COVID-19 UPDATES / FEDERAL GOVERNMENT RELATIONS
PPP Funds Exhausted; SBA No Longer Accepting Loan Applications
The $349 billion authorized for Paycheck Protection Program loans has been exhausted, the Small Business Administration reported yesterday, and the SBA is no longer accepting applications for PPP loans. Loan applications received by banks but not yet submitted to SBA will not be able to be completed, and the agency will not maintain a queue for PPP applications once additional funds are authorized. Any loan applications that have received an SBA authorization number will receive an SBA guaranty.
Action Alert: Urge Congress to Approve Additional PPP Funding
On Thursday the current Paycheck Protection Program exhausted the originally allocated funding of $350 billion. Congress is negotiating legislation to add an additional $250 billion into the program, but the discussions have stalled. The IBA is asking you to join with your banking peers across the United States to approve additional PPP funding.
Fed’s Paycheck Protection Program Facility Is Up and Running
Yesterday the Federal Reserve announced that its Paycheck Protection Program Liquidity Facility is fully operational and available for institutions to use. Through the facility, the Fed will extend non-recourse loans to institutions eligible to make PPP loans. PPP loans guaranteed by the SBA that are originated by eligible banks may be pledged as collateral to the Federal Reserve Banks.
Treasury Confirms PPP Lenders May Use Scanned Documents, E-Sign
The Department of the Treasury has updated its frequently asked questions on the Small Business Administration’s Paycheck Protection Program to confirm that PPP lenders may accept scanned copies of documents, as well as electronic signatures or consents permitted under the E-Sign Act.
Treasury noted that in cases where e-signatures are not feasible and the lender must obtain a wet signature without in-person contact, they should "take appropriate steps to ensure the proper party has executed the document." The FAQ noted that other signature requirements imposed by other applicable laws still apply.
IRS Launches Online EIP Tool to Check Status, Provide Payment Info
The Internal Revenue Service has launched a second online tool that enables consumers who have previously filed a tax return to check the status of their economic impact payment. Using the Get My Payment tool – available at IRS.gov – consumers can see the date their payment is scheduled to be deposited in their bank account or mailed to them and provide their bank account information to receive direct deposit if it is not currently on file with the IRS.
Taxpayers accessing the secure site will be asked to provide their Social Security number, date of birth and the mailing address used on their tax return. Taxpayers who need to add their bank account information will also need to provide their adjusted gross income for their most recent tax return submitted, the refund or amount owed from their last filed tax return, their bank account type, account and routing numbers.
The IRS reports that it intends to update the site once daily, usually overnight. A Spanish version of the site will also be available in the coming weeks. For individuals who do not normally file tax returns, the IRS launched a separate tool last week where they can provide payment information.
Federal Banking Agencies to Defer Appraisals and Evaluations for Real Estate Transactions Affected by COVID-19
The federal banking agencies have issued an interim final rule to temporarily defer real estate-related appraisals and evaluations under the agencies’ interagency appraisal regulations. The Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency are providing this temporary relief to allow regulated institutions to extend financing to creditworthy households and businesses quickly in the wake of the national emergency declared in connection with COVID-19.
The agencies are deferring certain appraisals and evaluations for up to 120 days after closing of residential or commercial real estate loan transactions. Transactions involving acquisition, development, and construction of real estate are excluded from this interim rule. These temporary provisions will expire on December 31, 2020, unless extended by the federal banking agencies. The National Credit Union Administration considered a similar proposal on Thursday.
In addition, the federal banking agencies, together with NCUA and the Consumer Financial Protection Bureau, in consultation with the Conference of State Bank Supervisors, issued a joint statement to address challenges relating to appraisals and evaluations for real estate-related financial transactions affected by COVID-19.
The interagency statement outlines other flexibilities in industry appraisal standards and in the agencies’ appraisal regulations and describes temporary changes to Fannie Mae and Freddie Mac appraisal standards that can assist lenders during this challenging time. The agencies will continue to communicate with the industry, as appropriate, as this situation evolves.
CFPB Provides Remittance Rule Relief Through 2020
As part of its policy response to the coronavirus pandemic, the Consumer Financial Protection Bureau last Friday indicated it would provide relief to depository institutions after the scheduled July 20 expiration of a key exception in its remittance rule. The bureau said its goal was to minimize disruptions in consumers’ ability to make cross-border remittance transfers, especially amid the economic turbulence individuals are facing. “For remittances that occur on or after July 21, 2020, and before January 1, 2021, the Bureau does not intend to cite in an examination or initiate an enforcement action in connection with the disclosure of actual third-party fees and exchange rates against any insured institution that will be newly required to disclose actual third-party fees and exchange rates after the temporary exception expires,” according to the CFPB.
Quarles: Fed to Consider Performance Through Pandemic in Stress Tests
The Federal Reserve will incorporate banks’ performance in the economic fallout of the coronavirus pandemic into the ongoing 2020 stress tests, Vice Chairman for Supervision Randal Quarles signaled last Friday.
"We’re going through actual stress currently," Quarles said during a webcast hosted by the University of Utah’s Eccles School of Business. "I think the right thing to do is for us to continue our stress tests, but as part of them to analyze how banks’ portfolios are responding to real current events."
Quarles added that the Fed would "use that analysis to inform determinations we make about the regulation and supervision of the financial sector."
Rep. Kustoff Flags Technical Complication with SEC Interpretation of CECL Delay
In a letter to SEC Chairman Jay Clayton last week, Rep. David Kustoff (R-Tenn.) urged the agency to rethink its approach to implementing the temporary delay of the current expected credit loss standard that was included in the CARES Act. The provision gave institutions an option to delay CECL implementation until the end of the public health emergency or the end of the year, whichever comes first.
"According to the SEC’s interpretation, the December 31, 2020, (or earlier) termination date of the delay requires a quarterly ‘catch-up’ of January 1, 2020, and quarterly estimates," Kustoff explained.
"Therefore, any capital relief offered by the banking agencies will apply only to beginning (January 1) balances, rather than what might be available during a mid-2020 option. Based on this updated regulatory capital relief proposal, banks that elect to delay CECL will apparently forego a portion of the regulatory capital relief that is proposed."
Kustoff argued that the decision to delay and later adopt CECL should not be a one-time decision, and urged SEC to clarify that the Dec. 31 end date of the delay be interpreted as Jan. 1 in order to give institutions a true one-year delay of CECL implementation, as Congress intended. Finally, Kustoff called for clarity on “how mid-year adoptions of accounting standards can work” during the national emergency.
Ginnie Mae Expands Pass-Through Assistance Program to Prevent Liquidity Shortfalls
Ginnie Mae has released guidance on its previously announced liquidity support program, which issuers can request an advance from Ginnie Mae to address funding shortfalls they may be facing due to the pandemic. These advances will enable issuers to continue making scheduled payments to their investors and avoid disruptions in the mortgage servicing and MBS capital markets as borrower forbearance and loss mitigation programs are implemented nationwide.
Ginnie Mae will advance funds at a fixed interest rate, which will be applied to a given month’s pass-through assistance to all issuers and posted on Ginnie Mae’s website on the second day of each month. This additional support will cover principal and interest and does not extend to taxes and insurance. "This is an extraordinary and last resort option for issuers in these unprecedented times, that will enable them to continue to serve homeowners and renters in America who rely on the government mortgage programs financed by Ginnie Mae," said Ginnie Mae’s Seth Appleton. "As important, this program underscores Ginnie Mae’s commitment to ensure timely payment of scheduled principal and interest to investors holding our MBS in all market conditions."
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.