InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Ohio attorney general: CARES Act payments exempt from garnishment under state law
On April 13, Ohio Attorney General Dave Yost issued a notice that Ohio law exempts CARES Act payments from garnishment, attachment, and execution. Yost noted that, in the event of an execution against a CARES Act payment, his office may intervene to enforce Ohio law.
New York Department of Financial Services issues Covid-19 cybersecurity guidance
On April 13, the New York Department of Financial Services issued guidance on cybersecurity awareness during the Covid-19 pandemic. The guidance identifies three areas of heightened risk: (i) remote working, including the risks associated with less secure internet connections, expanded use of less secure personal devices, increased use of video and audio-conferencing applications, and use of unauthorized personal accounts and applications to transmit non-public information; (ii) increased online phishing and fraud attempts; and (iii) increased risk to third party vendors. In accordance with the DFS’s cybersecurity regulation, all regulated entities are instructed to assess these risks and address them appropriately.
Maryland insurance administration calls on commercial insurers to work with consumers
On April 13, the Maryland insurance administration commissioner issued a bulletin to all property and casualty insurers regarding commercial insurance in light of the Covid-19 crisis. The bulletin called on insurers to cooperate with impacted insureds to revise policies utilizing estimated payroll and revenue; waive or reduce short-rate cancellation penalties; rely on pre-crisis data when assessing credit-worthiness for underwriting; and refrain from penalizing insureds that have inquired or filed business interruption claims that have not involved claim payments.
Treasury announces that over 80 million will receive economic impact payments
On April 13, the U.S. Department of the Treasury announced that it expects over 80 million Americans will receive Economic Impact Payments within the next two weeks, with tens of millions receiving direct deposit payments into their bank accounts by April 15. Additionally, the IRS will separately launch an online application called “Get My Payment” that allows taxpayers who filed in 2018 and 2019 but did not provide bank account information to submit direct deposit information for purposes of expediting their payment.
NCUA approves rule to facilitate credit union access to central liquidity facility
On April 13, the NCUA approved an interim final rule intended to make it easier for credit unions to join the NCUA’s Central Liquidity Facility, a mixed-ownership governing corporation, which can be used as a source of contingency liquidity. The rule now permits credit unions to join the facility as a direct member or through an agency relationship. It also eliminates the waiting period for new members to receive advances and eases collateral requirements.
California Department of Real Estate issues guidance regarding late submission of certain required reports
On April 13, the California Department of Real Estate (DRE) issued guidance providing that the DRE will review situations on a case-by-case basis with respect to deadlines for filing certain DRE required reports. Entities that are late in submitting their reports are requested to add a signed explanation as to the delay, if possible. The DRE will work with brokers who miss deadlines due to disruptions resulting from Covid-19.
District court says CARES Act does not provide a private right of action under PPP loan provisions
On April 13, the U.S. District Court for the District of Maryland denied plaintiffs’ request for a temporary restraining order and preliminary injunction against a national bank, ruling that “the CARES Act does not expressly provide a private right of action” and that the bank’s Paycheck Protection Program (PPP) eligibility restrictions do not violate the Act. As previously covered by InfoBytes, the plaintiffs alleged that the bank prioritized existing lending clients in the PPP and limited access to depository-only customers that did not have a credit card or loan with another financial institution. The plaintiffs argued that the bank had no legal authority under the Act to deny, restrict, or impede access, even though there is no such prohibition in the Act.
The court first determined that the Act contains neither an express nor implied private right of action. Moreover, even if Congress did intend to provide a private right of action, the bank’s alleged conduct “does not run afoul” of the law. While the Act outlines requirements that banks must consider when offering loans to small businesses, it “does not constrain banks such that they are prohibited from considering other information when deciding from whom to accept applications, or in what order to process applications it accepts.” The court also rejected the plaintiffs’ argument that Congress waived the “credit elsewhere” requirement with respect to PPP loans. According to the court, “[t]ypically, when an entity applies for an SBA loan, it has to certify that it could not obtain a loan from a different source. . . . In this case, [the bank] has imposed no such requirement on businesses’ eligibility for the PPP.” The court also concluded that the plaintiffs failed to demonstrate irreparable harm, and that imposing a temporarily restraining order could disincentivize lenders from participating in the program and reduce small businesses’ access to PPP loans. “[G]iven the competing policy interests, the need to balance the desire to assist the widest swath of small businesses with the need to incentivize lender participation, and the overall fluidity of this epidemic, Congress is better positioned to remedy any defects in the CARES Act, and to pass the supplemental legislation it believes best aimed at ameliorating the effects of the COVID-19 crisis,” the court wrote.
