Industry Developments

FHFA Extends Foreclosure and REO Eviction Moratoriums and COVID Forbearance Period

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On February 9, The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the “Enterprises”) are extending moratoriums on single-family foreclosures for Enterprise-backed, single-family mortgages. Moratoriums on REO eviction for properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu-of-foreclosure transactions are also extended. These moratoriums are extended until March 31, 2021. Further, borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional forbearance extension of up to three months, and COVID-19 Payment Deferral for borrowers with an Enterprise-backed mortgage can now cover up to 15 months of missed payments. Release.

Federal Reserve Board Announces the Second Extension of a Rule to Bolster the Effectiveness of the SBA’s PPP

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On February 9, The Federal Reserve Board announced the second extension to a temporary modification of the Board’s rules that allows certain bank directors and shareholders to apply to their banks for Small Business Administration Paycheck Protection Program (PPP) loans for their small businesses. The modification is intended to improve the effectiveness of the PPP. Prior to this modification, limits on the types and quantity of loans that bank directors, shareholders, officers and businesses owned by these persons can receive from their affiliated banks prevented some small business owners from accessing PPP loans. The rule extension is effective immediately and applies to PPP loans made through March 31, 2021. Release.

OCC Halts Publication of Fair Access Rule

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On January 28, the Office of the Comptroller of the Currency (OCC) announced that it would halt publication of its “fair access” rule, which would have prevented national banks from denying services to any individual customer unless justified by that customer’s documented failure to meet quantitative, impartial risk-based standards established by the bank. The rule, which was finalized by the OCC on January 14 and would have gone into effect on April 1, will be set aside for review by the next confirmed Comptroller of the Currency under the current administration. Release.

OCC, FDIC and CFPB Issue Final Rule on Role of Supervisory Guidance

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On January 19, the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) published a final rule regarding the role of supervisory guidance for regulated institutions. The final rule provides that unlike a law or regulation, supervisory guidance does not have the force and effect of law, and that the Agencies will not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. The final rule provides that the proper role of supervisory guidance is to outline supervisory expectations and priorities, or articulate views regarding appropriate practices for a given subject area. FDIC Release. OCC Release. Final Rule.

CFPB Issues Final Rule on Higher-Priced Mortgage Loan Escrow Exemption

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On January 19, the CFPB issued a final rule exempting certain insured depository institutions and insured credit unions from the requirement to establish escrow accounts for certain higher-priced mortgage loans (HPMLs). The final rule exempts from the HPML escrow requirement any loan made by an insured depository institution or insured credit union and secured by a first lien on the principal dwelling of a consumer if (1) the institution has assets of $10 billion or less; (2) the institution and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling during the preceding calendar year; and (3) certain of the existing HPML escrow exemption criteria are met. Final Rule.

CFTC Approves NFA’s Swap Dealer Capital Model Review Program

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On January 13, the Commodity Futures Trading Commission’s (CFTC) Market Participation Division determined that the National Futures Association’s (NFA) swap dealer capital model requirements and review program is comparable to the CFTC’s swap dealer capital model requirements and review program and is an acceptable means of compliance with CFTC Regulation 23.102. Release.

FHFA Further Extends COVID-Related Loan Flexibilities

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On January 13, the Federal Housing Finance Agency (FHFA) announced that it will extend several loan origination flexibilities until February 28, 2021, that were set to expire on January 31, 2021. The extended flexibilities include alternative appraisals on purchase and rate term refinance loans, alternative methods for documenting income and verifying employment before loan closing and expanding the use of power of attorney to assist with loan closings. Release.

OCC Issues Final Rule Regarding Regulatory Capital Treatment of Total Loss-Absorbing Capacity Investments

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On January 6, the OCC issued a final rule that applies to Category I and II banking organizations (advanced approaches banks), which include banking organizations and their subsidiary banks that have at least $700 billion in total consolidation assets, or $100 billion or more in total consolidated assets and $75 billion or more in cross-jurisdictional activities. The final rule requires deduction from advanced approaches banks’ regulatory capital for investments in certain unsecured debt instruments issued by bank holding companies subject to the Federal Reserve Board’s total loss-absorbing capacity and long-term debt requirements. Bulletin.

SEC Proposes Amendment to Rule 144

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On December 22, the SEC proposed to amend Rule 144. Among other things, the amendment would revise the holding period determination to the date of acquisition upon the conversion or exchange for market-adjustable securities acquired on the conversion or exchange of certain securities of issuers that do not have securities listed on a national securities exchange. The amendment would also require electronic filing of Form 144 and would eliminate the requirement to file Form 144 for resales of securities of issuers that are not subject to Exchange Act reporting. The public comment period will be open for 60 days following the publication of the proposed rule in the Federal Register. Release.

FHFA Extends COVID-19 Multifamily Mortgage Forbearance through March 31, 2021

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On December 23, the Federal Housing Finance Authority (FHFA) announced an extension of the COVID-19 relief mortgage forbearance to qualifying multifamily property owners through March 31, 2020, which was previously set to expire on December 31, 2020. The relief program also extends certain protections to related tenants. Release.