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California governor extends tax, licensing deadlines
On March 25, the governor of California issued an executive order intended to provide relief to small businesses. The order provides businesses filing a return of less than $1 million in taxes with a 90-day extension to file first quarter returns and make tax payments. The order also extended by 60 days deadlines for submitting applications, paying fees, and submitting audited financial reports for a number of business licensees, including card rooms and online payer services. The order also suspends the requirements to request and receive the consent of shareholders for shareholder meetings to be held by electronic transmission or by electronic video screen communication.
Fannie, Freddie develop payment deferral program
On March 25, Fannie Mae announced the release of a new payment deferral program developed with Freddie Mac at the direction of the FHFA. Fannie Mae issued Lender Letter LL-2020-05 and Freddie Mac issued Bulletin 2020-6 to introduce the new workout option which “enables servicers to assist eligible borrowers who have resolved a temporary hardship and resumed their monthly contractual payments but cannot afford either a full reinstatement or repayment plan to bring the loan current.” The lender letter and the bulletin cover, among other things: (i) criteria necessary to be eligible for a payment deferral; (ii) terms of payment deferral; (iii) steps to complete a payment deferral; (iv) applicable fees; (v) reimbursement for expenses; and (iv) servicer incentive fees. Servicers may begin to evaluate borrowers for the deferral payment program on July 1, but no later than January 1, 2021.
Ginnie Mae extends audited financial statement deadline
On March 25, Ginnie Mae announced that it will extend the deadline for the submission of Annual Audited Financial Statements to April 30 for lenders with a fiscal year end of December. Ginnie Mae encourages lenders to complete their Audited Annual Financial Statements—if they are able—within 90 days of the end of the lender’s fiscal year.
Department of Education provides Covid-19 relief by pausing loan collections, issuing refunds
On March 25, U.S. Secretary of Education Betsy DeVos announced that in order to provide additional relief for student loan borrowers, the Department will take a number of actions which include the following:
- Stop collection activities and wage garnishments for at least 60 days, effective March 13;
- Stop requests to the Department of Treasury to withhold funds from “defaulted borrowers' federal income tax refunds, Social Security payments, and other federal payments”;
- Refund almost $2 billion to over 830,000 borrowers from funds previously withheld as of March 13;
- Direct private collection agencies to “halt all proactive collection activities, including making phone calls to borrowers and issuing collection letters and billing statements,” however, “[p]rivate collection agencies are permitted to provide assistance upon the borrower's request”;
- Begin to “monitor employers' compliance with the request to stop wage garnishment.” Those “[b]orrowers whose wages continue to be garnished after March 13 should contact their employers' human resources department.”
Borrowers with defaulted loans who would like to “continu[e] a prior payment arrangement, consolidat[e] their loans, or begin[] a loan rehabilitation arrangement with their private collection agency, should contact the Department's Default Resolution Group at 1-800-621-3115 (TTY for the deaf or hearing-impaired 1-877-825-9923).”
For more information, borrowers may visit StudentAid.gov/coronavirus.
UK FCA discusses impact of Covid-19 on firms’ LIBOR transition plans
On March 25, the United Kingdom’s Financial Conduct Authority (FCA) issued a statement addressing the potential impact of Covid-19 on firms’ LIBOR transition plans. While the FCA states that the assumption that firms cannot rely on LIBOR being published after the end of 2021 is unchanged, it acknowledges that Covid-19 has impacted the timing of some aspects of the transition programs for many firms. The FCA states that it will continue to assess the impact on transition timelines and will update the market as soon as possible.
Find continuing InfoBytes coverage on LIBOR here.
SEC broadens and extends relief for businesses affected by Covid-19
On March 25, the SEC announced that publicly traded companies have an additional 45 days, subject to certain conditions, to file annual and quarterly reports in an effort to help businesses whose operations may be affected by Covid-19. Disclosure reports due between March 1 and July 1 will be eligible for extensions if companies can justify the need, the SEC stated in the announcement, which supersedes and extends a previously issued order on March 4. To qualify for an extension, “companies must continue to convey through a current report a summary of why the relief is needed in their particular circumstances for each periodic report that is delayed.” In addition, the SEC issued orders (see here and here) that will give certain investment funds and investment advisors more time to meet filing and delivery requirements and more flexibility to avoid in-person meetings. These orders broaden and extend relief that the SEC announced earlier this month (covered by InfoBytes here). The announcement also provides public company disclosure guidance as well as additional information with respect to certain obligations under various securities laws.
