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Financial Services Law Insights and Observations


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  • Freddie Mac updates Covid-19 servicing guidance

    Federal Issues

    On April 8, Freddie Mac updated previous guidance to servicers relating to working with borrowers impacted by Covid-19. Among other things, the guidance: (i) requires servicers to report activity to the credit bureaus for borrowers impacted by Covid-19; (ii) suspends all foreclosure actions, including initiation of the foreclosure process; (iii) waives milestone timelines for filing motions for relief from automatic stay in bankruptcy cases; (iv) waives requirements that forbearance cannot extend a delinquency beyond 12 months; (v) confirms that servicers must send the borrower the forbearance plan agreement to reflect the terms of the Covid-19 forbearance; and (vi) requires servicers to make good faith efforts at quality right party contact to evaluate the borrower for a forbearance plan. The guidance also clarifies that servicers should not submit disaster reporting codes for Covid-19 related issues, stating that Freddie Mac will continue to address the Covid-19 pandemic as unique and distinct from other “eligible disaster” provisions in the Freddie Mac guides.

    Federal Issues Covid-19 Freddie Mac Forbearance

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  • Minnesota governor extends stay at home order

    State Issues

    On April 8, Minnesota governor issued an executive order extending the previously issued stay at home order to May 3, 2020.  Minnesota also issued guidance regarding the business exemptions. Financial services, notaries, and real estate transactions are considered critical sectors, but, debt collection professionals and other workers supporting debt collection are not.

    State Issues Covid-19 Minnesota Debt Collection Consumer Finance

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  • Fannie Mae revises multifamily loan documents requiring escrow reserves

    Federal Issues

    On April 8, Fannie Mae announced updates to certain loan documents for multifamily lenders in response to Covid-19.  Form 6102.25—Modifications to Multifamily Loan and Security Agreement—Addenda to Schedule 2, and Form 6268—Modifications to Multifamily Loan and Security Agreement (Additional Reserve Escrows) are both updated to provide clarity in the drafting notes for calculating the replace reserve deposit when closing a supplemental mortgage loan.  In addition, as a condition to closing a supplemental mortgage loan with required reserve escrows, the guidance clarifies that an additional principal and interest reserve escrow is required on the pre-existing mortgage loan.  Loan documents may be modified to include a higher amount of reserves (not greater than 10% of the unpaid principal balance of the loan), or hold the escrows in a non-interest bearing account to the extent permitted by law. 

    Federal Issues Covid-19 Fannie Mae Mortgages

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  • Fannie Mae updates Covid-19 servicing guidance

    Federal Issues

    On April 8, Fannie Mae updated its guidance to single-family servicers regarding the impact of Covid-19 on servicing.  In particular, the guidance revises prior guidance on offering forbearance plans to comply with the recent enactment of the federal CARES Act.  Among the updates to the servicer guidance are: (i) clarifying responsibilities relating to achieving “quality right party contact” for borrowers in a forbearance plan; (ii) providing a specific delinquency code for use in reporting to Fannie Mae; (iii) granting flexibility for inspections; (iv) extending deadlines for submission of financial statements and Form 582 to April 30; (v) clarifying forbearance plan terms; (vi) eliminating the requirement that the servicer determine occupancy status prior to evaluating a borrower for a workout option; (vii) requiring that the servicer comply with FCRA and report borrowers affected by Covid-19; and (viii) requiring servicers to suspend all foreclosure related activities to comply with the CARES Act and suspend filing motions for relief in bankruptcy cases. 

    Federal Issues Covid-19 Fannie Mae Forbearance FCRA Foreclosure

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  • Texas regulator, industry groups warn of increased cyber risk

    State Issues

    On April 8, the Texas Department of Banking, the Independent Bankers Association of Texas and the Texas Bankers Association issued a joint notice warning that cybercriminals and nation state actors use times of crisis to exploit financial institutions. The notice urged institutions to warn employees and customers of social engineering, remind them of when online/virtual meeting platform links are expected and legitimate, and inform them of scams that are preying on Covid-19 fears. The notice also suggested institutions redistribute IT policies to employees and remind them about security expectations, and maintain secure connections for remote workers.

    State Issues Covid-19 Texas Banking Privacy/Cyber Risk & Data Security

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  • SEC announces temporary, conditional relief for certain business development companies

    Federal Issues

    On April 8, the SEC announced an order providing temporary, conditional exemptive relief for business development companies (BDCs) to enable them to make additional investments in small and medium-sized businesses, including those with operations affected by Covid-19. Among other things, the relief will provide additional flexibility to BDCs to issue and sell senior securities to obtain capital. The relief is subject to certain investor protection conditions.

    Federal Issues SEC Securities Covid-19

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  • SEC issues statement on importance of disclosures for investors, markets, and the fight against Covid-19

    Federal Issues

    On April 8, the SEC issued a statement regarding the importance of disclosure for investors, markets, and the fight against Covid-19. Companies are encouraged to issue disclosures that respond to investor interest in the company’s standing, operationally and financially, describe the company’s Covid-19 response, and discuss how the company’s operations and financial condition may change as efforts to fight Covid-19 progress. The guidance also provides specific considerations for quarterly earnings statements and calls, and forward-looking disclosures.

    Federal Issues SEC Disclosures Securities Covid-19

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  • SEC issues $2 million whistleblower award


    On April 3, the SEC announced an approximately $2 million award to a whistleblower in an enforcement action. According to the SEC’s press release, the whistleblower “provided vital information and assistance that substantially contributed to an ongoing investigation” that would otherwise have “been difficult for the agency to obtain absent the tip.” The formal order also states that the whistleblower “expeditiously reported the information” despite implied threats and suffering hardships, and that the law-enforcement interests in this investigation were high.

    As of April 3, the SEC has awarded 78 individuals a total of approximately $398 million in whistleblower awards since its first award in 2012.

    Securities SEC Whistleblower Enforcement

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  • OFAC amends Venezuela-related general license

    Financial Crimes

    On April 3, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) issued amended Venezuela General License (GL) 13E, which supersedes GL 13D and extends the expiration date through May 14, 2020 for certain transactions involving the identified corporation and any of its subsidiaries that are normally prohibited under Executive Orders (E.O.) 13850, 13857, and 13884. As previously covered by InfoBytes, E.O. 13884, among other things, prevents all property and interest in property of the Government of Venezuela within the U.S. or in the possession of a U.S. person from being transferred, paid, exported, withdrawn, or otherwise dealt in. OFAC notes that the corporation is engaged with OFAC on a proposed corporate restructuring that may result in significant ownership and control changes.

    Financial Crimes Department of Treasury OFAC Sanctions Venezuela Of Interest to Non-US Persons

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  • Delaware directs check sales and money transmitter licensees to use NMLS

    The Delaware Office of the State Bank Commissioner issued a directive that, beginning on April 15, all Chapter 23, Sale of Checks and Transmission of Money Licensees are advised to use the Nationwide Mortgage Licensing System for applications, renewals, surrenders and amendments.

    Licensing NMLS Covid-19 State Issues Money Service / Money Transmitters

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