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Connecticut Insurance Department will grant extensions to domestic insurers for hard copy filings
On April 29, the Connecticut Department of Insurance issued a bulletin to state-chartered insurers, health care centers and fraternal benefit societies discussing regulatory relief in light of the Covid-19 pandemic. The department continues to require that domestic companies timely make all required electronic filings. However, upon request, it will grant an additional 30, 45, 60 or 90 days (depending upon the type of filing) to complete many hard copy filings. A list of these filings is included in the bulletin.
Maryland governor prohibits garnishment of CARES Act recovery rebates
On April 29, the governor of Maryland issued an executive order prohibiting any garnishment or setoff of CARES Act recovery rebates. The order also provides that Maryland-incorporated banks and credit unions have no right of setoff or lien upon funds in a customer or member’s account that are traceable to a CARES Act recovery rebate.
Iowa adopts rulemaking for remote notarial acts
On April 29, the Iowa secretary of state adopted rules governing remote notarizations. The rules, which take effect July 1, 2020, govern training, technology, standards for communication, and proof of identity for remote notarial acts.
SBA, Treasury discuss borrower eligibility for PPP loans
On April 29, the Small Business Administration (SBA), in consultation with the Department of Treasury (Treasury) released two new frequently asked questions (FAQs) regarding the Paycheck Protection Program (PPP). The new guidance states that businesses in operation as of February 15, 2020 are eligible to apply for PPP loans, even if the business changes ownership after that date, as long as all other criteria are met. The SBA also plans to review each PPP loan of $2 million or more after the lender submits the small business borrower’s application for forgiveness, and states that as long as lenders follow the PPP lender requirements, all loans will retain the SBA guarantee no matter what the SBA review concludes. A joint Treasury and SBA statement suggests that because a “large number of companies” returned their PPP loans after the SBA issued guidance on PPP borrower loan certification (covered by InfoBytes here), the review of loans $2 million and above will “ensure PPP loans are limited to eligible borrowers.”
Earlier in the week, Treasury and the SBA added additional guidance in the FAQs addressing various other eligibility questions. These include:
- Borrowers should refer to FAQ #31 (covered by InfoBytes here) to determine whether a small business “owned by large companies with adequate sources of liquidity to support the business’s ongoing operations” would be eligible to apply for a PPP loan;
- Housing stipends or housing allowances to employees are compensation and should be included in the employer’s calculation of payroll costs;
- To determine an employee’s principal place of residence, lenders and borrowers should consult IRS regulations (26 CFR §1.121-1(b)(2));
- Agricultural producers, farmers, and ranchers can apply for PPP loans as long as the individual or entity meets certain criteria, including that it has 500 or fewer employees or $1 million or less in annual receipts;
- Agricultural cooperatives and other cooperatives may apply for PPP loans as long as they meet all PPP requirements; and
- Small business PPP loan applicants must count all employees—full-time and part-time—when calculating whether the small business has 500 or fewer employees.
On April 24, the SBA issued an interim final rule stating, among other things, that hedge funds and private equity firms are not eligible to apply for PPP loans, and that companies in private equity portfolios should consider whether they can make the required good faith certification of need for the PPP loans. In addition, small businesses in bankruptcy proceedings are not eligible to apply for PPP loans.
CFPB issues TRID interpretive rule, ECOA FAQ
On April 29, the CFPB issued an interpretive rule (IR) “clarifying that consumers can exercise their rights to modify or waive certain required waiting periods” in order to allow borrowers impacted by Covid-19 to access mortgage credit faster. The IR states that if, as a result of the Covid-19 pandemic, a mortgage borrower determines that a mortgage transaction must be completed prior to the end of the waiting period for either the TRID Rule or the Regulation Z right of rescission rule, the borrower may waive the waiting period. Further, the IR asserts that the Covid-19 pandemic qualifies as a “changed circumstance” for purposes of certain TRID Rule provisions, permitting the use of revised estimates of settlement charges. In addition, the Bureau issued a frequently asked question that addresses the Equal Credit Opportunity Act Valuations Rule, which states that a first-lien loan borrower may also waive the requirement that a lender provide the borrower with appraisals and valuations at or before settlement of the loan.
