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Another court dismisses PPP agent fees suit
On January 6, the U.S. District Court for the Central District of California issued an order dismissing a putative class action against two national banks alleging that the banks owe fees to agents that helped businesses file applications for the Paycheck Protection Program (PPP). The named plaintiff, a consulting company that aided borrowers in applying for federally guaranteed loans through the PPP, argued that its agents were entitled to fees from the banks that provided PPP loans. The court disagreed, finding that the CARES Act and its implementing regulations do not require lenders to pay agent fees absent an express agreement between an agent and the lender. The court further found that “nothing behind language in the CARES Act suggests that Congress intended to create an implied private right of action.”
The court’s decision follows rulings issued by other federal courts, which have also dismissed similar agent fee actions (covered by InfoBytes here, here, here, and here).
Agencies release annual CRA asset-size threshold adjustments
On December 17, the Federal Reserve Board and the FDIC announced the joint annual adjustments to CRA asset-size thresholds used to define small and intermediate small banks, which are subject to streamlined CRA evaluations and not subject to the reporting requirements applicable to large banks unless they choose to be evaluated as one. A “small” bank is defined as an institution that, as of December 31 of either of the prior two calendar years, had less than $1.322 billion in assets. An “intermediate small” bank is defined as an institution that, as of December 31 of both of the prior two calendar years, had at least $330 million in assets, and as of December 31 of either of the past two calendar years, had less than $1.322 billion in assets. This joint final rule became effective on January 1.
The OCC did not join in this announcement. As previously covered by a Buckley Special Alert, on May 20, the OCC announced the final rule to modernize the regulatory framework implementing the CRA. Its new CRA rule defines a small bank as an institution with $600 million or less in assets in four of the last five calendar quarters and an intermediate small bank as having $2.5 billion or less in assets in four of the last five calendar quarters.
FHFA seeks to implement minimum GSE liquidity and funding requirements
On December 17, the FHFA announced a notice of proposed rulemaking (NPRM) regarding liquidity and funding requirements for Fannie Mae and Freddie Mac (GSEs). The NPRM seeks to, among other things, implement two cash-flow based requirements and two long-term liquidity and funding requirements. These new requirements include (i) a short-term, 30-day liquidity requirement—based on a cumulative net cash outflow analysis plus requiring an additional $10 billion cushion of highly liquid assets; (ii) a 365-day liquidity requirement “extending the short-term cumulative cash outflow analysis to a full year”; (iii) a requirement that the “ratio of long-term unsecured to less-liquid assets must be greater than 120 percent”; and (iv) a requirement that the “ratio of the spread duration of unsecured debt to the spread duration of retained portfolio assets must be greater than 60 percent.” FHFA notes that the NPRM is intended to help ensure the GSEs “have enough liquid assets to continue supporting the mortgage market during times of severe stress.” The NPRM also supports FHFA oversight of GSE “prudential management, including compliance with standards pertaining to ‘adequacy and maintenance of liquidity and reserves.’” Comments on the NPRM are due 60 days after publication in the Federal Register.
OFAC sanctions Syrian entities, issues FAQs
On December 22, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) added several individuals and entities, including the Central Bank of Syria (CBoS), to its Specially Designated Nationals and Blocked Persons List related to Executive Order (E.O.) 13894. OFAC also released new Syria Frequently Asked Questions 866, 867, and 868 related to prohibitions applicable to CBoS and allowances for humanitarian assistance to Syria following CBoS’s designation. OFAC clarified, among other things, that “non-U.S. persons who knowingly provide significant financial, material, or technological support to, or knowingly engage in a significant transaction with the Government of Syria, including the CBoS, or certain other persons sanctioned with respect to Syria, risk exposure to sanctions.” With respect to permissible humanitarian assistance, OFAC explained that it “may issue specific licenses to authorize certain transactions involving U.S. persons or the U.S. financial system that may otherwise be prohibited by OFAC sanctions, provided those transactions are in the foreign policy interests of the United States.”
