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UK FCA discusses impact of Covid-19 on firms’ LIBOR transition plans
On March 25, the United Kingdom’s Financial Conduct Authority (FCA) issued a statement addressing the potential impact of Covid-19 on firms’ LIBOR transition plans. While the FCA states that the assumption that firms cannot rely on LIBOR being published after the end of 2021 is unchanged, it acknowledges that Covid-19 has impacted the timing of some aspects of the transition programs for many firms. The FCA states that it will continue to assess the impact on transition timelines and will update the market as soon as possible.
Find continuing InfoBytes coverage on LIBOR here.
SEC broadens and extends relief for businesses affected by Covid-19
On March 25, the SEC announced that publicly traded companies have an additional 45 days, subject to certain conditions, to file annual and quarterly reports in an effort to help businesses whose operations may be affected by Covid-19. Disclosure reports due between March 1 and July 1 will be eligible for extensions if companies can justify the need, the SEC stated in the announcement, which supersedes and extends a previously issued order on March 4. To qualify for an extension, “companies must continue to convey through a current report a summary of why the relief is needed in their particular circumstances for each periodic report that is delayed.” In addition, the SEC issued orders (see here and here) that will give certain investment funds and investment advisors more time to meet filing and delivery requirements and more flexibility to avoid in-person meetings. These orders broaden and extend relief that the SEC announced earlier this month (covered by InfoBytes here). The announcement also provides public company disclosure guidance as well as additional information with respect to certain obligations under various securities laws.
CSBS asks Fed and Treasury to create liquidity facility to support mortgage servicers
On March 25, CSBS President and CEO John W. Ryan sent a letter to Federal Reserve Board Governor Jerome Powell and Treasury Secretary Steven Mnuchin encouraging the agencies to create a liquidity facility under Section 13(3) of the Federal Reserve Act to support mortgage servicers “in anticipation of widespread borrower payment forbearance.” According to the letter, CSBS members—state regulatory agencies responsible for regulating bank and nonbank financial companies—have expressed concerns regarding liquidity and solvency in the mortgage servicing sector, and are particularly focused on monitoring the financial condition of nonbank mortgage servicers. Without a liquidity facility, CSBS warned that “mortgage servicers will experience a severe liquidity shortage that may threaten their continued viability, and by extension, the health of the nation’s housing finance market.”
West Virginia amends mortgage loan originator definition; adjusts allowable final installment payment on mortgage loans
On March 25, the West Virginia governor signed SB 651, which amends the definition of a mortgage loan originator “with respect to retailers of manufactured or modular homes and their employees” under the West Virginia Safe Mortgage Licensing Act. Among other things, SB 651 states that retailers of manufactured or modular homes (or the retailers’ employees) do not qualify as a mortgage loan originators provided they meet certain criteria, including that they (i) provide written disclosures to consumers of “any corporate affiliation with any mortgage lender” (including “at least one unaffiliated mortgage lender,” if they do have a corporate affiliation); (ii) do not directly negotiate loan terms with consumers or mortgage lenders; and (iii) do not represent that they can perform the activities of a mortgage loan originator. The amendments take effect June 2.
Also on March 25, the governor signed HB 4411, which adjusts the allowable final installment payment on a mortgage loan to be “a lesser amount or no more than $5 greater than any previous payment installment.” This adjustment does not apply to “any mortgage modification or refinancing loan made in participation with and in compliance with the federal Making Homes Affordable program, or any other mortgage modification or refinancing loan eligible under any government sponsored enterprise requirements or funded through any federal or state program or litigation settlement.” The adjustment takes effect May 27.
West Virginia issues stay at home order
On March 23, the West Virginia governor issued a stay at home order requiring non-essential businesses and operations to temporarily cease operations. Essential businesses and operations include financial and insurance institutions, including banks and banking services such as ATM services, currency exchanges, consumer lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, professional debt collectors and related creditor service workers, workers engaged in payment clearing and settlement, wholesale funding, and capital markets activities, entities that issue bonds, related financial institutions, institutions selling financial products, insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. Additionally, essential businesses and operations include those businesses that sell, manufacture, or supply other essential businesses and operations with the support of materials necessary to operate. The order becomes effective at 8:00 PM on March 24, 2020, and remains in effect until terminated by subsequent executive order.
Pennsylvania governor and health secretary issue stay at home orders
On March 23, the Pennsylvania Governor and Secretary of Health issued stay at home orders to certain counties. The orders direct residents of certain Pennsylvania counties to stay at home except as needed to access, support, or provide life-sustaining business, emergency, or government services. The governor issued additional guidance indicating that certain businesses engaging in financial activities may continue physical operations. For example, credit intermediation and related activities, insurance carriers and related activities, and certain funds, trusts, and other activities may continue physical operations. However, securities and commodity exchanges and other financial investment activities may not continue physical operations, unless they are considered financial services under the Cybersecurity and Infrastructure Security Agency advisory. The orders took effect at 8:00 PM on March 23, 2020, and will remain effective until April 6, 2020.
Oregon issues stay at home order
On March 23, the Oregon Governor issued stay at home order. The order closes certain businesses for which close personal contact “is difficult or impossible to avoid.” The order does not address financial institutions.
New Mexico issues emergency order closing non-essential businesses and non-profits
On March 23, the New Mexico Department of Health issued a public health emergency order closing all businesses and non-profit entities except for those deemed essential. Essential businesses include, among others, banks, credit unions, insurance providers, payroll services, brokerage services, and investment management firms.
Michigan Governor issues "Stay Home, Stay Safe" executive order
On March 23, the Michigan Governor issued a state-wide order to temporarily suspend in-person operations that are “not necessary to sustain or protect life.” The order takes effect on March 24, 2020, at 12:01 AM, and continues through April 13, 2020, at 11:59 PM. Businesses and operations that employ critical infrastructure workers may continue in-person operations, subject to certain conditions. Critical infrastructure workers include those in financial services. Additionally, a business or operation that employs critical infrastructure workers may designate suppliers, distribution centers, or service providers whose continued operation is necessary to enable, support, or facilitate the work of its critical infrastructure workers.
Hawaii issues stay at home order
On March 23, the Hawaii Governor issued a statewide order to stay at home and work from home starting at 12:01 AM Wednesday, March 25, 2020, through April 30, 2020. All businesses or operations not identified as federal critical infrastructure by the Cybersecurity and Infrastructure Security Agency, designated by the Director of the Hawaii emergency Management Agency, or listed in the proclamation, must cease. The proclamation permits, among others, financial institutions, including currency exchanges, consumer lenders (e.g., payday lenders, consumer installment lenders), credit unions, appraisers, title companies, financial markets, trading and futures exchanges, affiliates of financial institutions, entities that issue bonds, related financial institutions, and institutions selling financial products, to remain open.