April 21, 2020
Senate Clears $320B In Additional Funding For PPP
After bipartisan negotiations, the Senate this afternoon unanimously passed legislation to provide more than $320 billion in new funding for the Small Business Administration’s Paycheck Protection Program. The House must now approve the bill, which it is expected to do in a floor vote later this week.
Of the more than $320 billion appropriated for PPP loans, a minimum of $30 billion will be set aside for community development financial institutions, banks and credit unions with less than $10 billion in assets. Another $30 billion at least will go to banks and credit unions with assets between $10 billion and $50 billion. (Institutions in these categories may originate PPP loans above these levels.) The bill also includes an additional $60 billion in funding for the SBA’s Economic Injury Disaster Loan program and provides long-sought clarity that agricultural businesses may apply for EIDL funds.
American Bankers Association President and CEO Rob Nichols welcomed the news.
“Thanks to the tireless efforts of America’s banks, nearly 1.7 million small businesses have already received an average PPP loan of $206,000, according to the Treasury Department,” he said. “Unfortunately, millions of other small businesses desperate for assistance were still waiting for help when the SBA funds ran dry, which is why this legislation is so critical.
“America’s banks will continue to stand by their small business customers and do everything they can to deliver this relief quickly and efficiently, saving jobs and limiting the economic damage from this pandemic,” he added.
ABA Joins Broad Coalition Seeking Clarity On Garnishment Of Economic Impact Payments
The American Bankers Association today joined a broad coalition of financial trade and consumer organizations in a letter
to congressional leaders urging them to exempt the CARES Act economic impact payments from garnishment orders. Although the CARES Act exempted these payments from offset for debts owed to federal and state agencies (except for child support), it failed to address court-ordered garnishments to pay creditors, the groups noted.
“Banks are obligated to comply with garnishment orders unless lifted by a court,” the groups emphasized. “We urge Congress to provide this certainty to ensure that American families are receiving these benefits as intended.”
They added that clarifying the treatment of EIPs also could encourage more consumers to provide their direct deposit information to the IRS, which would facilitate the use of electronic payments rather than digital checks, something ABA has advocated since the EIP program was first announced.
Processing EIPs: Why Banks Should Talk To Their Cores
As banks continue to help the federal government deliver more than 150 million economic impact payments to eligible recipients, many banks are taking extraordinary steps to ensure customers can access their full economic impact payment, including customers with a negative checking account balance.
An American Bankers Association inquiry to 23 core providers found that while each provider is managing the operational challenges differently, banks wishing to prevent EIPs from being automatically applied to any negative account balances will generally need to implement new procedures. Banks should proactively reach out to their core provider to understand their options for this current round of EIPs and for another possible next wave of payments in the future.
FHFA To Limit Servicers’ Payment Advancement Obligations To MBS Investors Because Of Pandemic
In a move to support mortgage markets today, the Federal Housing Finance Agency announced
it will limit servicers’ obligations to advance payments to mortgage-backed securities investors to four months. After four months, the GSEs will assume payment responsibility.
With this announcement, FHFA has aligned Fannie Mae and Freddie Mac’s policies on servicer obligations to advance scheduled principal and interest payments for single-family mortgage loans. The agency also clarified that loans in forbearance because of the coronavirus will not be purchased out of MBS pools by Fannie and Freddie. Rather, they will be treated as a natural disaster event and remain in the pool, reducing potential liquidity demands on the GSEs.
This marks the latest step the FHFA has taken to support mortgage markets during the pandemic. The agency noted that it would “continue to monitor the impact of the coronavirus national emergency on the housing finance market” and make policy updates as needed.
GSEs Release Lender Scripts To Guide Borrowers Through Forbearance Options
With many borrowers seeking forbearance options because of the coronavirus pandemic, Fannie Mae
and Freddie Mac
have each released optional scripts for servicers to use when communicating with customers facing financial hardship. The scripts provide tips for determining the nature of a customer’s financial hardship and provide talking points that explain the GSEs’ forbearance options.
N.Y. Fed To Host Virtual Forum On Coronavirus’ Effect On LMI Communities
The Federal Reserve Bank of New York will host an online forum
at 1 p.m. Thursday, April 23, to address the effects of the coronavirus pandemic on low- and moderate-income communities. Leaders from the nonprofit, philanthropy, community development, policymaking and financial sectors will discuss the disparate impact of the health crisis and the imminent needs of LMI communities. It also will discuss the Fed’s response to the crisis thus far. Registration is open to the public although space is limited.