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Fed permits SBA-approved non-depository PPP lenders to utilize liquidity facility
On April 30, the Federal Reserve (Fed) announced that expanded access to the Paycheck Protection Program Liquidity Facility (PPPLF) beyond depository institutions to include all Small Business Administration (SBA) approved PPP lenders. Non-depository lenders, “includ[ing] banks, credit unions, Community Development Financial Institutions, members of the Farm Credit System, small business lending companies licensed by the SBA, and some financial technology firms” are now eligible to borrow from the PPPLF using PPP loans as collateral. In addition, the Fed announced that, in addition to using originated PPP loans as collateral, eligible borrowers can also use purchased whole PPP loans as collateral for credit extended by the Federal Reserve Banks under the facility “at a rate of 35 basis points.” The Fed’s announcement clearly states that an eligible borrower that pledges a purchased PPP loan must provide SBA documentation to prove that the lender “is the beneficiary of the SBA guarantee for the loan.” The announcement includes a PPPLF Term Sheet and a link to PPPLF frequently asked questions for additional details.
Alabama State Banking Department issues memorandum to licensees to work with customers
On April 29, the Alabama State Banking Department issued a memorandum encouraging licensees to work proactively with customers and to keep the department apprised of such efforts. Licensees are also reminded to work with customers to make sure they are aware of the potential for scams during the COVID-19 pandemic. The department should be notified of any suspicious lending-related activity.
West Virginia extends remote working for depository and non-depository entities
West Virginia’s Department of Financial Services Commissioner extended guidance enabling employees of regulated entities to work remotely through June 15 as a result of the Covid-19 crisis. The initial guidelines were announced on March 13 (previously discussed here) and were set to expire on May 1.
Illinois Department of Financial and Professional Regulation issues guidance to student borrowers
The Illinois Department of Financial and Professional Regulation has issued responses to frequently asked questions regarding the expansion of payment relief for student borrowers. The FAQs provide guidance to borrowers regarding relief options with respect to student loans.
VA issues guidance for noncompliant interest rate reduction refinance loans
On April 20, the Veterans Benefits Administration (VA) issued Circular 26-20-16, which provides guidance for noncompliant interest rate reduction refinance loans (IRRRLs). The guidance notes that the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) provides statutory criteria that affect whether the VA can guarantee refinance loans. In VA Circular 26-19-22, the VA notified lenders that an IRRRL must meet the requirements of the Act to receive and retain the full amount of VA’s guarantee. As such, Circular 26-20-16 sets forth requirements for IRRRLs, including enterprise level reporting and loan level reporting. The circular also discusses loan seasoning issues and the VA’s oversight of lender actions. The circular is rescinded April 1, 2023.
Texas governor permits remote notarization of real estate instruments
On April 29, the governor of Texas temporarily permitted persons to appear before a notary public via videoconference when executing real estate instruments such as mortgages. The Office of the Attorney General issued a set of conditions that must be met when using remote methods of notarization. These include the use of two-way video and audio communication permitting contemporaneous interaction, verification of identity, recordkeeping requirements, and attestations of the signatory and notary that they are physically located in Texas.
Wisconsin regulator bars penalties for late/missed rent payments
On April 29, the Wisconsin Department of Agriculture, Trade, and Consumer Protection adopted an emergency rule that prohibits landlords from assessing late fees or other penalties for missed or late rent payments during Covid-19 public health emergency. The rule is in effect until 90 days after the public health emergency ends.
Wisconsin Department of Financial Services discourages unlicensed adjustment service companies
On April 29, the Wisconsin Department of Financial Institutions issued guidance on adjustment service companies and encouraged Wisconsin residents exercise caution before hiring companies to assist them with debt management. In particular the guidance discourages doing business with unlicensed companies and links to a list of licensed adjustment service companies.
VA announces new reporting code for Covid-19 forbearance requests
On April 29, the Department of Veterans Affairs announced a new reason for default which will assist the VA in identifying borrowers impacted by Covid-19. The VA replaced the reason “Energy/Environmental Cost” with “National Emergency Declaration” in the Electronic Default Notice (EDN). Servicers should use this new reason for default when reporting the EDN. Effective June 1, 2020, this new reason for default will be accepted prior to the 61st day of delinquency.
Court approves $5 billion FTC settlement with social media company
On April 23, the U.S. District Court for the District of Columbia approved a $5 billion settlement between the FTC and a global social media company, resolving allegations that the company violated consumer protection laws by using deceptive disclosures and settings to undermine users’ privacy preferences in violation of a 2012 privacy settlement with the FTC. The settlement, first announced last July (covered by InfoBytes here), requires the company to take a series of remedial steps, including (i) ceasing misrepresentations concerning its collection and disclosure of users’ personal information, as well as its privacy and security measures; (ii) clearly disclosing when it will share data with third parties and obtaining user express consent if the sharing goes beyond a user’s privacy setting restrictions; (iii) deleting or de-identifying a user’s personal information within a reasonable time frame if an account is closed; (iv) creating a more robust privacy program with safeguards applicable to third parties with access to a user’s personal information; (v) creating a new privacy committee and designating a dedicated corporate officer in charge of monitoring the effectiveness of the privacy program; (vi) alerting the FTC when more than 500 users’ personal information has been compromised; and (vii) undertaking reporting and recordkeeping obligations, and commissioning regular, independent privacy assessments. The order “resolves all consumer-protection claims known by the FTC prior to June 12, 2019, that [the company], its officers, and directors violated Section 5 of the FTC Act.” While the court acknowledged concerns raised by several amici opposing the settlement, the court concluded that the settlement and the proposed remedies were reasonable and in the public interest. On April 28, the FTC announced the formal approval of amendments to its 2012 privacy order to incorporate updated provisions included in the 2019 settlement.