InfoBytes Blog
Filter
Subscribe to our InfoBytes Blog weekly newsletter and other publications for news affecting the financial services industry.
Colorado governor permits further extensions of money transmitter and real estate broker licenses
On July 19, the Colorado governor issued Executive Order 2020 141, which extends Executive Order D 2020 015, as amended by several earlier orders, until August 18, 2020. Executive Order D 2020 015 authorizes the Department of Regulatory Agencies to promulgate and issue emergency rules extending the expiration date of licenses issued by the Division of Banking for money transmitters and licenses issued by the Division of Real Estate for real estate brokers.
Fed expands MSLP to nonprofits
On July 17, the Federal Reserve Board announced that the Main Street Lending Program will support tax-exempt, nonprofit organizations. In June, the Board proposed expanding the program to certain nonprofits (covered by InfoBytes here), and in response to public feedback on the proposal, the Board (i) set the minimum employment threshold for nonprofits to 10 employees from the proposed 50; (ii) eased the donation-based funding limit; and (iii) adjusted several financial eligibility criteria to accommodate a wider range of nonprofit operating models.
The Main Street nonprofit loans have similar terms as the Main Street for-profit business loans, including the “interest rate, principal and interest payment deferral, five-year term, and minimum and maximum loan sizes.” The Board’s announcement also contains a chart covering the detailed changes and term sheets for the program’s Nonprofit Organization Expanded Loan Facility and Nonprofit Organization New Loan Facility.
Colorado updates guidance for critical financial institutions to reflect recent executive order On July 17, Colorado updated its Safer at Home guidance for critical financial institutions during the
On July 17, Colorado updated its Safer at Home guidance for critical financial institutions during the Safer at Home for Public Health Order 20-28. The guidance encourages financial institutions to become familiar with Executive Order D 2020 138, which imposes a statewide mask wearing requirement.
Texas Office of Consumer Credit updates guidance urging motor vehicle sales finance licensees to work with borrowers
On July 17, the Texas Office of the Consumer Credit Commissioner updated its advisory bulletin urging motor vehicle sales finance licensees to work with consumers during the Covid-19 crisis (previously covered here, here, and here). Among other measures, the regulator urges licensees to increase consumer communication regarding the effects of Covid-19 for licensees, work out modifications for payment difficulties, waive certain charges, and suspend repossessions. The guidance also reminds licensees of legal requirements for using electronic signatures, and continues to permit licensees to conduct activity from unlicensed locations, subject to certain conditions. The guidance is in effect through August 31, 2020, unless withdrawn or revised.
Texas Office of the Consumer Credit Commissioner extends regulated lender advisory
On July 17, the Texas Office of the Consumer Credit Commissioner updated its Regulated Lender Advisory Bulletin on coronavirus emergency measures, previously covered here. The guidance: (1) encourages lenders to work with consumers, including by working out modifications to assist with payments, waiving fees and charges, suspending charged-off accounts, and suspending repossessions of collateral or foreclosures of real property, among other things; (2) reminds lenders of legal requirements for using electronic signatures; and (3) continues to permit lenders to conduct regulated lending activity from unlicensed locations, subject to certain conditions. The guidance is in effect through August 31, 2020, unless withdrawn or revised.
EU - U.S. forum studies implications of Covid-19 for financial stability
On July 17, the U.S. Treasury Department issued a joint statement on the EU - U.S. Financial Regulatory Forum, which met virtually on July 14 and 15 and included participants from Treasury, the Federal Reserve Board, CFTC, FDIC, SEC, and OCC. Forum participants discussed six key themes: (i) potential financial stability implications and economic responses to the Covid-19 pandemic; (ii) capital market supervisory and regulatory cooperation, including cross-border supervision; (iii) “multilateral and bilateral engagement in banking and insurance,” including “cross-border resolution of systemic banks” and Volcker Rule implementation; (iv) approaches to anti-money laundering/countering the financing of terrorism financing and remittances; (v) the regulation and supervision of digital finance and financial innovation, such as “digital operational resilience and developments in crypto-assets, so-called stablecoins, and central bank digital currencies”; and (vi) sustainable finance developments. EU and U.S. participants recognized the importance of communicating mutual supervisory and regulatory concerns to “support financial stability, investor protection, market integrity, and a level playing field.”
