#2021-13, April 16, 2021

SBA Issues Notice Extending PPP, FAQs Clarifying Eligibility for Borrowers in Bankruptcy

Late last week, the Small Business Administration (SBA) issued a procedural notice to lenders regarding the extension of the Paycheck Protection Program due to enactment of the PPP Extension Act of 2021.  The notice states that SBA will shut down the PPP platform to new loan guaranty applications at 12 a.m. EDT on June 1.  The agency will have another 30 days – until 12 a.m. EDT on July 1 -- to process any pending applications.

In addition to the procedural notice, the SBA also issued an update to its frequently asked questions providing additional clarity about when an applicant or owner is no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes.  According to the FAQs, Chapter 7 bankruptcy filers will no longer be considered “presently involved in any bankruptcy,” after the bankruptcy court enters a discharge order in the case. For Chapter 11, 12, or 13 bankruptcy filers, the court must enter an order confirming the plan in the case.

If a bankruptcy court has entered an order dismissing the case in any form of bankruptcy, applicants or owners will no longer be considered “presently involved in any bankruptcy” for purposes of the PPP. SBA noted that “the discharge order, the order confirming the plan or the order of dismissal, whichever is applicable, must be entered before the date of the PPP loan application.”

To read the procedural notice, click here.  To read the FAQs, click here.

Fannie, Freddie Announce Effective End of ‘GSE Patch’

Fannie Mae and Freddie Mac recently issued lender letters announcing that any loans purchased by the GSEs after July 1 must conform to the requirements outlined in the Consumer Financial Protection Bureau’s recently finalized QM final rule.  This announcement essentially ends the so-called “GSE-patch.”

The change was required by recent amendments to the GSEs’ preferred stock purchase agreements with the Treasury Department, which detail that Fannie and Freddie may no longer acquire loans that do not meet these new standards. Fannie and Freddie clarified, however, that they will continue to buy loans that fall under the patch that have application dates on or before June 30 and are purchased as whole loans on or before August 31 or in mortgage-backed securities pools with an issue date on or before August 1.

The release of the lender letters comes shortly after the CFPB proposed to delay the mandatory compliance date of the general QM rule until October 1, 2022. If finalized, this delay means the GSE safe harbor can continue under the new general QM requirements until the new compliance date or until the GSEs exit conservatorship, whichever comes first.

To read the Fannie Mae lender letter, click here.  To read the Freddie Mac letter, click here.

FDIC Re-opens RFI on Signage, Advertising Requirements

The Federal Deposit Insurance Corporation (FDIC) recently re-opened its Request for Information (RFI) seeking input on modernize and revise its official sign and advertising rules.  The agency first issued the request for information last year, but the initiative was sidelined due to the pandemic.

In addition to the signage and advertising rules, the RFI also asks for feedback on how technological or other solutions could be used to help consumers better distinguish FDIC-insured banks and savings associations from entities that are not insured by the FDIC, particularly across web and digital channels.  Comments on the RFI are due May 24.

To read more and download the RFI, click here.

Gensler Confirmed as SEC Chairman

By a vote of 52 to 45 this week, the Senate confirmed Gary Gensler to serve as chairman of the Securities and Exchange Commission (SEC). Gensler previously served as chairman of the Commodity Futures Trading Commission from 2009 to 2014, where he led rulemaking to implement several Dodd-Frank Act reforms to swaps and derivatives markets.

Members Invited to Participate in MassHousing Symposium

On Wednesday, April 28 from 11:30 a.m. to 5:00 p.m., MassHousing is hosting A Path Forward: Crafting a Just Housing System for the Commonwealth.  This virtual symposium, which is open to all member bankers, will discuss policies and practices for building a just housing system for Massachusetts communities.

The event features five discussion sessions with talented practitioners working to address racial disparities in housing and promote economic empowerment for people of color. The sessions will cover:

• Closing the racial homeownership gap 
• Supporting renters through the pandemic
• Diversity, equity and inclusion in the workplace 
• Supporting diverse businesses in the housing ecosystem 
• Recent changes in federal and state housing policies 

To view the full schedule, learn more about the sessions and register, visit the A Path Forward: Crafting a Just Housing System for the Commonwealth event page.