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Agencies issue joint statement on loan modifications and reporting for financial institutions
On March 22, the Federal Reserve Board (Fed), CFPB, FDIC, NCUA, OCC, and Conference of State Bank Supervisors (CSBS) issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” to address the “unique and evolving situation” created by Covid-19. Guidance covered in the statement includes, among other things (i) “encourage[ing] financial institutions to work prudently with borrowers” negatively impacted by disruptions in the economy caused by the virus, to include providing loan modifications to borrowers and mitigating credit risk; (ii) advising that in “accounting for loan modifications” the modifications “do not automatically result in [troubled debt restructurings] (TDRs).” The agencies assert that “short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs”; (iii) reporting loans as past due as a result of a payment deferral is “not expected”; (iv) reporting short-term loan arrangements, such as deferrals, as nonaccrual assets is temporarily not required; and (v) reminding financial institutions that restructured loans “continue to be eligible as collateral at the [Fed’s] discount window.” The statement adds that “the agencies view prudent loan modification programs offered to financial institution customers affected by COVID-19 as positive and proactive actions that can manage or mitigate adverse impacts on borrowers, and lead to improved loan performance and reduced credit risk,” and “agency examiners will not criticize prudent efforts to modify terms on existing loans for affected customers.” (See Fed press release; OCC press release; FDIC press release and FIL-22-2020; NCUA press release; CFPB press release; and CSBS press release.)
South Carolina regulator issues MLO work location guidance
On March 13, 2020, the South Carolina State Board of Financial Institutions, Consumer Finance Division (division) released guidance for mortgage origination and servicing companies regarding working remotely due to Covid-19. The division’s interim guidance allows licensed mortgage loan originators (MLO) to work from home provided that certain criteria are met including (i) the company establishes temporary supervisory policies and procedures; (ii) the MLO has secure access to the company’s origination system; (iii) the security of the MLO’s computer is maintained; and (iv) the MLO does not keep physical company records at the remote location.
Minnesota Commerce Department issues guidance to industrial loan and thrift companies
On March 17, the Minnesota Commerce Department issued a letter to Minnesota industrial loan and thrift companies related to issues and questions arising from the Covid-19 outbreak. The letter notes that companies that choose to close a branch such that it is not open for business or examination purposes must notify the Department. The notice must include certain information, such as when the company expects to reopen the branch. The letter also provides that if a branch is opening and closing loans, employees can work from home to perform tasks, but may not close loans from an unlicensed location.
Kentucky Department of Financial Institutions issues guidance on changes in operations
The Kentucky Department of Financial Institutions issued a statement recommending Kentucky chartered financial institutions to work with customers affected by Covid-19 to meet their financial needs, including waiving overdraft fees, restructuring existing loans, and extending loan payment terms. The statement provides that any bank or credit union that significantly alters its in-person operations should notify the Director of the Division of Depository Institutions by email.
New York regulator issues licensee work location guidance
On March 12, the Superintendent of the New York State Department of Financial Services ordered temporary relief to New York certain financial institutions to temporarily relocate or close branch offices or places of business if adversely affected by Covid-19, “without complying with the prior notice or application requirements of the Banking Law or Financial Services Law.” However, licensed individuals may not conduct licensable activities in person with members of the public at or from their personal residence. Authorization was also given for 45-day extensions to filing deadlines for certain certifications and annual and quarterly filings.
FHA Issues FAQs to address Covid-19; Extends annual recertification deadline
On March 18, the FHA issued a new set of Covid-19 FAQs. Importantly, FHA extended the due date for annual recertification to April 30, 2020 for lenders with a December fiscal year end. The new FAQs also provide that lenders will not be penalized for overdue binder requests caused by temporary office closures or staff reductions (although lenders are encouraged to make every effort to submit case binders as quickly as possible), and clarify questions regarding foreclosure moratoriums.
Wisconsin DFI provides Covid-19 guidance
In March, the Wisconsin Department of Financial Institutions, Division of Banking (Division) issued guidance to state licensed mortgage loan originators (MLO) regarding working from a location that is not licensed or registered in light of Covid-19. Effective immediately, the Division will allow MLOs to work from home provided they comply with a number of provisions, including (i) the sponsoring licensed entity must notify the Division which MLOs will be working from home and keep a list of all such MLOs to be available upon request; (ii) the MLO may not maintain physical business records at home; and (iii) MLOs may not conduct business with consumers at the home location. Additional resources for financial services companies regarding Covid-19 may be found at the Department of Financial Institutions webpage here.
Maine Bureau of Financial Institutions issues statement to financial institutions about new lending programs in response to Covid-19
On March 20, the Maine Department of Professional and Financial Regulation, Bureau of Financial Institutions, issued a statement notifying Maine banks and credit unions that they may participate in two new lending program coordinated by the Finance Authority of Maine (FAME) to provide assistance to borrowers affected by Covid-19. The Covid-19 Relief Consumer Loan Program will be administered by FAME in partnership with Maine financial institutions. FAME also has partnered with the United States Small Business Administration to offer different loan products to Maine-based businesses affected by Covid-19. Lenders are encouraged to evaluate the new programs as a way to assist Maine’s consumers and businesses.
Nevada deems collection agencies “non-essential businesses”
On March 20, the Nevada Financial Institutions Division issued guidance deeming a collection agency a non-essential business under the Nevada Governor’s orders to close non-essential business. The guidance mentioned in particular that courts in Las Vegas have suspended issuing defaults on civil actions, suspended issuing orders for the examination of a judgment debtor, and suspended the issuance of any writ of execution. Collection agencies licensed or certified in Nevada must cease collection efforts until April 16.
VA issues foreclosure moratorium for Covid-19-affected borrowers
On March 18, the Department of Veterans Affairs (VA) released Circular-26-20-8, “Foreclosure Moratorium for Borrowers Affected by Covid-19,” to strongly encourage mortgage servicers to observe the following actions regarding home loan borrowers affected or potentially affected by Covid-19: (i) establish a 60-day moratorium starting March 18 on completing pending foreclosures or initiating new foreclosures; and (ii) consider the impact of eviction when choosing to retain property instead of conveying to the VA. The VA requests that loan holders not expose veterans and their families to additional risks through evictions, and states that VA regulation 38 C.F.R. 36.4324(a)(3)(ii) “allows additional interest on a guaranty claim when eventual termination has been delayed due to circumstances beyond the control of the holder, such as VA-requested forbearance.”