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Georgia authorizes remote notarization
On March 31, the governor of Georgia issued an executive order suspending requirements of Georgia’s property code that notarizations of deeds and other instruments to record interests in real property occur in person. Instead, any such requirement can now be satisfied by the use of real time audio-video conference. In addition, the order permits required witnesses to appear remotely. The suspension will last until the state of emergency in Georgia is terminated.
New Hampshire issues FAQs on foreclosures during pandemic
On March 31, the New Hampshire Banking Department issued FAQs for consumers addressing foreclosures during the Covid-19 pandemic. The FAQs reiterate that New Hampshire Emergency Order #4 establishes a temporary prohibition on all foreclosures while New Hampshire’s Covid-19 state of emergency is in effect, and that the CARES Act gives borrowers with federally-backed mortgage loans the right to request a forbearance based on Covid-19 related financial hardship.
Special Alert: CARES Act places significant burdens on servicers of consumer debt but provides some relief to depositories
President Trump late last week signed the Coronavirus Aid, Relief, and Economic Security Act that attempts to soften the negative economic effects of the Covid-19 pandemic on consumers, including by suspending payments for certain student loan borrowers and enabling mortgage loan borrowers to easily obtain temporary forbearances. The act also provides certain limited regulated relief for banks and credit unions.
This Special Alert summarizes the provisions providing relief to borrowers with federal student loans and the provisions of Title IV that dictate the manner in which servicers and collectors report borrowers to consumer reporting bureaus; provide forbearance, foreclosure, and eviction relief throughout the housing market; and provide limited regulatory relief to depository institutions.
Buckley issued a separate Special Alert on the Small Business Administration-related provisions contained in Title I of the act and will be covering separately the new Special Inspector General’s office created by the act, False Claims Act considerations, and other liability risks that we expect to arise.
FHFA eases loan processing for GSEs
On March 31, the FHFA announced that it has provided flexibility to Fannie Mae and Freddie Mac (GSEs) in processing loans. According to the announcement, the GSEs will now be allowed to (i) use “desktop appraisals on new construction loans”; (ii) accept an “alternative to the Completion Report” to show that construction is complete; (iii) rely on documents from borrowers to allow draws instead of requiring inspections; and (iv) utilize remote online notarizations and powers of attorney to a greater extent. Fannie Mae updated LL-2020-04 to specifically address temporary appraisal requirements, identification of Fannie Mae loans, and alternatives to complete report Form 1004D. Additionally, Fannie Mae updated LL-2020-03 for single-family sellers, adding remote online notarization, verification of self-employment, age of documentation, market-based assets, powers of attorney, and lender QC requirements. Freddie Mac also covered the FHFA topics in Bulletin 2020-8 with Covid-19-related selling guidance.
OCC issues Comptroller’s Handbook booklet updating interest rate risk
On March 26, the OCC issued Bulletin 2020-26 announcing the revision of the Interest Rate Risk booklet of the Comptroller’s Handbook, which replaces the June 1997 version of the same name. The revised booklet “incorporates and reflects applicable statutes and regulations, guidance, and examination procedures,” and expands model risk and model risk management discussions, “including developing, reviewing, and stress testing model assumptions.” The revised booklet also provides guidelines “consistent with the Pillar 2 supervisory approach outlined in the Basel Committee on Banking Supervision’s Interest Rate Risk in the Banking Book.”
SEC to host to virtual discussion on raising capital for small businesses
On March 31, the SEC announced that the Office of the Advocate for Small Business Capital Formation will begin hosting a series of virtual discussions, each on “a particular area of the market, incorporating feedback from entrepreneurs, investors, and other market participants.” The first “Online Investment Capital Raising Virtual Coffee Break” will focus on the impact Covid-19 is having on raising capital, and will be held on April 3 at 11 am EDT. Additional information about the event can be found here, and participants can join the event by clicking here.
CFPB taskforce seeks input on consumer financial protection law improvements
On March 27, the CFPB’s Taskforce on Federal Consumer Financial Law issued a request for information (RFI) seeking input on consumer protection areas for the taskforce to focus its research and analysis, and requesting suggestions for “harmonizing, modernizing, and updating the federal consumer financial laws.” Specifically, the taskforce seeks information on “fair, transparent, and competitive” consumer financial service areas that are currently functioning well, as well as areas that may benefit from regulatory improvements to “facilitate competition and materially increase consumer welfare.” Areas of interest include: (i) automobile financing; (ii) consumer credit and reporting; (iii) debt collection and settlements; (iv) deposit accounts, electronic payments, money transfers, and prepaid cards; (v) mortgage origination and servicing; (vi) small-dollar lending; and (vii) student lending and servicing. Responses are due 60 days after the RFI is published in the Federal Register.
CFPB issues guidance for Covid-19 mortgage relief options
On March 31, the CFPB released guidance for consumers who have been negatively impacted by the Covid-19 pandemic and may have difficulty making mortgage or rent payments. Pursuant to the recently passed CARES Act, for homeowners with federally backed mortgages, no foreclosures may be initiated for 60 days beginning on March 18, and homeowners financially impacted by Covid-19 have the right to a forbearance of up to 180 days. The guidance lays out mortgage relief options as well as the process for homeowners to determine the programs for which they qualify. According to the guidance, the CARES Act also protects renters by suspending evictions for 120 days beginning on March 27 if the landlord has a federally backed mortgage. The guidance notes that even if the landlord does not have a federally backed mortgage, most states have also suspended evictions during the pandemic. The guidance also includes information on how homeowners can request mortgage relief from their servicers, including sample questions and other tips. Further, the guidance cautions homeowners to carefully monitor their mortgage statements and credit reports and describes how to avoid scams.
Fed delays revised control framework until September
On March 31, the Federal Reserve Board (Fed) announced that its control and divestiture proceedings final rule—set to take effect April 1—would be delayed for six months. As previously covered by InfoBytes, the Fed revised the bank control framework to clarify the rules used to determine if a firm controls a bank pursuant to the Bank Holding Company Act and the Home Owner’s Loan Act. The Fed stated that “[t]he delay will reduce operational burden and allow institutions to focus on current economic conditions” created by the Covid-19 pandemic. No changes were made to the final rule, which will now become effective on September 30.
FHFA final rule amends stress testing requirements
On March 24, the FHFA published a final rule amending its stress testing requirements consistent with changes made by section 401 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. The final rule adopts amendments proposed last December (covered by InfoBytes here) without change, increasing the minimum threshold for FHFA-regulated entities to conduct stress tests from $10 billion to $250 billion in total consolidated assets, removing the requirements for Federal Home Loan Banks to conduct stress tests, and reducing the number of stress test scenarios from three to two by removing the “adverse” scenario. The final rule took effect March 24.