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FHA issues partial waiver of face-to-face interviews, issues FAQs on single-family housing
On March 13, FHA issued a partial waiver of the face-to-face interviews with borrowers before three full monthly installments due are unpaid as required by 24 C.F.R. § 203.604. In lieu of an in-person meeting, servicers may establish contact by phone, email, or video calling services. The partial waiver applies for 12 months, until March 13, 2021.
FHA also issued FAQs for Single-Family Housing on March 13, noting that (i) FHA is continuing to endorse loans and process claims but there may be processing delays; (ii) if HOCs are closed, stakeholders should email the resource center at answers@hud.gov for escalated calls; (iii) the deadline for audited financial statements has been extended to April 30, 2020; (iv) CAIVRS and TOTAL Scorecard will continue to be available to lenders; (v) all on-site reviews are suspended until further notice but lender monitoring and loan reviews will continue remotely; and (vi) occupancy inspections and appraisals must continue but no physical contact with occupants is required.
FHA issues Covid-19 guidance
On March 9, FHA issued a reminder to servicers of FHA’s loss mitigation options, noting that Covid-19 could be an event negatively impacting a borrower’s ability to pay their monthly mortgage payment.
CFPB provides consumers with Covid-19 guidance
The CFPB is maintaining a website with steps consumers can take to protect themselves from the financial impact of Covid-19. The website includes guidance on steps to take in the event of difficulty meeting mortgage payment obligations, working with housing counselors, questions relating to credit reporting, and other resources.
Fed announces creation of special credit facility
On March 17, the Federal Reserve announced the creation of a special credit facility to serve as a funding backstop to facilitate commercial lending. Under the structure, the Federal Reserve Bank of New York will lend money to the newly created special purpose vehicle (SPV) on a resource basis, to be secured by the commercial loans purchased by the SPV from eligible issuers. There are limits on the maximum amount any single issuer may sell to the SPV. The SPV is scheduled to cease purchasing additional commercial paper on March 17, 2021.
Fed encourages use of discount window
On March 16, the federal bank regulatory agencies issued a statement encouraging depository institutions to use the Federal Reserve’s discount window to meet household and business demands for credit.
Fed encourages banks to use capital and liquidity buffers
On March 15, the Federal Reserve issued a press release that, among other things, encouraged banks to use their capital and liquidity buffers to lend to households and businesses and announced that reserve requirement ratios will be reduced to 0% effective March 26. The Federal Reserve, OCC, and FDIC issued a joint press release on March 17 with the same encouragement.
Fed agencies encourage flexibility in light of Covid-19 crisis
On March 13, the OCC, FDIC, and NCUA issued guidance on March 13 that borrows heavily from the Federal Reserve’s 2013 Guidance SR 13-6 / CA 13-3: Supervisory Practices Regarding Banking Organizations and Their Borrowers and Other Customers Affected by a Major Disaster or Emergency to address how institutions can work prudently with affected customers and how the agencies can provide regulatory relief in a safe and sound manner to institutions.
Releases by the FDIC (FIL-17-2020, OCC (Bulletin 2020-15, and NCUA (Letter 20-CU-02, along with the Fed’s 2013 Guidance all encourage financial institutions to be flexible in working with all borrowers affected by the coronavirus outbreak, with the FDIC especially calling out customers in vulnerable industry sectors such as airlines, energy, travel, tourism, shipping, and small businesses.The guidance suggests the following efforts to aid customers: (i) waiving certain fees (e.g. ATM, overdraft, and late payments); (ii) increasing ATM daily withdrawal limits; (iii) easing restrictions on check-cashing; (iv) increasing credit card limits for creditworthy borrowers; (v) offering payment accommodations (e.g. extending due dates and allowing deferrals); and (vi) working with consumers temporarily unable to work due to business closures, slowdowns, or sickness. The regulators also encourage prudent efforts to modify terms of existing loans, and in the OCC’s guidance, to consider easing terms on new loans in a manner consistent with prudent banking practices.
The regulators stated their intent to work with institutions to reduce the burden of examinations, including making greater use of off-site reviews, and not to assess penalties or take other supervisory actions if institutions are unable to comply with reporting requirements despite reasonable and prudent efforts. The guidance also encourages institutions that need to temporarily close physical locations to offer alternative service options when practical and to notify their primary federal or state regulator and customers about temporary closures and alternative service options as soon as practical.
Fed agencies issue Covid-19 guidance
On March 9, the Federal Reserve, CFPB, FDIC, NCUA, OCC, and CSBS issued a joint release encouraging institutions to “work constructively with borrowers and other customers in affected communities” and stating that “prudent efforts consistent with safe and sound lending practices should not be subject to examiner criticism.” The agencies also acknowledged that institutions would face staffing and other challenges and committed to expedite requests to provide more convenient availability of services and work to minimize the disruption and burden of examinations and inspections.
FFIEC issues Covid-19 guidance
On March 6, the FFIEC issued updated guidance on steps financial institutions should take to minimize adverse effects of a pandemic, particularly with respect to the institution’s business continuity plans.
OCC issues Comptroller’s Handbook booklet updating deposit-related credit guidance
On March 12, the OCC issued Bulletin 2020-14 announcing the revision of the Deposit-Related Credit booklet of the Comptroller’s Handbook that was issued in September 2018. The revised booklet provides guidance for OCC examiners in connection with the examination and supervision of national banks, federal savings associations, and federal branches and agencies of foreign banking organizations that provide small-dollar, unsecured credit products and services such as check credit, overdraft protection, and deposit advance products. The revised booklet includes, among other things, (i) updated guidance following the rescission of OCC Bulletin 2018-28, Deposit-Related Credit: Updated Comptroller’s Handbook Booklet Advance Products (previously covered by InfoBytes here); (ii) changes to OCC issuances, laws, and regulations made since the last booklet; (iii) information explaining the applicability of references to covered savings associations; and (iv) clarifying edits regarding supervisory guidance and sound risk management practices. An appendix containing a sample request letter is also included.