COVID-19 UPDATES / GOVERNMENT RELATIONS
SBA: PPP Round Two Lending Tops $185B
As of 5 p.m. yesterday, a total of 2.5 million Paycheck Protection Program loans had been made in the second round of funding for a total of $185.4 billion – about 58% of the round two funds available – according to the Small Business Administration.
Of that total, approximately 53% was made by lenders with over $50 billion in assets, 15% by lenders with $10 billion to $50 billion in assets, and 32% by lenders with under $10 billion. The average loan size for round two was $74,304, and across both rounds the average loan size dropped to $128,357.
Meanwhile, SBA has indicated it will grant a seven-day extension to the safe harbor for firms that have access to other sources of capital to repay PPP loans. Borrowers that applied for a PPP loan prior to April 24, 2020, and that repay the loan in full by May 14, 2020, will be deemed by SBA to have made the required certification of economic need in good faith.
In updates to its FAQ document, SBA noted that the extension will be automatic and will be implemented through a revision to the interim final rule that provided the safe harbor. SBA also said that it expects to issue additional guidance on how it will review the borrower certification will be issued prior to May 14.
View the data (scroll to bottom of page)
CFPB Compliance Aid Clarifies ECOA Notification Obligations for PPP Loans
The Consumer Financial Protection Bureau on Wednesday published a compliance aid to provide additional clarity regarding banks’ obligations under the Equal Credit Opportunity Act with regard to borrowers who have applied for a Small Business Administration Paycheck Protection Program loan.
Under ECOA, banks must notify credit applicants with an approval, counteroffer, denial or other adverse notice within 30 days of receiving a completed application. The CFPB clarified that PPP loan applications are only considered completed applications once the creditor receives a loan number from the SBA or a response about the availability of funds.
The CFPB also noted that if a creditor receives a PPP loan application and refuses to grant the credit request without ever submitting the PPP loan to the SBA, they must provide an adverse action within 30 days after taking the adverse action. Finally, CFPB confirmed that a creditor that has gathered sufficient data from an applicant for a credit decision but has not received a loan number or response from the SBA may not deny the application based on incompleteness.
IRS Updates FAQs to Address Payments to Deceased, Other Non-Eligible Recipients
The IRS updated its FAQs on the CARES Act economic impact payments to reflect that the deceased (as well as heirs receiving payments in their name), non-resident aliens and incarcerated individuals are not eligible to receive EIPs and must return them. The obligation to return funds is on the ineligible recipients, not on banks.
FHFA to Provide Additional Loan Origination Flexibility
As part of its ongoing effort to provide relief to mortgage borrowers during the coronavirus pandemic, the Federal Housing Finance Agency on Tuesday announced that it would extend until at least June 30 several previously announced loan origination flexibilities for customers of Fannie Mae and Freddie Mac.
Specifically, FHFA indicated it would continue to offer alterative appraisals on purchase and rate term refinance loans, alternative methods for verifying employment before loan closing, and flexibility for borrowers to provide documentation instead of an inspection to allow renovation disbursements. FHFA also said it would expand the use of power of attorney and remote online notarizations to facilitate loan closings.
Fannie Mae and Freddie Mac both issued their own communications highlighting the changes.
Agencies Provide Relief for Banks Participating in New Liquidity Facilities
To facilitate banks’ participation in the Paycheck Protection Program Liquidity Facility and the Money Market Mutual Fund Liquidity Facility, the federal banking agencies issued an interim final rule on Tuesday that will allow institutions to neutralize the effects of their participation for purposes of the liquidity coverage ratio.
Under the existing liquidity coverage ratio rule, banks are required to hold a buffer of high-quality liquid assets to meet short-term liquidity needs. This action by the agencies effectively exempts MMLF or PPPLF funding from the LCR calculation. The rule takes effect immediately, and the agencies will accept comments for 30 days after publication in the Federal Register.
ICYMI - Gov. Holcomb Outlines Indiana Reopening Plan
On Friday Gov. Holcomb held a press conference to announce the measures his administration plans to take to gradually reopen the state. He predicated the reopening on the basis of four criteria being met:
1. The number of hospitalized COVID-19 patients has decreased for 14 days;
2. The state must retain a surge capacity for critical care beds and ventilators;
3. The state has the ability to test all individuals who exhibit COVID-19 symptoms;
4. Contact tracing measures are in place for all who test positive.
Gov. Holcomb noted that if the state is unable to meet these four critical criteria, the state will pause the reopening process. The administration has provided a five-stage reopening of Indiana that gradually eases requirements and recommendations related to social distancing, public gatherings, business openings and governmental services.
• Stage 1: Indiana is currently in Stage 1, the most restrictive stage.
• Stage 2: Begins on May 4 and runs through May 24.
• Stage 3: Begins on May 24 and run through June 14.
• Stage 4: Begins on June 14 and runs through July 4.
• Stage 5: Begins July 4. We will continue to social distance in this stage, but all other aspects will return to normal.
Gov. Holcomb also provided industry-specific guidelines. Banks should be aware of not only general business guidelines, but also both retail and office guidelines provided.
Indiana Back on Track reopening plan
General reopening guidelines for all businesses
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.