April 6, 2020 

Luetkemeyer Discusses CECL Delay, CARES Act In Latest MBA Podcast Episode

The latest episode of Our Two Cents with MBA podcast features Missouri Congressman Blaine Luetkemeyer discussing the CARES Act. Luetkemeyer provides insights into the CECL delay incorporated into the act and discusses what bankers can expect from the U.S. Treasury Department and the Small Business Administration as the Paycheck Protection Program continues to roll out across the country.

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Parson Issues Executive Order For Remote, Electronic Notary

Gov. Mike Parson signed an executive order today that will allow the Missouri Secretary of State to implement some form of remote and electronic notary. It orders that the requirement of personal appearance before a notary public is suspended to the extent that any notarial act is authorized to be performed using audio-video technology, provided certain conditions are met. The order is valid until May 15, 2020, unless extended. Additional details will be posted on the secretary of state’s website in the coming days.

$13.6 Million In CDBG Funds Announced For Missouri COVID-19 Response Efforts

The Missouri Department of Economic Development announced today that it will receive $13.6 million in Community Development Block Grant funds from the U.S. Department of Housing & Urban Development to support Missouri’s COVID-19 response efforts. The CDBG funds are part of more than $57.7 million of HUD grants allocated to the state and individual communities. The state’s $13.6 million CDBG allocation will be allocated to nonentitlement areas across the state, which include incorporated municipalities under 50,000 and counties under 200,000 in population.

Fed To Establish Facility For Financing SBA PPP Loans

To facilitate loans being made through the Small Business Administration’s Paycheck Protection Program, the Federal Reserve today said it will soon create a facility to provide term financing backed by PPP loans. More details will be announced later this week, the Fed said in its brief announcement. This move, strongly advocated by the American Bankers Association, would provide PPP lenders with liquidity to ensure they can fund the up to $349 billion in PPP loans authorized by Congress in the CARES Act. It addresses one concern expressed by bankers as the PPP launched last week and as it scales up this week.

Registration For Participation In Fed’s Commercial Paper Funding Facility Now Open

The Federal Reserve Bank of New York today opened the registration process for the new commercial paper funding facility that was established by the Federal Reserve last month. Eligible issuers wishing to participate must register by Thursday, April 9, and the CPFF will begin funding purchases of commercial paper Tuesday, April 14. The N.Y. Fed also released an expanded set of FAQs about the new facility.

Through the CPFF, the Fed will provide a liquidity backstop to U.S. issuers of commercial paper, which finances a range of economic activity, including the operational needs of companies, by purchasing unsecured and asset-backed commercial paper directly from eligible companies.

Mnuchin, Top SBA Officials Answer Banker Questions on PPP

With banks across the country working through the weekend to make and fund loans through the Small Business Administration’s Paycheck Protection Program, Treasury Secretary Steven Mnuchin and several other senior Treasury and SBA officials met with banker leaders with the American Bankers Association Sunday morning to answer questions and hear feedback.
During a video teleconference with ABA board members, state bankers association executives and other ABA leadership bank CEOs, Mnuchin reiterated the importance of bankers’ role in delivering relief to small businesses amid the coronavirus pandemic. He also expressed his view that it will be important for members of Congress and the president to provide more PPP funds when the $349 billion currently allocated runs low. Mnuchin and other Treasury officials addressed numerous questions from ABA members, with answers to be reflected both in the Treasury guidance and ABA’s FAQ document.
Responding to concerns from banks that were unable to access SBA systems Friday, SBA officials emphasized that they have been balancing security and speed in providing access to the systems that allow banks to make PPP loans. As of Sunday morning, nearly 1,900 lenders had processed almost 78,000 PPP loans totaling $22 billion, the officials said, adding that up to 150 lenders are being approved to make PPP loans each hour and that new systems designed to help banks connect to SBA and process PPP loans are expected to go on line as soon as Monday.
ABA continues to share banker concerns with Treasury and SBA staff and is engaged at the highest level with agency leaders to ensure banks can efficiently respond to the massive business demand for PPP loans as the COVID-19 lockdowns continue.

Agencies Temporarily Lower Community Bank Leverage Ratio To 8%

As required by Section 4012 the CARES Act, the federal banking agencies today temporarily lowered the community bank leverage ratio, issuing two interim final rules to set the CLBR at 8% and then gradually re-establish it at 9%.

Under the interim final rules, the CBLR will be set at 8% beginning in the second quarter of 2020 through the end of the year. Community banks that have a leverage ratio of 8% or greater and meet certain other criteria may elect to use the CBLR framework. Beginning in 2021, the CBLR will increase to 8.5% for the calendar year. Community banks will have until Jan. 1, 2022, before the leverage ratio requirement to use the CBLR framework will return to 9%.

“The agencies are providing community banking organizations with a clear and gradual transition back to the 9 percent leverage ratio requirement previously established by the agencies,” regulators said in a joint press release. “This transition will allow community banking organizations to focus on supporting lending to creditworthy households and businesses given the recent strains on the U.S. economy caused by the coronavirus.”

The changes will be effective as of the publication of the rules in the Federal Register and the agencies will accept comments on the interim final rules for 45 days after publication.

Regulators Offer Flexibility To Servicers Offering Mortgage Forbearance Options

Financial regulators issued a joint policy statement granting flexibility to mortgage servicers to work with borrowers struggling as a result of the coronavirus pandemic. Under the CARES Act, servicers are required to grant payment forbearances to impacted borrowers for up to 180 days, and possibly longer.
The agencies confirmed that these forbearances can be offered in a manner consistent with Regulation X. Therefore, these forbearance offers are exempt from certain loss mitigation procedural requirements and servicers do not need to obtain a complete application before offering CARES Act forbearance to the borrower. The agencies also said they would not penalize servicers for failing to provide the required notice of acknowledgement to borrowers who submit incomplete applications within the five-day time frame described in the servicing rules, provided that the notice is given before the end of the forbearance period. The agencies also said that they would not penalize servicers for failing to provide other loss mitigation notices and outreach efforts, so long as servicers demonstrate good-faith efforts to comply “within a reasonable time frame.”
Finally, the agencies said they would not take action against servicers for delays in sending annual escrow statements, provided the servicers demonstrate good-faith efforts to comply “within a reasonable time frame.” In addition to the statement, the CFPB offered further clarification in a set of frequently asked questions regarding compliance with the servicing rules during the COVID-19 emergency.

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