FEDERAL GOVERNMENT RELATIONS
New GSE Fee on Refinances Criticized, Groups Call for Withdrawal
On Wednesday night, Fannie Mae and Freddie Mac announced that they will impose an “adverse market refinance fee” of 50 basis points for no-cash-out and cash-out refinance mortgages with delivery dates on or after Sept. 1, 2020 (for Fannie Mae loans), or with settlement dates on or after Sept. 1 (for Freddie Mac loans). This fee – which would amount to an additional $1,400 for the typical consumer, based on the average GSE loan size – would either be paid upfront or be added to the mortgage interest rate.
Banking advocates joined several other financial services, housing and consumer groups in a joint statement Thursday strongly criticizing this action by the GSEs and calling for the withdrawal of the fee. “The additional 0.5% fee on Fannie Mae and Freddie Mac refinance mortgages will raise costs for families trying to make ends meet in these challenging times,” the groups said. “The pricing increase is particularly harmful for our nation’s low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy.”
Both the American Bankers Association and Independent Community Bankers of America have issued statements in opposition to the fee.
Federal Banking Agencies Issue Joint Statement on Enforcement of BSA/AML Requirements
Yesterday the federal banking agencies issued a joint statement updating existing enforcement guidance to enhance transparency regarding how they evaluate enforcement actions that are required by statute when financial institutions fail to meet Bank Secrecy Act/Anti-Money Laundering (BSA/AML) obligations. The statement clarifies that isolated or technical violations or deficiencies are generally not considered the types of problems that would result in an enforcement action. Additionally. the agencies address how they evaluate violations of individual components of the BSA/AML compliance program and describes how they incorporate the customer due diligence regulations and recordkeeping requirements issued by the U.S. Department of the Treasury as part of the internal controls pillar of the financial institution’s BSA/AML compliance program.
The statement, issued by the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corp., the National Credit Union Administration and the Office of the Comptroller of the Currency, updates and supersedes the Interagency Statement on Enforcement of BSA/AML Requirements that was issued on July 19, 2007, in order to promote a consistent approach to the application of Section 8(s) of the Federal Deposit Insurance Act and Section 206(q) of the Federal Credit Union Act.
The Financial Crimes Enforcement Network simultaneously issued a “Statement on Enforcement of the Bank Secrecy Act” that sets forth its approach to enforcement in circumstances of non-compliance with the BSA.
Kennedy to FDIC: Stop Companies From Taking Advantage of ILC Loophole
Sen. John Kennedy (R-La.) wrote to Chairman Jelena McWilliams of the Federal Deposit Insurance Corp. on Wednesday, urging her not to allow industrial loan companies to exploit a loophole in the Bank Holding Company Act during the coronavirus pandemic.
“I have concerns that we are approaching an inflection point that compromises this nation's longstanding policy of not mixing commerce and banking,” Kennedy wrote. “In particular, I am deeply concerned about companies the size of Rakuten, Google, or Facebook offering banking services without proper supervision. The ILC loophole was never meant to address these types of firms.”
Recently, there have been calls for the FDIC to deny Rakuten Bank America’s resubmitted ILC application and to strengthen its proposal to enhance oversight of ILC parent companies.
Bipartisan Bill Would Extend COVID-19 Relief to USDA RD Borrowers
On Wednesday, the bipartisan Rural Equal Aid Act was introduced. The bill would provide six months of payment relief for borrowers using the U.S. Department of Agriculture’s Rural Development loan programs. The bill – introduced by Rep. Cindy Axne (D-Iowa) in the House and Sen. Jon Tester (D-Mont.) in the Senate – provides equal treatment for RD loans to that provided under the CARES Act for Small Business Administration borrowers.
SBA Updates Guidance on PPP Forgiveness, Loan Reviews
The Small Business Administration Tuesday evening released several elements of guidance for Paycheck Protection Program lenders and borrowers. The agency added three new frequently asked questions to its FAQs on PPP loan forgiveness. The new questions address how lenders should handle forgiveness applications for PPP borrowers who also received Economic Injury Disaster Loan advances.
SBA also issued two new questions on its main PPP FAQ document. The new FAQs clarify that whether fees are paid to an agent or other third party is immaterial to SBA’s guarantee of a PPP loan or to its payment of feeds to lenders. The FAQs also clarify that vision and dental benefits do not count toward the cash compensation cap of $100,000 for PPP payroll costs.
Finally, SBA released an interim final rule describing procedures by which a PPP borrower may appeal certain SBA loan review decisions to the agency’s Office of Hearings and Appeals. It also outlines circumstances when borrowers may request appeals. For example, the rule states that borrowers may not appeal lenders’ PPP loan decisions to OHA, although borrowers may ask SBA to review lender decisions to deny loan forgiveness applications.
IBA COVID-19 Updates
The IBA has several COVID-19 resources and updates available at our website.