The RESPONSE: Federal and State Actions Affecting the Financial Services Industry - Edition 9

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.

Paycheck Protection Program Liquidity Facility Is Operational, But PPP Funds No Longer Available

The Federal Reserve announced on April 16, 2020, that the Paycheck Protection Program Liquidity Facility (PPP Facility) is available to provide liquidity to eligible financial institutions by extending credit to financial institutions that make PPP Loans. PPP Facility documents, including the applicable term sheet, letter of agreement, transmittal form and more can be found on the PPP Facility webpage.

The Federal Reserve's announcement comes as the U.S. Small Business Administration (SBA) announced it could no longer accept new applications as funding is no longer available. U.S. Treasury Secretary Steven Mnuchin and SBA Administrator Jovita Carranza have urged Congress to appropriate more funds to the PPP.

Federal Banking Regulators to Hold Webinar on Interagency Statement on Loan Modifications

The Federal Deposit Insurance Company (FDIC), Federal Reserve, Office of the Comptroller of the Currency (OCC) and the National Credit Union Administration (NCUA) will host a webinar on Friday, April 24, from 3 p.m. to 4 p.m. EDT to discuss the revised Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus published on April 7, 2020. The webinar will address accounting and regulatory reporting considerations in light of the April 7 statement, particularly how current accounting principles interact with Section 4013 of the CARES Act. Details for registration can be found in the FDIC press release.

FDIC Temporarily Postpones Updates to Signage and Advertising Requirements

The FDIC announced that it is postponing its efforts to modify signage and advertising requirements. The FDIC intends to update the rules to better reflect evolving banking business models that incorporate physical, digital and mobile banking solutions, and had published a request for information in the Federal Register seeking input regarding potential changes.

OCC Guidance on FEMA Force-Place Insurance Facilitates a Consistent Approach

The OCC has issued guidance aligning the grace period after which flood insurance must be force-placed with the 120-day grace period recently announced by the Federal Emergency Management Agency (FEMA). As borrowers are late on mortgage payments, flood insurance premiums may become unpaid. Flood insurance regulations require the lender to avoid a lapse in coverage and "force-place" flood insurance. Servicers instantly observed that the FEMA grace period may not be consistent with banking regulator flood insurance regulations. The OCC guidance resolves that inconsistency.

FFIEC Announces Computational Tools to Facilitate Rate Compliance

The Federal Financial Institutions Examination Council (FFIEC) – consisting of the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), FDIC, NCUA, OCC and the State Liaison Committee – has released the Annual Percentage Rate (APR) Computational Tool and the Annual Percentage Yield (APY) Computational Tool to facilitate regulatory supervision and financial institution compliance with applicable laws and regulations, such as the Truth in Lending Act and the Military Lending Act. The new tools replace the Annual Percentage Rate Calculation Program for Windows (APRWIN) and Annual Percentage Yield Calculation Program for Windows (APYWIN) used by the Office of the Comptroller of the Currency.

CFPB Issues Final Rule on Data Reporting Thresholds Under HMDA

The CFPB released a 157-page final rule that raises the loan-volume coverage threshold for collecting and reporting data under the Home Mortgage Disclosure Act (HMDA). The threshold for reporting data on closed-end mortgage loans is raised from 25 to 100 and the threshold for open-end lines of credit is raised from 100 to 200, with varying effective dates. The CFPB believes this rule will lessen the regulatory burden on smaller financial institutions and will allow such institutions to focus on responding to consumer needs. The CFPB has provided an executive summary of the rule.

Texas Issues Advisory Bulletin on Coronavirus Emergency Measures

The Texas Office of Consumer Credit Commissioner has issued a revised OCCC Advisory Bulletin B20-2 addressing COVID-19-related emergency measures affecting regulated lenders. Among other items, the bulletin 1) moves the deadline for filing annual reports from May 1, 2020 to June 1, 2020, 2) urges lenders to work with borrowers affected by the crisis by, among other measures, providing workout options and waiving fees, 3) provides direction regarding the use of electronic signatures and 4) gives instructions for conducting certain regulated lending activities from unlicensed activities.

Massachusetts Division of Banks Issues Industry Notice on Cybersecurity

The Massachusetts Division of Banks issued an industry notice providing tips that financial institutions may use to improve cybersecurity readiness. The notice focuses on the role of people, processes and technology in fighting increased cybercrimes that occur during times of crisis.

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.