April 16, 2020

The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 8

Holland & Knight Alert
Holland & Knight's Financial Services Industry Group

Like our clients, Holland & Knight's Financial Services Industry Group is committed to actively contributing to our nation's response to the coronavirus (COVID-19) pandemic and related economic fallout and recovery efforts. For our part, Holland & Knight's 300-plus lawyers and professionals who comprise our Financial Services Industry Group want to ensure that bank and non-bank financial institutions, financial intermediaries and other financial services industry participants and stakeholders have access to timely, accurate and succinct updates on federal and state legislative, regulatory and administrative responses to the COVID-19 pandemic that are most relevant to our financial services clients.

To that end, we are pleased to share with you the latest edition of The RESPONSE.

SBA Issues Interim Final Rule and FAQs for PPP Loans

On April 15, 2020, the U.S. Small Business Administration (SBA) issued an interim final rule and FAQs regarding eligibility and other aspects related to Payroll Protection Program (PPP) loans. The guidance on eligibility requirements relates to self-employed applicants, bank directors and shareholders (and businesses owned by them), bank executives and key officers, and gambling businesses. The interim final rule also clarifies that requirements for loans pledged for borrowings at a Federal Reserve Bank or advances from a Federal Home Loan Bank do not apply to PPP loans.

The answers to the FAQs clarify that lenders must have collected borrower certifications and reviewed borrowers' payroll cost calculations and documentation before submitting the loan in SBA's E-Tran system, and also elaborate on approvals by the SBA's Standards of Conduct Committee, which approves loan applications by businesses owned or run by current SBA employees, members of Congress, appointed officials, legislative or judicial branch employees, other SBA-affiliated individuals and their household members.

Federal Banking Agencies Release Guidance Affecting Appraisals in Real Estate Transactions

On April 14, the Federal Reserve Board (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued an interim final rule deferring, for up to 120 days following closing, the requirement to obtain an appraisal or evaluation for certain residential and commercial real estate transactions. Transactions for acquisition, development and construction of real estate are excluded. The National Credit Union Administration (NCUA) will consider a similar proposal on April 16.

Federal Agencies, State Bank Commissioners Address Real Estate Appraisal Challenges

The Federal Reserve, FDIC, OCC, NCUA and the Consumer Financial Protection Bureau (CFPB), in consultation with state financial regulators, issued an interagency statement outlining flexibilities in appraisal standards and regulations as well as describing temporary changes to the Fannie Mae and Freddie Mac appraisal standards that are intended to help lenders. 

OCC Hosts PPP Listening Sessions

The OCC will hold three listening sessions, with each session intended to discuss different aspects of the Paycheck Protection Program. The first session will focus on payroll verification and will occur on April 16 from 11 a.m. to 1 p.m. EDT. The second session will focus on fraud identification and will occur on April 20 from 1 p.m. to 3 p.m. EDT. The third session, to focus on backend processes, will take place on April 21 from 1 p.m. to 3 p.m. EDT. Those interested in providing information should contact the OCC's Office of Innovation at innovation@occ.treas.gov to indicate in which call they are interested in participating.

FFIEC Updates Bank Secrecy Act/Anti-Money Laundering Examination Manual

The Federal Financial Institutions Examination Council (FFIEC) agencies (the Federal Reserve, OCC, FDIC, NCUA and the State Liaison Committee) have published updates to the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The updates emphasize a risk-focused approach to BSA/AML supervision and are intended to improve banking programs with the overall objective of protecting the financial system against financial crime, specifically money laundering and terrorist financing. The updates provide further transparency of the BSA/AML examination process, but they do not establish new requirements.

CFPB and FHFA Create New Borrower Protection Program

The CFPB and the Federal Housing Finance Agency (FHFA) have announced a new joint information-sharing Borrower Protection Program. Through the program, the CFPB will share complaint information and analytical tools with the FHFA, and the FHFA will share Fannie Mae and Freddie Mac loss mitigation information with the CFPB in an effort to better protect consumers.

NCUA Facilitates Access to Central Liquidity Facility

On April 13, the NCUA approved an interim final rule providing easier access to the Central Liquidity Facility by eliminating the six-month waiting period for a new member to receive a loan, temporarily amending the waiting period for a credit union to terminate its membership, easing collateral requirements on some assets and temporarily allowing for an agent member to borrow for its own liquidity needs. The interim final rule is effective on publication in the Federal Register and will expire on Dec. 31, 2020.

NCUA Commits Additional Community Development Loan Funds for COVID-19 Assistance

On April 13, the NCUA announced that it will commit $1.375 million of the 2020 Community Development Revolving Loan Fund appropriation for COVID-19. These funds are available for grants to low-income credit unions to help offer payment assistance and loan payment relief, to help develop new products or to help move credit union operations to remote locations.

New Michigan Website Provides COVID-19 Insurance and Financial Services Information

The Michigan Department of Insurance and Financial Services has launched a website that consolidates COVID-19 related information for Michigan financial services licensees and registrants, and their borrowers. Included among the information are a number of FAQs geared toward licensees and registrants in consumer finance, motor vehicle installment sellers and sales finance companies, mortgage loan originators and more.

New Jersey Gives Notaries Temporary Authority to Conduct Remote Online Notarizations

New Jersey Gov. Phil Murphy signed Assembly Bill No. 3903 on April 14, immediately authorizing New Jersey-licensed notaries, using "communication technology" and subject to certain conditions, to notarize the signing of a document or perform any other notarial act for an individual who is not at the same physical location as the notary, i.e., to conduct remote online notarizations. The authority will expire when the governor rescinds Executive Order No. 103 of 2020, which declared the spread of the coronavirus in New Jersey to be a public health emergency.  

Illinois Suspends Consumer Debtor/Garnishee Wage Garnishments

On April 14, Illinois Gov. JB Pritzker issued Executive Order 2020-25, suspending wage garnishments of consumer debtors and consumer garnishees. The Order does not apply to domestic support obligations.

Pennsylvania Provides Further Updates on Revised Guidance for Real Estate Transactions

Pennsylvania has provided further clarification to the revised limited guidance allowing for certain in-person activities for residential home purchase real estate transactions under contract before March 18, 2020. As for all other real estate transactions, the statement clarifies that the revised limited guidance applies to all appraisals prepared in Pennsylvania no matter the purpose or property type such that entering into a building to conduct an interior appraisal is prohibited.

For questions, comments or additional information on any of these areas, please reach out to the Holland & Knight professional with whom you work or one of the following contacts in our Financial Services Industry Group.

About Our Financial Services Industry Group:

Participants in the financial services industry require sophisticated legal counsel to navigate a complex, ever-changing environment and respond to opportunities and challenges as they arise. With more than 300 members throughout the firm, Holland & Knight's Financial Services Industry Group has the depth and experience to effectively serve borrowers and lenders in all of their legal matters, including corporate services, international operations, labor and employment, litigation and dispute resolution, public policy and regulation, real estate and white collar defense. The combination of our thorough knowledge and a sincere commitment to provide responsive service is why clients entrust our team to handle their legal needs.

Holland & Knight has established a COVID-19 Response Team to help clients respond to a variety of business and legal issues they may be facing in this crisis. Please visit Holland & Knight's website for the latest COVID-19 news and updates important to your business.

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