Newsroom

May 15, 2020

5 things to know on coronavirus

capitol hillNAFCU's widely-read NAFCU Today is credit union leaders' go-to source for the latest on issues impacting the credit union industry. For those short on time, here's a roundup of this week's top need-to-know updates and resources related to the coronavirus pandemic related to the economy, paycheck protection program (PPP) fraud, housing, and more.

Many in 'precarious' situation before COVID-19

The Federal Reserve released its 2019 Survey of Household Economics and Decisionmaking (SHED) Thursday, which also included results from a special follow-up survey conducted in early April to understand some of the economic impact of the coronavirus pandemic. The 2019 survey results showed "most adults were faring reasonably well financially," but also highlighted that many were still financially vulnerable and unable to pay monthly bills or an unexpected emergency expense, putting them in a "precarious financial situation" as the coronavirus pandemic began.

The supplemental survey revealed about one-fifth of adults had either lost their job or had hours reduced in March. While 18 percent of all adults didn't think they'd be able to pay their bills in full in April, that sentiment increased to 35 percent among those whose jobs had been impacted. Review the full survey results.

Reality TV star charged with PPP fraud

A reality TV personality – from Love & Hip Hop: Atlanta – has been charged with federal bank fraud by the Department of Justice arising from a PPP loan he obtained. The PPP loan Fayne received for $2,045,800 was supposed to go toward retaining employees and other expenses as required by the PPP, according to his application. Instead, Fayne used $1.5 million of the funds within days to buy a Rolex Presidential watch, diamond bracelet, diamond ring, and pay $40,000 in child support. The DOJ previously charged two individuals with PPP fraud.

Coronavirus' toll on credit cards

New data from JPMorgan Chase revealed a 40 percent year-over-year drop in credit card spending at the end of March. The drop is largely due to decreased spending on non-essentials – such as restaurants, retail, and entertainment – which fell 50 percent. Essential spending, such as groceries, spiked nearly 20 percent at the beginning of the pandemic, but has since stabilized below normal spending levels. In addition, the report's findings indicated that the spending changes are more so a result of social-distancing and stay-at-home orders – rather than job loss – as higher-income households have shown larger drops in spending.

Foreclosure, eviction moratorium extended

The Federal Housing Finance Agency (FHFA) is extending its moratorium on foreclosures and evictions for government-sponsored enterprise (GSE)-backed single-family mortgages. The moratorium was set to expire Sunday; it has been extended through June 30, 2020. The agency said it will continue to monitor the coronavirus situation and update policies as needed. It recently extended some of its relief efforts related to appraisals, verifying employment, providing documentation, and use of power of attorney and remote online notarizations.

NAFCU President and CEO Dan Berger recently spoke with FHFA Director Mark Calabria about the agency's efforts, as well as the impact significant forbearance requests could have on credit unions and other mortgage servicers. The association will continue working with the FHFA, Treasury, and Congress as additional efforts to support homeowners are pursued to ensure credit unions' concerns are addressed.

Hood makes legislative requests to support industry

NCUA Chairman Rodney Hood participated in a virtual roundtable with the House Financial Services Consumer Protection and Financial Institutions Subcommittee earlier this week, during which he outlined the state of the industry, efforts from the NCUA to provide relief amid the coronavirus pandemic, and additional ways Congress can support credit unions.

In his written testimony, Hood explained the NCUA's efforts to expand access to its Central Liquidity Facility (CLF) – as mandated by the CARES Act – provide guidance on small dollar lending and other ways to support borrowers and consumers, examination flexibility, handling loan modifications, encourage use of the PPP, and more. He also detailed initiatives to support minority depository institutions and Community Development Financial Institutions, as well as legislative requests, many of which are supported by NAFCU, including:

  • making CLF changes permanent;
  • temporarily reducing minimum capital standards;
  • temporarily raising the member business lending cap;
  • permanently increasing credit unions' loan maturity limit; and
  • permanently allowing all credit unions to add underserved areas to their fields of membership.

Rep. Blaine Luetkemeyer, R-Mo., also commended Hood on his request that credit unions be exempt from the current expected credit loss standard. Hood testified before the Senate Banking Committee this week; NAFCU sent letters to both committees outlining areas credit unions would like more relief.