UK FCA extends LIBOR benchmark deadline
On April 29, the United Kingdom’s Financial Conduct Authority (FCA) issued a follow-up statement that allows firms the ability to use the LIBOR interest rate benchmark in new sterling LIBOR linked loans for an addition six months due to the Covid-19 pandemic. The FCA acknowledges that due to challenges presented by the current operating environment, it is not feasible for lenders to complete the transition from LIBOR across all new sterling LIBOR linked loans before the original Q3 2020 target end date. The FCA provides several recommendations including: (i) lenders should be in a position to offer non-LIBOR linked products by the end of Q3; (ii) from Q3 onward, lenders and borrowers should agree on a process to facilitate conversion to an alternative rate prior to the end of 2021; and (iii) all new issuances of sterling LIBOR-referencing loan products that expire after the end of 2021 should cease by the end of Q1 2021. The announcement also reiterates the FCA’s previously stated position that the central assumption that firms cannot rely on LIBOR being published after the end of 2021 remains unchanged (covered by InfoBytes here).
Find continuing InfoBytes coverage on LIBOR here.
State AGs, U.S. senators urge CRAs to protect credit scores during Covid-19 crisis
On April 28, New York Attorney General Letitia James and Pennsylvania Attorney General Josh Shapiro, along with the attorneys general of 19 other states and the District of Columbia sent letters to the three credit reporting agencies (CRAs) stating their intention to protect consumer credit and ensure fair and accurate reporting on consumer credit reports during the Covid-19 crisis. The letter calls attention to the obligations of the CRAs under the FCRA and state credit-reporting laws and further states that the attorneys general intend to enforce compliance of all related requirements. Notwithstanding the CFPB’s announcement that it will ease the FCRA’s 30 or 45-day time restrictions for CRAs to investigate consumer complaints, the letter insists that the attorneys general will enforce the FCRA deadlines. Pursuant to the CARES Act amendment of the FCRA—which requires that consumer accounts be reported by furnishers as current if the consumer was current prior to the grant of a CARES Act accommodation—the letter asserts that its signors will actively monitor for compliance to this amendment. Finally, the letter expresses appreciation for the CRAs’ compliance and cooperation.
On April 27, Senator Elizabeth Warren (D-MA) and Senator Brian Schatz (D-HI) sent letters to the same CRAs also urging the agencies to protect consumer credit reports by complying with the CARES Act amendment to the FCRA. In addition, the Senators request that the CRAs reply to six questions included in the letters to assist the Senators in understanding all efforts the CRAs are taking to protect consumer credit scores during the Covid-19 crisis.
SEC releases agenda for Small Business Capital Formation Committee meeting
On April 28, the SEC released the agenda for the May 8, 2020, meeting of its Small Business Capital Formation Advisory Committee, which will be hosted via video conference. The committee will discuss the capital formation proposal and how small businesses are coping with Covid-19, among other topics.
SBA issues IFR on PPP loan disbursement requirements
On April 28, the Small Business Administration (SBA) issued an interim final rule (IFR) regarding disbursements under the SBA’s Paycheck Protection Program (PPP). The IFR explains that PPP lenders must fund loans to approved small businesses—those that were issued an SBA loan number—in one disbursement. Borrowers may not request multiple disbursements to delay their eight weeks of coverage. Further, the start date for the eight weeks of coverage for any loans that were approved but are not fully disbursed is the date of the first disbursement. The IFR makes clear that funds must be disbursed within 10 days of a borrower’s loan approval date, and that the 10 days starts on April 28 for any loans that were previously approved but not disbursed prior to the issuance of the IFR. PPP lenders are not responsible for disbursement delays based on the failure of the borrower to submit required documents, and a borrower’s loan will be cancelled if all required documents are not submitted within 20 days of loan approval. The IFR further instructs that in order to receive the lender processing fee, PPP lenders must disburse each loan and submit SBA Form 1502 within 20 days of loan approval. As this form has not yet been released, the deadline for submitting the form for previously approved loans is May 18. The IFR states that lenders will not receive the processing fee for loans that are: (i) cancelled by the borrower prior to disbursement of loan funds; or (ii) cancelled and repaid by the borrower after disbursement of loan funds. The IFR is effective immediately, and comments must be submitted by June 3.
U.S. Supreme Court announces May oral arguments to be delivered via teleconference
On April 28, the U.S. Supreme Court announced that on May 4-6 and 11-13, the Court will hear a number of the oral arguments that were previously postponed for March and April due to the Covid-19 pandemic. Counsel will present arguments to the Court via telephone conference as the Chief Justice prompts them, and the next case will follow immediately after the first ends.