5 things to know this week
NAFCU'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 news, including new procedural notices from the Small Business Administration (SBA) on the paycheck protection program (PPP) related to second-draw loan applications for "unresolved borrowers," and new priorities for the CFPB.
Resolving PPP issues
The SBA announced that it started processing new second-draw PPP loan applications for unresolved borrowers – those who had an issue with their first-draw loan – Wednesday. These second-draw loans will be automatically moved to "research status" and lenders may have to submit additional documentation to resolve issues. Applications with that can't be resolved should be withdrawn from the platform by lenders. Second-draw applications that were rejected before Jan. 27 because of unresolved issues can be resubmitted.
In addition, the SBA released three other procedural notices this week:
- Modifications for 7(a) and 504 loans: This implements changes from the Consolidated Appropriations Act (CAA) to increase the loan guarantee to 90 percent for 7(a), 7(a) small, preferred lender program, and community advantage (CA) pilot program loans. This increase expires Oct. 1, 2021, and will automatically revert to the previous level.
- Elimination of 504 fees: Certain 504 fees are temporarily eliminated until Sept. 30, 2021.
- Extension of payment deferral: This procedural notice extends the deferment of payments for 7(a), 504, and microloan borrowers under Section 1112 of the CARES Act. The SBA has sent letters to eligible borrowers who had an approved loan up until Sept. 27, 2020.
CFPB acting director focused on COVID relief, fair lending, more
CFPB Acting Director Dave Uejio yesterday published a blog outlining "the new priorities and focus of the CFPB," which include relief for consumers facing hardship due to the coronavirus pandemic and economic crisis, and racial equality. Uejio flagged some concerning examination findings related to mortgage and student loan forbearance, payment deferments, PPP, and other CARES Act provisions. For the bureau's Supervision, Enforcement, and Fair Lending division, Uejio said it will expedite enforcement investigations related to COVID-19 and penalties may be assessed.
He also indicated the bureau will begin supervising lenders related to the Military Lending Act and plans to "rescind public statements conveying a relaxed approach to enforcement of the laws in our care." The bureau in August 2018 – under Acting Director Mick Mulvaney – indicated it would no longer examine financial institutions for compliance with the law as it didn't have explicit authority. Former CFPB Director Kathy Kraninger subsequently sent draft legislation to Congress that would give the bureau clear authority to supervise for MLA compliance.
CUs participating in FedNow pilot program
The Federal Reserve announced this week that more than 110 participants from the FedNow Community are participating in the FedNow Service's pilot program. Several credit unions and corporate credit unions are among the participants; see the full list here.
The Fed in October began recruiting financial institutions, service providers, and payment processors to participate in the pilot program to support the development, testing, and adopting of the real-time payments system. The program is set to include three phases: Advisory, testing, and closed-loop production.
NAFCU has previously shared with the Fed ways in which credit unions and their members would benefit from affordable faster payments capabilities and has encouraged an accelerated launch. The association's Cybersecurity and Payments Committee engaged in early discussions with Fed representatives to discuss features and strategies that would promote early adoption. The Fed last year provided an update, announcing that the FedNow Service's target release date is 2023 or 2024.
ICYMI: NAFCU updates SIF analysis
As credit unions prepare for the year ahead, NAFCU has released an updated analysis of the National Credit Union Share Insurance Fund (NCUSIF). NAFCU believes the fund entered the COVID-19 pandemic in a strong position and expects the equity ratio will remain under moderate stress in 2021 due to strong share growth and low interest rates.
The updated analysis reviews the NCUSIF performance in 2020, the prospects for a premium charge in 2021, and some long-term issues to watch. Access this member-only resource here.
Senate Banking Committee hears from HUD nominee
The Senate Banking Committee Thursday held a hearing to consider the nominations of Marcia Fudge to serve as secretary at the Department of Housing and Urban Development (HUD) and Cecilia Rouse to serve as chair of the Council of Economic Advisers.
During the NAFCU-monitored hearing, Fudge indicated affordable housing, housing equality, and pandemic relief would be among her priorities at HUD. She also said she believes in a "holistic and collaborative" approach between the federal housing regulators as it relates to housing finance reform, but did not provide additional details. NAFCU is a leader in housing finance reform efforts and will continue to work closely with the federal regulators, agencies, and Congress to ensure credit unions' concerns are addressed as the GSEs rebuild capital and move toward the end of their conservatorship.
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