REGULATORY DEVELOPMENTS

CFPB Rescinds Statement of Policy Regarding Prohibition on Abusive Acts or Practices

On March 11, the CFPB announced the rescission of its Statement of Policy Regarding Prohibition on Abusive Acts or Practices issued on January 24, 2020. The 2020 Statement of Policy provided a framework for the CFPB’s exercise of its supervisory and enforcement authority to address abusive acts or practices and was intended to clarify what was regarded by many to be an unclear standard. However, in rescinding the Statement of Policy, the CFPB indicated that, based on its experience, the principles set forth in the Statement of Policy do not actually deliver clarity to regulated entities and further concluded that the Statement of Policy undermined deterrence, was inconsistent with the CPPB’s duty to enforce the standards established by Congress in Section 1031(d) of the Dodd-Frank Act, and was contrary to the CFPB’s mission to protect consumers. The CFPB also indicated that it intends to exercise its supervisory and enforcement authority, while considering good faith, company size and all other factors that the CFPB typically considers in applying its prosecutorial discretion. The rescission has been interpreted by many as a signal that the CFPB intends to increase its enforcement activity in this area.

Agencies Release Proposed New Interagency Questions and Answers Regarding Private Flood Insurance

On March 11, the Board of Governors of the Federal Reserve System, Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation, National Credit Union Administration and Farm Credit Administration requested public comment on 24 proposed Interagency Questions and Answers Regarding Private Flood Insurance. The proposal is intended to help lenders comply with the agencies’ joint rule promulgated in 2019 to implement the private flood insurance provisions of the Biggert-Waters Flood Insurance Reform Act of 2012. The proposal incorporates new questions and answers in a number of areas including:

• Mandatory Acceptance;
• Discretionary Acceptance, and
• Private Flood Insurance General Compliance.

These Questions and Answers would supplement the 118 Interagency Questions and Answers Regarding Flood Insurance that the agencies proposed on July 6, 2020. Comments will be accepted for 60 days after publication in the Federal Register.

SBA Updates Guidance for Lenders on Revising Schedule C PPP Applications

On March 12, the SBA updated its Paycheck Protection Program FAQs and calculation guidance documents to reflect new options available to PPP applicants filing Schedule C, including self-employed individuals, sole proprietors and independent contractors, to use gross income to calculate their loan amount. The updated FAQs added a new FAQ 66, which addresses the options that lenders have to assist Schedule C filers who have already submitted a PPP loan application to use gross income to calculate their PPP loan amount.