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Special Alert: California Assembly to introduce legislation for Covid-19-related relief for mortgage loans, vehicle-secured credit, PACE financing, and deferred deposit transactions
We understand that the California State Assembly will shortly propose amendments to Assembly Bill No. 2501 to create the “COVID-19 Homeowner, Tenant, and Consumer Relief Law of 2020.” As of posting of this Alert, the proposed legislation is not available on California’s legislative service website. The proposed law would provide relief to homeowners, tenants, and vehicle owners by prohibiting creditors and loan servicers from taking specified actions, including initiating foreclosures or repossessions, during the period from the date of enactment of the proposed law through the 180-day period following the date that California Governor Gavin Newsom declares the emergency related to Covid-19 has ended. Additionally, the proposed law would require servicers to place certain loans that become delinquent into automatic forbearance for a period of at least six months.
The proposed law appears similar to portions of an appropriations bill, “Take Responsibility for Workers and Families Act,” which was introduced in the U.S. House of Representatives on March 23, 2020, prior to the enactment of the federal Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and failed to pass. We understand that the proposed law is scheduled to be heard before the California State Assembly Banking Committee on May 19.
Arkansas Insurance Department issues bulletin to insurers regarding compliance and licensing
On May 11, the Arkansas Insurance Department issued a bulletin regarding compliance and licensing for admitted and surplus lines insurance carriers doing business in Arkansas. Insurers and other regulated entities are advised that they must continue to expeditiously adjust claims during Covid-19. The bulletin also provides guidance on regulatory filing deadlines, the permissibility of electronic filings and signatures, the status of on-site examinations by the department, license renewals, and continuing education deadlines.
Arkansas Insurance Department rescinds several Covid-19-related bulletins
On May 11, the Arkansas Insurance Department issued a bulletin announcing the rescission of certain Covid-19 related bulletins issued under Executive Order 20-03. Among others, Bulletin 16-2020 regarding the suspension of title insurance audits and Bulletin 18-2020 regarding Covid-19 financial regulatory compliance, are suspended as of May 11, 2020.
Maryland Collection Agency Licensing Board issues advisory notice to collection agencies
On May 11, the Maryland State Collection Agency Licensing Board issued an advisory notice regarding voluntary cessation of collection agency activity. The board noted its expectation that collection agencies that voluntarily cease business operations in Maryland do so in compliance with their respective business continuity plans to manage any related disruptions in compliance and otherwise wind down operations in an orderly manner that protects consumers from harm. The notice sets forth certain minimum requirements that a collection agency must meet, including promptly notifying the owner of consumer claims assigned to the collection agency if collection of the consumer claims will cease and remitting any and all consumer payments held in custodial accounts. Collection agencies temporarily or permanently ceasing operations must provide the board with documentation explaining its plans to meet the expectations set forth in the guidance.
Federal Reserve published updates to the Municipal Liquidity Facility term sheet
On May 11, the Federal Reserve Board issued a press release to publish updates to the Municipal Liquidity Facility (MLF) term sheet. As previously covered by InfoBytes (here and here), the MLF was established to provide liquidity to state and local governments so they could continue to provide services for their citizens. The Federal Reserve Board also published FAQs regarding the MLF and a Pricing Appendix.
Kansas Insurance Department Covid-19 FAQs contain guidance for insurance companies and broker-dealers
On May 11, the Kansas Insurance Department updated its Covid-19 FAQs, which, among other things, address how the department is handling licensing for insurance agents and registration for broker-dealers and investment advisers during the pandemic.
Kansas Office of the State Bank Commissioner issues guidance on re-opening of bank facilities
On May 11, the Kansas Office of the State Bank Commissioner (OSBC) issued guidance regarding the re-opening of closed bank lobbies and branches due to Covid-19. The OSBC expects that bank lobbies and branches closed due to the pandemic will begin a gradual reopening, in line with the statewide phased approach, with the objective of a full re-opening by June 15, 2020. However, banks operating across multiple counties are encouraged to consult county-level re-opening procedures, which may be more stringent than state-level procedures. The guidance also acknowledges that certain branches with limited or restricted access may not be able to re-open. The OSBC requests that banks provide written notice of the effective dates of branch and lobby re-openings, even if those re-openings are staggered within the organization.
Virginia regulator extends procedural orders requiring electronic service and filing
On May 11, the Virginia State Corporation Commission issued an order extending its earlier procedural orders that modify its operating and service of order procedures to permit electronic service of commission orders and electronic filing of certain business documents (previously covered here).
District court grants preliminary injunction against PPP Ineligibility Rule
On May 11, the U.S. District Court for the Eastern District of Michigan granted a preliminary injunction against the enforcement of the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) Ineligibility Rule, concluding that the rule—which excludes “banks, political lobbying firms, certain private clubs with restrictive admissions practices, and sexually oriented businesses that present entertainment or sell products of a ‘prurient’ (but not unlawful) nature” from PPP loan eligibility—contravenes the purpose of the PPP. According to the opinion, a group of businesses that “provide lawful ‘clothed, semi-nude, and/or nude performance entertainment’” filed suit against the SBA seeking a preliminary injunction against the enforcement of the PPP Ineligibility Rule, after they were prevented from obtaining the loans and/or participating in the PPP because their businesses were deemed to be “of a ‘prurient sexual nature.’” The SBA argued that Congress could not have intended to support businesses that the SBA has historically denied financing, saying it would lead to “absurd results.” The court rejected this argument, stating, “these are no ordinary times, and the PPP is no ordinary legislation.” The court reasoned that because the intent of the CARES Act, which houses the PPP, is to protect workers in need, it is “not absurd to conclude” that in order to support workers from all businesses, Congress would temporarily permit SBA financial assistance to previously excluded business types. Finding that the Rule is in conflict with the Congressional purpose of the PPP, the court granted the preliminary injunction barring the SBA from enforcing the Rule.
New York extends moratorium on evictions and foreclosures
The governor of New York issued Executive Order 202.28, extending through June 6 the moratorium on evictions of residential or commercial tenants for nonpayment of rent or foreclosure of a residential or commercial mortgage for nonpayment for a period of sixty days beginning on June 20. The moratorium applies only to properties owned or rented by someone that is eligible for unemployment insurance or benefits or is otherwise facing hardship due to the Covid-19 outbreak.