Fannie and Freddie announce new disaster payment deferral
On July 15, Fannie Mae and Freddie Mac introduced a new home-retention workout option, the “disaster payment deferral,” for borrowers experiencing financial hardship. According to Fannie Mae’s Lender Letter LL-2020-11 and Freddie Mac’s Guide Bulletin 2020-28, the disaster payment deferral would bring the borrower current on their mortgage by deferring the delinquency amount (which includes up to 12 months of past-due principal and interest payments; out-of-pocket escrow advances paid to third parties; and servicing advances paid to third parties in the ordinary course of business) as a non-interest bearing balance, due and payable at liquidation, refinance, or maturity. To qualify for the program, an eligible disaster event is defined as (i) a financial hardship that impacts the borrower's ability to pay their contractual monthly payment; and (ii) either: the property securing the mortgage loan experienced an insured loss, the property securing the mortgage loan is located in an eligible FEMA-Declared Disaster Area, or the borrower's place of employment is located in an eligible FEMA-Declared Disaster Area. Among other requirements detailed by the Lender Letter and Bulletin, servicers must confirm that the borrower has resolved the financial hardship and have the ability to continue paying the contractual monthly payments. Servicers must begin evaluating borrowers for the disaster payment deferral beginning July 1.
Fed extends temporary exception to allow bank insiders access to PPP
On July 15, the Federal Reserve Board adopted an interim final rule (IFR) extending a temporary exception from the requirements of section 22(h) of the Federal Reserve Act and corresponding provisions of Regulation O for certain loans guaranteed under the Small Business Administration’s Paycheck Protection Program (PPP). The IFR extends the exception to August 8—the new date on which the PPP is set to expire (covered by InfoBytes here). The original extension was announced on April 17 (covered by InfoBytes here) and permits banks to extend credit to bank insiders, but only for PPP loans. However, the IFR does not except a PPP loan from other restrictions that may apply, including those under section 22(g) the Federal Reserve Act, section 215.5 of Regulation O, or applicable SBA PPP lending restrictions. The IFR takes effect immediately, and comments will be accepted for 45 days after publication in the Federal Register.
Terrorist Financing Targeting Center designates ISIS-affiliated financial facilitators and money services businesses
On July 15, the U.S. Treasury Department announced that the seven member nations of the Terrorist Financing Targeting Center (TFTC) have jointly designated six targets affiliated with the Islamic State of Iraq and Syria (ISIS), including three key money services businesses. Four targets are designated for providing “a critical financial and logistical lifeline to ISIS, its branches, and its global facilitation networks,” while two targets are designated for “abus[ing] the goodwill of the international community under the auspices of charitable giving to facilitate the transfer of funds for and to support the activities of ISIS’s branch in Afghanistan, ISIS-Khorasan (ISIS-K).” Since 2017, the participating TFTC members—Saudi Arabia, Bahrain, Kuwait, Oman, Qatar, the United Arab Emirates, and Treasury’s Office of Foreign Assets Control (OFAC)—have issued five rounds of joint designations against 60 terrorist targets globally, in an effort to challenge ISIS’s ability to finance its operations through money service businesses and charities operating under false pretenses.
As a result of the sanctions, “all property and interests in property of these targets that are or come within the United States or in the possession or control of U.S. persons must be blocked and reported to OFAC.” OFAC noted that its regulations “generally prohibit all dealings by U.S. persons or within the United States that involve any property or interests in property of blocked persons.” OFAC further warned that persons that engage in transactions with one of the designated individuals maybe be exposed to sanctions or subject to an enforcement action. Additionally, foreign financial institutions that knowingly facilitate significant transactions to the designated entities may be subject to prohibitions or strict conditions by OFAC.
OFAC issues sanctions for supporting Russian financier
On July 15, the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) announced sanctions pursuant to Executive Orders 13848, 13694, and 13661 against three individuals and five entities located in Sudan, Hong Kong, and Thailand, for allegedly enabling a Russian financier to evade U.S. sanctions. According to OFAC, the financier supported the Internet Research Agency (IRA), a Russian “troll farm” designated by OFAC in 2018, and is believed to be the financier behind Private Military Company, a “designated Russian Ministry of Defense proxy force.” OFAC alleged that this operation “advocated for the use of social media-enabled disinformation campaigns similar to those deployed by the IRA, and the staging of public executions to distract protestors seeking reforms.” Additionally, OFAC alleged that the individual and Thailand and Hong Kong-based entities “facilitated over 100 transactions exceeding $7.5 million that were sent in the interest of [the financier].” As a result, all property and interests in property belonging to, or owned by, the identified individuals and entities subject to U.S. jurisdiction are blocked, and “any entities that are owned, directly or indirectly, 50 percent or more by the designated entities, are also blocked.” U.S. persons are generally prohibited from dealing with any property or interests in property of blocked or designated persons.