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Financial Services Law Insights and Observations


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  • Agencies instruct servicers to pause foreclosures while HAF assistance is available

    Federal Issues

    On May 6, the Secretaries of HUD, Department of Veterans Affairs, Department of Agriculture, and Treasury announced that servicers of federally-backed mortgages should pause pending foreclosure proceedings while assistance is available under the Homeowner Assistance Fund (HAF). President Biden’s American Rescue Plan established HAF to provide approximately $10 billion in financial support for families affected by the Covid-19 pandemic. According to the announcement, pausing pending proceedings is considered “a vital step towards keeping families in their homes as they receive assistance through the HAF program and is consistent with Congress’s intent in putting in place the HAF program to protect vulnerable homeowners.” The Secretaries encourage homeowners and servicers to continue collaborating on loss mitigation options so that homeowners eligible for assistance can choose “the best path to staying in their homes and fully utilize available resources.” They also “strongly encourage servicers to offer these loss mitigation options to borrowers who are struggling to make their mortgage payments, including those who are eligible for HAF funding.” The announcement further noted that, among other things, Treasury is urging HAF program administrators to ensure that their programs expedite handling of applications from homeowners with pending foreclosure proceedings, and to develop expedited procedures for handling homeowners with immediate threats to housing stability, in addition to supporting homeowners who may benefit from the agencies’ loss mitigation options.

    Federal Issues Covid-19 HUD Department of Veterans Affairs Department of Agriculture Department of Treasury Loss Mitigation Foreclosure Mortgages American Rescue Plan Act of 2021 Consumer Finance

  • SBA implements newest PPP changes

    Federal Issues

    On March 22, the SBA published an interim final rule (IFR) implementing recent changes to the Paycheck Protection Program (PPP) that were included in the American Rescue Plan Act of 2021, enacted on March 11 (covered by InfoBytes here). These changes include “expanding the eligibility for First- and Second-Draw PPP loans, revising the exclusions from payroll costs for purposes of loan forgiveness, and providing that a PPP borrower that receives a PPP loan after December 27, 2020 can be approved for a Shuttered Venue Operator Grant [(SVOG)] under certain conditions.” Specifically, if a borrower received a First- or Second-Draw PPP loan after December 27, 2020, the amount of the subsequently approved SVOG will be reduced by the amount of the PPP loan. However, if a PPP applicant is approved for an SVOG before SBA issues a PPP loan number, the applicant will be ineligible for the PPP loan and “acceptance of any PPP loan proceeds will be considered an unauthorized use.” The IFR also provides several other clarifications and changes, which will apply to PPP loans approved, as well as loan forgiveness applications submitted, on or after March 11, 2021. The IFR took effect March 18. To assist SVOG applicants, SBA announced the launch of a splash page for the SVOG application portal, which will begin accepting applications April 8.

    Earlier on March 18, SBA also released the following updated forms: (i) PPP loan guaranty application for lenders; (ii) Second-Draw loan guaranty lender application; (iii) First-Draw and Second-Draw PPP loan application forms; and (iv) First-Draw and Second-Draw PPP borrower applications for Schedule C filers using gross income.

    Federal Issues SBA Covid-19 American Rescue Plan Act of 2021 Small Business Lending

  • CFPB asks industry to aid consumers in getting stimulus funds

    Federal Issues

    On March 17, CFPB acting Director Dave Uejio issued a statement encouraging financial institutions and debt collectors to allow Economic Impact Payment (EIP) funds to reach consumers. Uejio expressed concerns that EIP funds—distributed through the recently enacted American Rescue Plan Act of 2021 (covered by InfoBytes here)—may be intercepted to cover consumers’ overdraft fees, past-due debts, or other financial liabilities. Uejio applauded proactive measures taken by industry members to ensure consumers have the ability to access the full value of their EIP funds, noting that “many financial institutions have pledged to promptly restore the funds to the people who should receive them.”

    Federal Issues CFPB Debt Collection Covid-19 American Rescue Plan Act of 2021 Consumer Finance

  • Biden extends Covid-19 regulatory relief

    Federal Issues

    On March 11, President Biden signed the American Rescue Plan Act of 2021 (the Act), which will, among other things, extend certain emergency authorities and temporary regulatory relief contained in the CARES Act to address the continued impact of the Covid-19 pandemic. Under a section titled, “Committee on Small Business and Entrepreneurship,” the Act will provide an additional $7.25 billion for the Paycheck Protection Program (PPP), extend the eligibility of certain nonprofit entities for covered loans under the PPP, and amend certain aspects of the program allowing for certain businesses to take second loans. However, the Act does not actually extend the PPP, which is currently set to expire on March 31 (covered by InfoBytes here). The Act also allocates nearly $10 billion through the Homeowner Assistance Fund to allow eligible entities to provide direct assistance for mortgage payments, property insurance, utilities, and other housing-related costs to help prevent delinquencies, defaults, and foreclosures. Moreover, a provision related to fair housing activities provides $20 million “to ensure fair housing organizations have additional resources to address fair housing inquiries, complaints, investigations, and education and outreach activities, and costs of delivering or adapting services, during or relating to the coronavirus pandemic.” Additionally, the Act provides $15 billion for Economic Injury Disaster Loan (EIDL) advance payments, including $5 billion for supplemental targeted EIDL advance payments for the hardest hit.

    In addition to providing Covid-19 relief, the Act also includes, among other things, a section that modifies the treatment of student loan forgiveness. Specifically, Section 9675 will exclude from gross income any amount of student loan debt that is modified or discharged (in whole or in part) after December 31, 2020, and before January 1, 2026. The tax exemption will include federal, private, and institutional loans. According to a press release issued by Senators Bob Menendez (D-NJ) and Elizabeth Warren (D-MA), the provision is intended to “ensur[e] borrowers whose debt is fully or partially forgiven are not saddled with thousands of dollars in surprise taxes.”

    Federal Issues Federal Legislation Covid-19 Biden CARES Act SBA EIDL Student Lending American Rescue Plan Act of 2021

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