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On March 31, the Treasury Department and the Internal Revenue Service launched the Employee Retention Credit, a resource designed to encourage businesses to keep employees on their payroll during the Covid-19 outbreak. The resource is a refundable tax credit of 50 percent of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by Covid-19. Employers of all sizes, including tax-exempt organizations may qualify to receive the employee retention credit if either: (i) the employer’s business is fully or partially suspended by government order due to Covid-19 during the calendar quarter; or (ii) the employer’s gross receipts are below 50 percent of the comparable quarter in 2019. Once the employer’s gross receipts go above 80 percent of a comparable quarter in 2019 they no longer qualify after the end of that quarter. State and local governments and their instrumentalities, and small businesses who take Small Business Loans are not eligible for the employee retention credit. The credit applies to wages paid after March 12, 2020 and before January 1, 2021, and cover both cash payments and a portion of the cost of employer provided health care.
In light of widespread interruptions created by the Covid-19 emergency, the Rhode Island Division of Banking extended the due date for debt collectors, small loan lenders, and debt management companies to submit 2020 Rhode Island Annual Reports to April 30, 2020. Extensions beyond that date will be considered on a case-by-case basis.
Washington governor and Department of Financial Institutions announce measures to assist with mortgage delinquencies
On March 31, Washington Governor Jay Inslee along with the director of the Washington State Department of Financial Institutions announced measures to alleviate burdens for distressed homeowners. DFI’s guidelines advise mortgage servicers to cooperate with distressed homeowners, and specifically mentioned that servicers should consider payment forbearance agreements with delinquent owners.
Oregon published a website that includes FAQs addressing Covid-19 insurance and financial services information for consumers. The website addresses questions regarding, among other things, making mortgage payments and addressing concerns about keeping money in checking or savings accounts during the Covid-19 outbreak. In addition, the responses to the FAQs indicate that the Division of Financial Regulation is encouraging its regulated lenders and financial service providers to take active measures to provide help to people and businesses affected by the pandemic, including offering loan forbearance plans, fee waivers, and other deferred payment options to their customers.
On March 31, Nevada updated its state of emergency directive extending state-issued licenses and permits that were set to expire during the state of emergency period. The directive will remain in effect until the state of emergency is terminated or renewed.
The Commissioner of the Oklahoma State Banking Department issued FAQs as a supplement to FAQs issued earlier by the FDIC. The FAQs address: (i) working with borrowers, and appropriately documenting the credit file; (ii) closing a lobby but maintaining drive through service; (iii) access to safe deposit boxes; (iv) conducting board meetings remotely, and (v) bank examinations.
On March 31, the governor of Georgia issued an executive order suspending requirements of Georgia’s property code that notarizations of deeds and other instruments to record interests in real property occur in person. Instead, any such requirement can now be satisfied by the use of real time audio-video conference. In addition, the order permits required witnesses to appear remotely. The suspension will last until the state of emergency in Georgia is terminated.
On March 31, the New Hampshire Banking Department issued FAQs for consumers addressing foreclosures during the Covid-19 pandemic. The FAQs reiterate that New Hampshire Emergency Order #4 establishes a temporary prohibition on all foreclosures while New Hampshire’s Covid-19 state of emergency is in effect, and that the CARES Act gives borrowers with federally-backed mortgage loans the right to request a forbearance based on Covid-19 related financial hardship.
Special Alert: CARES Act places significant burdens on servicers of consumer debt but provides some relief to depositories
President Trump late last week signed the Coronavirus Aid, Relief, and Economic Security Act that attempts to soften the negative economic effects of the Covid-19 pandemic on consumers, including by suspending payments for certain student loan borrowers and enabling mortgage loan borrowers to easily obtain temporary forbearances. The act also provides certain limited regulated relief for banks and credit unions.
This Special Alert summarizes the provisions providing relief to borrowers with federal student loans and the provisions of Title IV that dictate the manner in which servicers and collectors report borrowers to consumer reporting bureaus; provide forbearance, foreclosure, and eviction relief throughout the housing market; and provide limited regulatory relief to depository institutions.
Buckley issued a separate Special Alert on the Small Business Administration-related provisions contained in Title I of the act and will be covering separately the new Special Inspector General’s office created by the act, False Claims Act considerations, and other liability risks that we expect to arise.
On March 31, the FHFA announced that it has provided flexibility to Fannie Mae and Freddie Mac (GSEs) in processing loans. According to the announcement, the GSEs will now be allowed to (i) use “desktop appraisals on new construction loans”; (ii) accept an “alternative to the Completion Report” to show that construction is complete; (iii) rely on documents from borrowers to allow draws instead of requiring inspections; and (iv) utilize remote online notarizations and powers of attorney to a greater extent. Fannie Mae updated LL-2020-04 to specifically address temporary appraisal requirements, identification of Fannie Mae loans, and alternatives to complete report Form 1004D. Additionally, Fannie Mae updated LL-2020-03 for single-family sellers, adding remote online notarization, verification of self-employment, age of documentation, market-based assets, powers of attorney, and lender QC requirements. Freddie Mac also covered the FHFA topics in Bulletin 2020-8 with Covid-19-related selling guidance.
- Buckley Webcast: Where we are now: Exploring potential risks and rewards for lenders under CARES Act’s Paycheck Protection Program
- Benjamin W. Hutten to discuss "Understanding OFAC sanctions" at a NAFCU webinar
- Garylene D. Javier to discuss "Navigating workplace culture in 2020" at the DC Bar Conference