STATE GOVERNMENT RELATIONS
Governor Announces New COVID-19 Restrictions for Indiana
This week, Gov. Eric Holcomb announced that he is placing additional restrictions in Indiana to slow the spread of the COVID-19 virus. He announced that the state is postponing all non-emergency surgeries until the start of next year.
The governor also announced that the state is imposing a hard cap on social gatherings per the tiered structure in place based on the color code spread rate provided by the Indiana Department of Health. Exceptions to these limits had been permitted via local government prior to this decision.
View spread-rate map (scroll down)
FEDERAL GOVERNMENT RELATIONS
CFPB Finalizes QM Reforms
The Consumer Financial Protection Bureau has finalized rules addressing the pending expiration of the “GSE Patch,” which exempts Fannie Mae and Freddie Mac mortgage loans from parts of the bureau's Qualified Mortgage rule.
The patch provides QM status to loans purchased or guaranteed by the government-sponsored enterprises, even if they exceed the rule’s 43% debt-to-income (DTI) limit. It is scheduled to expire July 1, 2021, or when the government-sponsored enterprises exit conservatorship.
The CFPB’s first rule replaces the 43% DTI limit with an approach based on loan pricing. The second creates a new category of “seasoned” QMs, allowing non-QM mortgages to “season” into QMs based on strong performance over 36 months.
Indiana Among State Bankers Associations Calling On Congress to Extend TDR Provisions
Fifty-one state bankers associations on Wednesday called on lawmakers to extend the troubled debt restructuring provisions in the CARES Act that allow banks to suspend generally accepted accounting principles for COVID-19-related loan modifications.
Once a loan is classified as a TDR, the groups indicated, it often requires twice the regulatory capital of other loans, and is ineligible for consideration as collateral at the Federal Reserve, often requiring the bank to take remedial steps against a loan, including foreclosure. The associations wrote that “[i]t is critically important that the TDR relief in the CARES Act (Section 4013) be extended before the end of 2020 so that America’s banks can continue to fulfil their role as financial first responders in the communities they serve.”
The letter follows a push Tuesday from a group of 35 Republican members of Congress to extend the TDR restrictions. In a letter to congressional leadership the lawmakers noted that allowing the provision to expire “would have a drastic and adverse impact on the ability of consumers and businesses to access credit now and a TDR classification would further hurt their ability to access credit in the future.”
House Clears NDAA, Paving Way for BSA/AML Changes
By a bipartisan vote of 335 to 78, the House Tuesday night passed the National Defense Authorization Act for fiscal year 2021, a bill that includes several critical improvements to anti-money laundering rules. Among other provisions, the bill directs the Financial Crimes Enforcement Network to establish and maintain a national registry of beneficial ownership information that banks may in turn rely on when complying with customer due diligence requirements.
Although President Trump has threatened to veto the NDAA over other provisions, the House vote margin was large enough to overcome a veto. The bill now goes to the Senate.
SBA Details Tax Reporting on Covered 7(a) Payments
The Small Business Administration has issued a notice on the six months of 7(a), 504, and Microloan payments it is making for borrowers under Section 1112 of the CARES Act.
The notice on related tax issues indicates:
- 7(a) lenders are responsible for issuing the Form 1099-MISC for: (1) loans that have not been purchased by SBA, and (2) loans that have been purchased by SBA and are serviced by the 7(a) lender.
- SBA is responsible for issuing the Form 1099-MISC for 7(a) loans that have been purchased and are serviced by SBA.
The notice also details tax reporting for the 504 and Microloan programs, what must be reported as income on Form 1099-MISC, who should be identified as the payer and recipient, and more.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.