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FTC releases 2019 Annual Highlights
On April 23, the FTC released its 2019 Annual Highlights, which outlines the Commission’s efforts over the past year to protect consumers and promote competition. The report discusses various enforcement actions, policy and advocacy initiatives, and education and outreach programs, and notes that FTC actions in 2019 have led to more than $232 million in refunds to consumers. The report covers a range of consumer protection enforcement actions related to, among other things, unfair and deceptive marketing as well as privacy and data security issues. The report also discusses joint consumer protection enforcement-related efforts with foreign agencies and multilateral organizations, as well as information-sharing and enforcement cooperation measures intended to streamline and facilitate joint law enforcement investigations. In addition, the report highlights recent policy actions, such as advocacy comments, amicus briefs, and Congressional testimony, and discusses education efforts undertaken in 2019 including: (i) a series of public hearings on Competition and Consumer Protection in the 21st Century; (ii) workshops with state regulators and law enforcers; (iii) workshops on consumer protection issues such as small business financing, consumer reporting accuracy, and privacy matters; and (iv) education outreach programs. According to the stats and data section of the report, the FTC received more than 3.2 million consumer reports in 2019, in which identity theft and imposter scam complaints represented over 40 percent of the total reports received.
SEC’s Investor Advisory Committee to hold remote meeting
The Investor Advisory Committee of the Securities and Exchange Commission will hold a remote public meeting on May 4 via a live webcast. The meeting will focus on public company disclosures in light of the Covid-19 outbreak and on public company shareholder engagement and meetings by virtual means.
CFPB eases filing deadlines for certain ILSA and Regulation J reports
On April 27, the CFPB released guidance in order to provide “flexibility and reduce administrative burden” for land developers that are subject to the Interstate Land Sales Full Disclosure Act (ILSA). The Bureau explains that in light of the impacts of Covid-19, it will not take supervisory or enforcement action against land developers for delays in filing financial statements and annual reports of activity, as long as the developers make good faith efforts to submit filings “within a reasonable time.” The guidance notes that all other ILSA and Regulation J requirements must be timely met.
CFPB asks FCC to allow financial institutions to make certain Covid-19-related calls
On April 27, the CFPB sent a letter to the FCC in support of a petition filed at the end of March by several financial trade associations, which seeks an expedited ruling to allow financial institutions to make certain automated calls concerning Covid-19 relief options without violating the TCPA. The CFPB specifically encouraged the FCC to allow a limited number of automated Covid-19-related calls from financial institutions that would alert customers of offers of forbearance, payment deferrals, fee waivers, extensions or relaxations of repayment terms, loan modifications, and other resources related to loans secured by homes or vehicles. “Allowing financial institutions to make automated calls is one more way to maximize the outreach to ensure consumers receive important and timely information,” CFPB Director Kathy Kraninger noted, cautioning, however, that financial institutions must still comply with other legal requirements with respect to their communications with customers, including the Bureau’s mortgage servicing rules and Dodd-Frank’s prohibition on unfair, deceptive, or abusive acts or practices.
OCC issues guidance to banks on tracking PPP loan data
On April 27, the OCC issued guidance for banks on receiving credit under the Community Reinvestment Act (CRA) for the loans the banks made to small businesses through the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The guidance suggests that lenders should track the PPP loan data, particularly for loans to businesses with $1 million or less in annual revenues that are located in underserved, distressed or low to moderate-income (LMI) areas. The OCC states that tracking this data along with lending decisions and loan volume data “is a prudent banking practice consistent with the principles of safety and soundness and fair access and fair treatment of borrowers.” The SBA’s PPP frequently asked questions can be found here.
Fed revises Municipal Lending Facility to include more cities and counties; extends expiration date
On April 27, the Federal Reserve (Fed) announced it will expand the Municipal Liquidity Facility (MLF) in important ways. As previously covered by InfoBytes, the MLF was established to provide liquidity to state and local governments so they could continue to provide services for their citizens. As when it was established on April 9, the facility will provide up to $500 billion through the purchase of state and county-issued short-term notes, with $35 billion in credit protection provided by the Treasury pursuant to the CARES Act. Revisions to the MLF include lower population thresholds for the facility. Specifically, the facility will purchase notes from counties with at least 500,000 residents, down from the original two million resident threshold, and U.S. cities with a minimum of 250,000 residents, down from the original one million residents threshold. Further, to be eligible for the revised facility, notes must mature within 36 months of issuance—an increase from the previous 24-month maximum maturity term. Issuers must also have had at least two nationally recognized statistical rating firms provide investment grade ratings, as of April 8, 2020. In addition, the Fed extended the termination date for the MLF from September 30 to December 31, 2020.
CFPB outlines lending discrimination warning signs for small businesses applying for PPP loans
On April 27, the CFPB posted a reminder that federal laws such as ECOA protect business owners from discrimination on the basis of protected characteristics when applying for loans under the CARES Act Small Business Administration’s Paycheck Protection Program or other loan programs. The Bureau’s blog post provides several examples of potential lending discrimination warning signs, including (i) being refused for an available loan or workout option even though the business meets the advertised requirements; (ii) being offered credit or workout options with higher rates or worse terms even though the business may be eligible for lower rates; (iii) being discouraged by a lender from applying due to a protected characteristic; (iv) being denied credit without being told why; and (v) receiving negative comments about race, national origin, sex, or other protected characteristics. Lending discrimination complaints may be submitted here, and the Bureau notes that it takes complaint information into account when conducting supervisory and enforcement work.
VA revises lender guidance for borrowers impacted by Covid-19
On April 27, the Department of Veterans Affairs revised Circular 26-20-10, Lending Guidance for Borrowers Affected by Covid-19. The revisions provide that the VA may delegate responsibility to an approved lender to close loans automatically, and that any loan closed under this authority is guaranteed from the date of loan closing. The circular otherwise provides guidance for VA home loan borrowers impacted by Covid-19 and creates temporary measures for loan originating, closing and guarantee. Among other measures, the circular provides that furloughs and other income curtailments as a result of Covid-19 should not be considered a break in employment for underwriting purposes. The circular is effective until July 1, 2023.
NCUA announces grants for minority depository institutions
On April 27, the National Credit Union Administration announced that it is making a total of $125,000 in mentoring grants available to small, low-income credit unions designated as minority depository institutions. Grants will be available in amounts of up to $25,000 and are intended to help recipients establish mentoring programs with larger, low-income designated credit unions that can provide guidance on how to assist low-income and underserved populations.
SBA, Treasury announce guidance on PPP loan processing
On April 26, the Small Business Administration (SBA) updated information regarding the operations of the Paycheck Protection Program (PPP) to supplement an April 24 statement from the SBA and the Department of Treasury (Treasury) announcing that the PPP would restart. Through funding from the PPP and Health Care Enhancement Act signed on April 24, the SBA’s PPP resumed processing loan applications on April 27. The SBA also issued a guidance memo for lenders describing XML file transmission of completed loan applications. The memo advises that lenders may send one bulk submission each of no less than 15,000 loans, which the SBA will process into their E-Tran system. Lenders will then receive one file from the SBA providing loan guarantee numbers and loan amounts for approved applications, as well as a report of loan applications that were not “successfully processed by the SBA loan systems.” The SBA update details additional actions it will take when processing loans, which include: (i) “[p]acing the number of loans processed in the E-Tran system”; (ii) limiting each lender to originating a maximum of 10 percent of the PPP funds available, (iii) “[i]mplementing operational standards to ensure that lenders access PPP funds based on their asset size”; (iv) making certain that applications are processed in the order submitted; and (v) providing guidance to lenders with “a significant amount of loan applications.”