural or declared disaster or forbearance” is not a substitute for complying with the CARES Act credit reporting requirements; (v) warning that reporting forbearances on accounts that are not delinquent, or for which a consumer has not requested a forbearance, “increases the risks of inaccurate reporting and consumer confusion”; and (vi) specifying account status reporting requirements after a CARES Act accommodation ends.

    Federal Issues CFPB CARES Act Covid-19 Consumer Reporting FCRA

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