PH FedACTion: Financial Regulatory Updates
Daily Financial Regulation Update - Wednesday, May 6, 2020
May 06, 2020
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Major Developments
Federal Reserve Bank of New York Releases Seller Certifications for Secondary Market Corporate Credit Facility
May 5, 2020
The Federal Reserve Bank of New York in preparation of launching the Secondary Market Corporate Credit Facility issued forms of certifications that Eligible Sellers desiring to participate in the facility must make, addressing:
Solvency. The seller must make a certification regarding its solvency.
U.S. Business. The seller must certify that it is a business that is created or organized in the U.S. or under the laws of the U.S. and that has significant operations in and a majority of its employees based in the U.S., consistent with Section 4003(c)(3)(C) of the CARES Act.
Conflict of Interest. The seller must certify that it satisfies the conflict of interest requirements in Section 4019 of the CARES Act.
In addition, Eligible Sellers must agree to a verification mechanism with respect to the U.S. Business and conflict of interest requirements.
Congress
Click here to view the full text of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), 116 HR. 748, Enacted March 27, 2020.
Click here to view the full text of the Paycheck Protection Program Increase Act of 2020, Enacted April 24, 2020.
Click here to view a running list of proposed legislation from the Senate Committee on Banking, Housing, and Urban Affairs, Senate Committee on Small Business and Entrepreneurship, House Committee on Financial Services, and House Committee on Small Business.
U.S. Senate
Committee on Small Business and Entrepreneurship
Senators Rubio and Cardin Urge the OMB to Consider Small Business Contractors When Issuing Regulations to Secure the Supply Chain
May 4, 2020
U.S. Senators Marco Rubio (R-FL) and Ben Cardin (D-MD), Chairman and Ranking Member of the Senate Committee on Small Business and Entrepreneurship, sent a letter to Russell Vought, Acting Director of the Office of Management and Budget (OMB) regarding the implementation of Section 889(a)(1)(B) of the John S. McCain National Defense Authorization Act for Fiscal Year 2019, urging the OMB, when issuing regulations to secure the supply chain, to provide special consideration to small businesses and provide them with both a clear path to compliance and a reasonable compliance time frame.
U.S. House of Representatives
Committee on Financial Services
Congresswoman Waters and Subcommittee Chairs Seek to Hold Mortgage Servicers Accountable During COVID-19
May 5, 2020
Congresswoman Maxine Waters (D-CA), Chairwoman of the House Financial Services Committee; Congressman Gregory Meeks (D-NY), Chair of the Subcommittee on Consumer Protection and Financial Institutions; Congressman Wm. Lacy Clay (D-MO), Chair of the Subcommittee on Housing, Community Development, and Insurance; and Congressman Al Green (D-TX), Chair of the Subcommittee on Oversight and Investigations, sent letters to the nation’s largest mortgage servicers requesting information related to their communications about relief available to borrowers with federally-backed mortgages under the CARES Act. In the letters, Committee Members also outlined the various borrower protections Congress included in the CARES Act and the important role mortgage servicers play in implementing these protections. The requested documents and information are to be provided by May 15, 2020.
Federal Agencies
Department of the Treasury
Joint Statement by Treasury Secretary Steven T. Mnuchin and Secretary of the Interior David L. Bernhardt on Distribution of Coronavirus Relief Fund Dollars to Native American Tribes
May 5, 2020
U.S. Secretary of the Treasury Steven T. Mnuchin and Secretary of the Interior David L. Bernhardt issued a joint statement after agreeing on a path forward to provide Coronavirus Relief Fund dollars to Native American Tribes. The path forward will: (i) distribute 60% of the $8 billion to Tribes based on population data used in the distribution of the Indian Housing Block Grant, subject to a floor of $100,000; and (ii) distribute the remaining 40% of the $8 billion based on the total number of persons employed by the Indian tribe and any tribally-owned entity, and further data to be collected related to the amount of higher expenses faced by the tribe in the fight against COVID-19.
Federal Reserve Bank of New York
Pre-COVID-19 Data Shows Total Household Debt Increased in Q1 2020, Though Growth in Non-Housing Debt Slows
May 5, 2020
The Federal Reserve Bank of New York’s (FRBNY) Center for Microeconomic Data issued its Quarterly Report on Household Debt and Credit (Report), which shows that total household debt increased by $155 billion (1.1%) to $14.30 trillion in the first quarter of 2020. The total balance is now $1.6 trillion higher, in nominal terms, than the previous peak of $12.68 trillion in the third quarter of 2008. The Report is based on data from the FRBNY’s Consumer Credit Panel, a nationally representative sample of individual- and household-level debt and credit records drawn from anonymized Equifax credit data.