CSBS asks Fed and Treasury to create liquidity facility to support mortgage servicers
On March 25, CSBS President and CEO John W. Ryan sent a letter to Federal Reserve Board Governor Jerome Powell and Treasury Secretary Steven Mnuchin encouraging the agencies to create a liquidity facility under Section 13(3) of the Federal Reserve Act to support mortgage servicers “in anticipation of widespread borrower payment forbearance.” According to the letter, CSBS members—state regulatory agencies responsible for regulating bank and nonbank financial companies—have expressed concerns regarding liquidity and solvency in the mortgage servicing sector, and are particularly focused on monitoring the financial condition of nonbank mortgage servicers. Without a liquidity facility, CSBS warned that “mortgage servicers will experience a severe liquidity shortage that may threaten their continued viability, and by extension, the health of the nation’s housing finance market.”
West Virginia amends mortgage loan originator definition; adjusts allowable final installment payment on mortgage loans
On March 25, the West Virginia governor signed SB 651, which amends the definition of a mortgage loan originator “with respect to retailers of manufactured or modular homes and their employees” under the West Virginia Safe Mortgage Licensing Act. Among other things, SB 651 states that retailers of manufactured or modular homes (or the retailers’ employees) do not qualify as a mortgage loan originators provided they meet certain criteria, including that they (i) provide written disclosures to consumers of “any corporate affiliation with any mortgage lender” (including “at least one unaffiliated mortgage lender,” if they do have a corporate affiliation); (ii) do not directly negotiate loan terms with consumers or mortgage lenders; and (iii) do not represent that they can perform the activities of a mortgage loan originator. The amendments take effect June 2.
Also on March 25, the governor signed HB 4411, which adjusts the allowable final installment payment on a mortgage loan to be “a lesser amount or no more than $5 greater than any previous payment installment.” This adjustment does not apply to “any mortgage modification or refinancing loan made in participation with and in compliance with the federal Making Homes Affordable program, or any other mortgage modification or refinancing loan eligible under any government sponsored enterprise requirements or funded through any federal or state program or litigation settlement.” The adjustment takes effect May 27.
West Virginia issues stay at home order
On March 23, the West Virginia governor issued a stay at home order requiring non-essential businesses and operations to temporarily cease operations. Essential businesses and operations include financial and insurance institutions, including banks and banking services such as ATM services, currency exchanges, consumer lenders, credit unions, appraisers, title companies, financial markets, trading and futures exchanges, payday lenders, affiliates of financial institutions, professional debt collectors and related creditor service workers, workers engaged in payment clearing and settlement, wholesale funding, and capital markets activities, entities that issue bonds, related financial institutions, institutions selling financial products, insurance companies, underwriters, agents, brokers, and related insurance claims and agency services. Additionally, essential businesses and operations include those businesses that sell, manufacture, or supply other essential businesses and operations with the support of materials necessary to operate. The order becomes effective at 8:00 PM on March 24, 2020, and remains in effect until terminated by subsequent executive order.
Pennsylvania governor and health secretary issue stay at home orders
On March 23, the Pennsylvania Governor and Secretary of Health issued stay at home orders to certain counties. The orders direct residents of certain Pennsylvania counties to stay at home except as needed to access, support, or provide life-sustaining business, emergency, or government services. The governor issued additional guidance indicating that certain businesses engaging in financial activities may continue physical operations. For example, credit intermediation and related activities, insurance carriers and related activities, and certain funds, trusts, and other activities may continue physical operations. However, securities and commodity exchanges and other financial investment activities may not continue physical operations, unless they are considered financial services under the Cybersecurity and Infrastructure Security Agency advisory. The orders took effect at 8:00 PM on March 23, 2020, and will remain effective until April 6, 2020.