On April 14, the plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Fourth Circuit.
FINRA adds PPP question to Covid-19 FAQs
On April 13, FINRA updated its FAQs on regulatory relief due to Covid-19 to include an FAQ that addresses Paycheck Protection Program loans. The FAQ answers a question relating to loan forgiveness for registered persons, stating that the loan forgiveness amount will not be considered a “compromise with a creditor” and will not need to be reported on Form U4 for question 14K.
HUD announces multifamily mortgage payment relief
On April 13, HUD announced new measures for FHA-approved multifamily mortgagees regarding the implementation of CARES Act forbearance. The guidance stipulates that servicers must grant multifamily borrowers who experience financial hardships due to Covid-19 and request assistance up to 90 days of forbearance, and may grant this forbearance without receiving direct approval from HUD provided they follow guidance outlined in Mortgagee Letter 2020-09 (covered by InfoBytes here). As required by the CARES Act, all owners and agents of FHA-insured multifamily properties and properties participating in HUD multifamily assisted housing programs must also cease all evictions of tenants for non-payment of rent for 120 days. The guidance also outlines the standard multifamily forbearance protocol, which is intended to streamline processing for borrowers, servicers, and lenders. The protocol stipulates that HUD is (i) “allowing servicers to grant, without HUD approval, up to 30 days of forbearance for borrowers experiencing a financial hardship due to COVID-19 if the borrower was current on their mortgage payments as of February 1, 2020”; (ii) “allowing automatic forbearance extensions from servicers to borrowers for up to two additional 30-day periods, without HUD approval”; and (iii) “encouraging borrowers to enter into repayment plans with renters (residential and commercial) that experience an income reduction or temporary loss of household income but are able to make up the difference over time, without HUD approval.”
States ask Treasury to exempt stimulus payments from garnishment and urge CFPB to “vigorously enforce” FCRA
On April 13, a coalition of state attorneys general and the Hawaii Office of Consumer Protection (states) sent a letter to Treasury Secretary Steven T. Mnuchin, calling for immediate action to ensure that stimulus checks issued under the CARES Act to consumers affected by the Covid-19 pandemic are not subject to garnishment by creditors and debt collectors. While the CARES Act does not “explicitly designate these emergency stimulus payments as exempt from garnishment,” the states claim that a “built-in mechanism” contained within a provision of the CARES Act can rectify the legislative oversight. Specifically, the states point to Section 2201(h), which “authoriz[es] Treasury to issue ‘regulations or other guidance as may be necessary to carry out the purposes of this section,’” and ask Treasury to immediately designate the stimulus checks as “‘benefit payments’ exempt from garnishment.”
The same day, another coalition of state attorneys general sent a letter to CFPB Director Kathy Kraninger urging the Bureau to rescind an April 1 policy statement directed at consumer reporting agencies (CRAs) and furnishers (covered by InfoBytes here) that stated the Bureau will take a “flexible supervisory and enforcement approach during this pandemic regarding compliance with the Fair Credit Reporting Act [(FCRA)] and Regulation V.” According to the states, the policy statement suggests that the Bureau does not plan on enforcing the CARES Act amendment to the FCRA, which requires lenders to report as current any loans subject to Covid-19 forbearance or other accommodation. The Bureau’s decision, the states contend, may discourage consumers from taking advantage of offered forbearances and other accommodations. The states also argue that allowing CRAs to take longer than the FCRA-prescribed 30 days to investigate consumer disputes puts consumers at risk. The states stress that the recent increase in Covid-19 scams has heightened the need for the Bureau to vigorously enforce the FCRA, and that, moreover, the thousands of complaints received by the states, FBI, FTC, and DOJ concerning phishing and other scams designed to gather consumers’ financial information have highlighted identity theft risks. The states emphasize “that even if the CFPB refuses to act. . .we will not hesitate to enforce the FCRA’s deadlines against companies that fail to comply with the law.”