Federal Bank Regulatory Agencies Modify Liquidity Coverage Ratio for Banks Participating in Money Market Mutual Fund Liquidity Facility and Paycheck Protection Program Liquidity Facility
May 5, 2020
The federal bank regulatory agencies announced an Interim Final Rule that modifies the agencies’ Liquidity Coverage Ratio (LCR) rule to support banking organizations’ participation in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility. The Interim Final Rule facilitates participation in these facilities by neutralizing the LCR impact associated with the non-recourse funding provided by these facilities. The Interim Final Rule does not otherwise alter the LCR or its calibration.
Securities and Exchange Commission
SEC Releases COVID-19 Related FAQs
May 4, 2020
The U.S. Securities and Exchange Commission has released Frequently Asked Questions related to the unique circumstances arising from COVID-19. The guidance discusses disclosure requirements under the COVID-19 Order (Release No. 34-88465, March 25, 2020) and requirements for Form S-3 filings.
Statement Announcing SEC Staff Roundtable on Emerging Markets
May 4, 2020
U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton issued a statement announcing an SEC staff roundtable on emerging markets. He noted that significant barriers to effective inspections and regulatory oversight continue to exist in many emerging markets, including China. In light of such concerns, the SEC staff will host a roundtable this summer to hear the views of investors, other market participants, regulators, and industry experts on how the SEC can continue to raise investor awareness of risks and explore potential additional steps that can be taken to mitigate them. The roundtable date, agenda items, panelists, moderators, and logistical information will be made public as they are finalized.
FINRA
FINRA Reminds Firms to Beware of Fraud During the Coronavirus (COVID-19) Pandemic
May 5, 2020
The Financial Industry Regulatory Authority (FINRA) has issued a notice urging firms and associated persons to be cognizant of the heightened threat of frauds and scams to which firms and their customers may be exposed during the COVID-19 pandemic. The notice outlines four common scams—(i) fraudulent account openings and money transfers; (ii) firm imposter scams; (iii) IT Help Desk scams; and (iv) business email compromise schemes—and describes measures that firms and associated persons may take to mitigate related risks.
Department of Housing and Urban Development/Federal Housing Administration
HUD Increases and Expands Flexibility of Funds for Public Housing Authorities to Fight COVID-19
May 5, 2020
U.S. Department of Housing and Urban Development Secretary Ben Carson announced the allocation of $380 million in supplemental administrative fee funding to all Public Housing Authorities. The two months of additional funding may be used for traditional administrative fees as well as for new costs related to protecting assisted families and employees throughout the COVID-19 pandemic.
Federal Housing Finance Agency
FHFA Extends Loan Processing Flexibilities for Fannie Mae and Freddie Mac Customers
May 5, 2020
The Federal Housing Finance Agency (FHFA) extended several loan origination flexibilities currently offered by Fannie Mae and Freddie Mac designed to help borrowers during the COVID-19 pandemic. The flexibilities are extended until at least June 30, 2020 and include: (i) alternative appraisals on purchase and rate term refinance loans; (ii) alternative methods for verifying employment before loan closing; (iii) flexibility for borrowers to provide documentation (rather than requiring an inspection) to allow renovation disbursements (draws); and (iv) expanding the use of power of attorney and remote online notarizations to assist with loan closings.
Fannie Mae
Fannie Mae Releases Lender Letters on Impact of COVID-19 on Originations and Appraisals
May 5, 2020
Fannie Mae released Lender Letters to all Fannie Mae single-family sellers on the impact of COVID-19 on originations and appraisals. The Lender Letter on Originations provides reminders and temporary flexibilities to support mortgage originations. The Lender Letter on Appraisals provides temporary flexibilities to the appraisal requirements.
Freddie Mac
Selling Requirements and Guidance Related to COVID-19
May 5, 2020
Freddie Mac has issued a Bulletin to Freddie Mac sellers that provides temporary requirements related to mortgage purchase eligibility and self-reporting requirements for mortgages in COVID-19 related forbearance, and an extension of certain previously announced temporary requirements. Additionally, the Bulletin provides guidance and reminders, including those related to furloughs and layoffs, unemployment compensation, and automated income assessment with Loan Product Advisor® using tax return data.
Ginnie Mae
Ginnie Mae Announces Pass-Through Assistance Program for Participants in the Ginnie Mae Multifamily MBS Program
May 4, 2020
Ginnie Mae issued All Participants Memorandum 20-05 (APM 20-05) that announces the expansion of its issuer assistance programs in response to the COVID-19 pandemic. The assistance is intended to minimize disruptions in the mortgage servicing and multi-family mortgage-backed securities markets as borrower forbearance and loss mitigation programs are implemented to help provide relief to renters affected by COVID-19.