OCC clarifies Dodd-Frank preemption standards
On December 18, the OCC released a letter clarifying the agency’s interpretation of preemption standards and requirements codified by Dodd-Frank in 12 U.S.C. § 25b. The letter notes that section 25b codifies three standards pursuant to which federal law may preempt state consumer financial law, focusing on the procedural requirements for OCC “preemption determinations,” which are “affirmative conclusion[s] by the OCC that federal law preempts a state consumer financial law” made under the Barnett standard in section 25b. The letter explains that a “preemption determination” is “limited to a regulation or order issued by the OCC that concludes that a state consumer financial law is preempted pursuant to the Barnett standard,” and does not include “[a]n OCC action that has only indirect or incidental effects on a state consumer financial law,” or when the OCC “concludes that (1) a state consumer financial law is preempted pursuant to the discriminatory effect or other federal law standards or (2) a state law other than a state consumer financial law is preempted.” The letter addresses the OCC’s authority to make preemption determinations by regulation or on a “case-by-case basis,” including the circumstances under which CFPB consultation is required, the substantial evidence standard, and the requirement to publish preemption determinations. It clarifies that the section 25b periodic review requirement applies to any OCC conclusion that a state consumer law is preempted, which is not limited to determinations made under the Barnett standard. The interpretive letter also confirms that section 25b does not affect OCC interpretations of the authority to charge interest under 12 U.S.C. § 85, addresses the level of deference the OCC is afforded with respect to its interpretations, and describes the agency’s framework for complying with the standards and requirements for preemption determinations.
CFPB settles with auto loan company for inaccurate furnishing
On December 22, the CFPB announced a settlement with a nonprime auto loan originator and servicer (company) for allegedly violating the FCRA by providing erroneous consumer loan data to consumer reporting agencies (CRAs). According to the consent order, between January 2016 and August 2019, the company (i) furnished inaccurate information to CRAs it knew or should have known was inaccurate; (ii) failed to promptly update information with the CRAs once it was determined to be inaccurate or incomplete; (iii) failed to furnish dates of first delinquency for severely delinquent or charged off accounts; and (iv) failed to implement reasonable written policies and procedures regarding the accuracy of furnished information. The consent order imposes a civil money penalty of $4.75 million and requires the company to, among other things, correct all inaccuracies identified by the Bureau, conduct monthly reviews of information furnished to CRAs, and establish reasonable written policies and procedures regarding the accuracy and integrity of furnished information.
CFPB announces $5.5 million loss mitigation settlement
On December 18, the CFPB announced a settlement with a mortgage servicer for allegedly violating the CFPA and RESPA’s implementing regulation, Regulation X, due to widespread failures in the handling and processing of homeowners’ applications for loss mitigation options. According to the consent order, which was entered with the mortgage servicer’s successor in interest, the mortgage servicer violated Regulation X by, among other things, failing to (i) state in the acknowledgement notices the additional documents and information borrowers needed to submit to complete loss mitigation applications; (ii) provide a reasonable due date for submission of borrower documents; (iii) properly evaluate borrowers for all loss mitigation options available to them; and (iv) treat certain applications as “facially complete” in accordance with Regulation X. Additionally, the consent order states that the servicer’s alleged failure to “accurately review, process, track, and communicate to borrowers information regarding their applications for loss mitigation options” is an unfair act or practice and the alleged failure to send accurate acknowledgement notices is a deceptive act or practice. The Bureau asserts that the servicer’s failures delayed or deprived some borrowers of a reasonable opportunity to obtain the benefits of a loss mitigation option, resulting in additional harm such as negative credit reporting, additional late fees, and additional interest.
The consent order requires the successor in interest to pay nearly $5 million in total redress to over 11,000 consumers. The consent order also imposes a $500,000 civil money penalty and includes requirements for operational changes should the successor in interest resume mortgage servicing operations.
OFAC designates Cuban state-owned businesses for evading U.S. sanctions
On December 21, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to the Cuban Assets Control Regulations against three state-owned entities “controlled by the Cuban military with strategic roles in the Cuban economy.” According to OFAC, the entities are identified on OFAC’s List of Specially Designated Nationals and Blocked Persons, with two of the entities being designated for, among other things, using “their Panamanian incorporation to subvert international trade restrictions.” One of the sanctioned entities, OFAC notes, is a financial investment and remittance company “authorized by the Central Bank of Cuba to finance export operations, conduct financial leasing operations, and handle commercial distribution of remittance cards.” Find continuing InfoBytes coverage on the Cuban Assets Control Regulations here.
Washington extends garnishment protection to federal stimulus payments
On January 4, Washington Governor Jay Inslee issued a proclamation, extending the state’s moratorium on garnishments related to consumer debts (previously covered here, here, here and here,) and adding federal stimulus payments to the list of funds that are protected from garnishment. Protected funds already included state and federal unemployment payments. These protections were set to expire by January 19 until the governor issued an additional proclamation, extending the moratorium “until the termination of the Covid-19 State of Emergency or until rescinded.”
Colorado prohibits late rent payment fees
On December 31, the Colorado governor issued Executive Order D 2020 307, prohibiting landlords, mobile home park owners, management entities, and agents of all of the foregoing from charging any fee or penalty against a tenant or mobile home owner based on untimely payment of rent. Any late payment fees charged on or after January 31 will apply only to rent due on or after that date.