The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 7

Like our clients, Holland & Knight's Financial Services Industry Group is committed to actively contributing to our nation's response to the coronavirus (COVID-19) pandemic and related economic fallout and recovery efforts. For our part, Holland & Knight's 300-plus lawyers and professionals who comprise our Financial Services Industry Group want to ensure that bank and non-bank financial institutions, financial intermediaries and other financial services industry participants and stakeholders have access to timely, accurate and succinct updates on federal and state legislative, regulatory and administrative responses to the COVID-19 pandemic that are most relevant to our financial services clients.

To that end, we are pleased to share with you the latest edition of The RESPONSE.

Summary of Federal Reserve's Expanded $2.3 Trillion Lending Programs 

On April 9, 2020, the Federal Reserve announced additional actions to provide up to $2.3 trillion in loans to support the U.S. economy. For your convenience, we have summarized the Main Street Lending Program, Municipal Liquidity Facility, the Primary and Secondary Market Corporate Credit Facilities and the Term Asset-Backed Securities Loan Facility.

Federal Reserve Seeks Feedback on Main Street Lending Program 

The Federal Reserve is seeking feedback from lenders, borrowers and other stakeholders to ensure that the Main Street Lending Program supports the economy as effectively as possible while safeguarding taxpayer funds. Comments may be submitted until April 16 via this form. 

Treasury Secretary Clarifies Requirements for CARES Act Passenger Air Carrier Payroll Assistance 

On April 10, U.S. Treasury Secretary Steven Mnuchin clarified that passenger air carriers receiving $100 million or less of payroll assistance under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) will not be required to provide financial instruments as taxpayer compensation. Those receiving over $100 million in payroll assistance will be required to compensate taxpayers through appropriate financial instruments. 

FAQs Clarify PPP Due Diligence and BSA Beneficial Ownership Requirements 

The U.S. Small Business Administration, in consultation with the U.S. Department of the Treasury, has issued another set of Frequently Asked Questions (FAQs) providing guidance with respect to the implementation of the Paycheck Protection Program (PPP). The FAQs that explain the lenders' customer due diligence (CDD) requirements, including beneficial ownership information obligations under the Bank Secrecy Act (BSA) and how lenders can meet those requirements when issuing PPP loans. The expanded FAQs can be found on the Treasury Department website. 

CFPB Relaxes Supervisory and Enforcement Practices on Remittance Transfers 

The Consumer Financial Protection Bureau (CFPB) on April 10 released a policy statement intended to ease the impact of the COVID-19 Pandemic on the remittances market. As such, between July 21, 2020, and Jan. 1, 2021, the CFPB will not initiate enforcement actions nor cite supervisory violations against certain remittance transfer providers that will be required to disclose actual third-party fees and exchange rates under the Electronic Fund Transfer Act when the temporary exception to such disclosure expires on July 21, 2020.

CFPB Interpretive Rule Facilitates Faster COVID-19 Economic Impact Payments 

On April 13, the CFPB issued an interpretive rule explaining that COVID-19 pandemic relief payments made by federal, state or local governments are not subject to the compulsory use prohibition under the Electronic Fund Transfer Act and Regulation E if those payments 1) are made to provide assistance to the pandemic, 2) are not part of an established government benefit program, 3) are made on a one-time or limited basis, and 4) are distributed without a requirement that consumers apply to the agency to receive funds. This is intended to allow consumers to receive relief payments in a fast, secure and efficient manner if direct deposit is unavailable.

Fannie Mae Updates COVID-19-Related Mortgage Servicing Requirements 

Fannie Mae has updated Lender Letter LL-2020-02 and mortgage servicing FAQs for single-family mortgage borrowers impacted by COVID-19. Among other items, the documents clarify servicer responsibilities in establishing quality right party contact and in providing forbearance plans to customers. 

District of Columbia Requires Mortgage Servicers to Create Payment Deferral Programs 

The District of Columbia is requiring mortgage servicers (see Section 202, page 13), for the period during the public health emergency and 60 days thereafter, to provide residential and commercial loan borrowers with a deferment program that, among other requirements, 1) allows for at least a 90-day deferment period of mortgage payments, 2) waives late fees, processing fees or any other fees accrued during the pendency of the public health emergency, and 3) does not report any derogatory credit information that occurs as a result of the deferral. 

Alaska Passes Law Providing Moratorium on Foreclosures and Evictions 

Alaska has established a moratorium on foreclosures and evictions for consumers who have experienced financial hardship as a result of COVID-19. The moratorium lasts until June 30 or the end of the public health emergency, whichever comes first. 

Pennsylvania Revises Guidance on Residential Real Estate Transactions 

The Pennsylvania Department of State has revised its limited guidance, originally issued April 8, allowing for certain in-person activities for residential home purchase real estate transactions that were under a signed contract before the March 6 Emergency Disaster Declaration. The revised statement allows for in-person activities on transactions under contract as of March 18 and expands the limits on in-person activities to cover home equity and refinance transactions.

New Jersey Imposes Emergency Consumer Protections on Insurance Providers 

The New Jersey Department of Banking and Insurance on April 10 directed insurers to provide residents and businesses with grace periods for the payment of insurance premiums. Through a series of bulletins, the Department imposes various payment grace period, non-cancellation, late fee waiver and other requirements on property and casualty carriers, life insurance carriers, carriers of individual, small group and large group health insurance markets, and others.

Massachusetts Attorney General Issues Guidance Protecting CARES Act Relief Payments

On April 13, Massachusetts Attorney General Maura Healey issued guidance protecting consumers who receive CARES Act relief payments. The guidance explains that the relief payments are exempt from seizure or garnishment by creditors under Massachusetts law. Healey also signed a multistate letter sent to the U.S. Department of Treasury requesting that the agency protect CARES Act payments as they would payments under other government relief programs.

For questions, comments or additional information on any of these areas, please reach out to the Holland & Knight professional with whom you work or one of the following contacts in our Financial Services Industry Group.

About Our Financial Services Industry Group:

Participants in the financial services industry require sophisticated legal counsel to navigate a complex, ever-changing environment and respond to opportunities and challenges as they arise. With more than 300 members throughout the firm, Holland & Knight's Financial Services Industry Group has the depth and experience to effectively serve borrowers and lenders in all of their legal matters, including corporate services, international operations, labor and employment, litigation and dispute resolution, public policy and regulation, real estate and white collar defense. The combination of our thorough knowledge and a sincere commitment to provide responsive service is why clients entrust our team to handle their legal needs.

Holland & Knight has established a COVID-19 Response Team to help clients respond to a variety of business and legal issues they may be facing in this crisis. Please visit Holland & Knight's website for the latest COVID-19 news and updates important to your business.