May 1, 2020

The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 15

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.

Federal Reserve Expands Scope of Main Street Lending Program

The Federal Reserve, after receiving public feedback, has announced it will expand the scope and eligibility of the Main Street Lending Program. Under the expanded program, 1) a third loan option has been created that, instead of requiring lenders to retain a 5 percent loan share as with existing loan options, requires lenders to retain a 15 percent share on loans that, when combined with other debt, do not exceed six times a borrower's adjusted income, 2) the minimum loan size for certain loans has been lowered to $500,000 and 3) the pool of eligible businesses has been expanded. Program documents can be found at the link above and in Holland & Knight's alert: "Treasury, Federal Reserve Release Final Main Street Facility Term Sheets," April 30, 2020. 

Federal Reserve Expands Access to PPP Liquidity Facility

The Federal Reserve has expanded access to the Paycheck Protection Program Liquidity Facility (PPPLF) to include additional lenders and has expanded they type of collateral that can be pledged. As such, all PPP lenders, including non-depository institutions, can now participate in the PPPLF, and whole PPP loans can be pledged as collateral to the PPPLF (with appropriate documentation as described in the announcement).

Federal Reserve Committee Issues Statement on Activities to Support Economy

The Federal Reserve's Federal Open Market Committee (FOMC) has issued a statement outlining certain actions it will use to support the U.S. economy through the pandemic. Among the items discussed in the statement is the FOMC's decision to maintain the federal funds rate target range at zero to 0.25 percent, to continue to purchase Treasury securities and agency residential and commercial mortgage-backed securities as needed to support market functionality, as well as to offer large-scale overnight and term repurchase agreement operations.

SBA Updates PPP Guidance to Lenders and Borrowers

The U.S. Small Business Association (SBA) has once again updated its PPP FAQs for borrowers and lenders. Updates include clarification on PPP loan eligibility and SBA review of loan files.

CFPB Facilitates Access to Mortgage Credit for Consumers with Urgent Financial Need

The Consumer Financial Protection Bureau (CFPB) issued an interpretive rule on April 29, 2020, allowing consumers seeking an extension of credit from a creditor to waive applicable waiting periods under the Truth in Lending Act (TILA)/Real Estate Settlement Procedures Act (RESPA) Integrated Disclosures Rule and/or the Regulation Z rescission rules if 1) the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency and provides the creditor with a brief statement describing the emergency and indicating that it is due to the COVID-19 pandemic, and 2) the emergency necessitates closing the credit transaction before the end of the applicable waiting periods. 

New Jersey Extends Deadline to File Mortgage Servicer and Lender Licenses

The New Jersey Department of Banking and Insurance had previously issued guidance that 1) mortgage servicers not already licensed as residential mortgage lenders become so licensed and 2) that licensed mortgage lenders/residential mortgage lenders must register with the Department if they conduct mortgage servicing. Because of the COVID-19 pandemic, the Department has extended the deadline for filing such applications until June 12, 2020.

Texas Revises Guidance on Emergency Measures for Credit Access Businesses

The Texas Office of Consumer Credit Commissioner (OCCC) has revised guidance for credit access businesses and given them until May 31, 2020, to file their first quarter reports. Further, the OCCC has urged credit access businesses to work with consumers through the crisis by increasing communications, providing workout modifications, waiving certain fees and charges, and suspending vehicle repossessions and account charge-offs, among other items. The OCCC has further provided guidance on parameters for electronic signatures and providing services from unlicensed locations.

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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