[co-author: Brennan Meier]
SEC DIVISION OF INVESTMENT MANAGEMENT ENDS CERTAIN COVID-19 RELIEF
On April 16, the staff of the SEC’s Division of Investment Management provided notice that certain temporary relief provided in response to the COVID-19 pandemic will be terminated or withdrawn. Specifically, the staff announced that the following order and no action letters would be terminated or withdrawn, respectively, effective April 30, 2021:
- The conditional exemptive order providing temporary flexibility to obtain short-term funding to (1) registered open-end management investment companies other than money market funds and (2) insurance company separate accounts registered as unit investment trusts;
- A no-action letter addressing the ability of certain affiliates to purchase securities from a money market fund; and
- A no-action letter addressing the ability of certain affiliates to purchase debt securities from a mutual fund.
CFPB ISSUES INTERIM FINAL RULE TO PROTECT TENANTS FROM EVICTIONS
On April 19, the CFPB issued an interim final rule, effective May 3, 2021, requiring debt collectors to provide clear and conspicuous written notice to tenants — not including texts or emails — of the tenant’s rights under the CDC’s eviction moratorium. The notice must be provided on the same date as the eviction notice, or, if no eviction notice is required by law, on the date that the eviction action is filed. The rule also prohibits debt collectors from misrepresenting tenants’ eligibility for protection from eviction under the moratorium.
The CDC’s moratorium, extended through June 30, 2021, prohibits landlords, or a landlord’s agent or attorney acting as debt collector on behalf of the landlord or owner of the residential property, from evicting tenants for non-payment of rent, if the tenant submits a written declaration that the tenant is unable to afford full rental payments and would likely become homeless or have to move into a shared living setting. Debt collectors who fail to abide by this rule can be prosecuted by federal agencies and state attorneys general for violations of the Fair Debt Collection Practices Act (FDCPA). The FDCPA also provides a private right of action against debt collectors, including class actions, and violators can be held liable for actual damages, statutory damages and attorney’s fees. The CFPB’s rule does not preempt more protective state law. To assist with compliance, the CFPB has provided debt collectors with sample disclosure language.
“No one should be evicted from their home without understanding their rights, and we will hold accountable those debt collectors who move forward with illegal evictions. We encourage debt collectors to work with tenants and landlords to find solutions that work for everyone.”
– CFPB Acting Director Dave Uejio
CFPB UPDATES DEBT COLLECTION RULE SMALL ENTITY COMPLIANCE GUIDE
The CFPB has updated its Debt Collection Rule Small Entity Compliance Guide to reflect changes from a December 2020 Final Rule under the FDCPA. In addition to miscellaneous administrative changes, the CFPB:
- Added Section 10.5 to discuss the prohibition against legal action and Section 10.6 to discuss threats of legal action to collect on time-barred debt and the prohibition on passive collection;
- Added Appendix A to include an annotated version of the model validation notice that debt collectors can use to obtain safe harbor with respect to validating information about a debt to a consumer;
- Updated Section 12.4 to incorporate reference to the safe harbor and Section 12.5 to include reference to the requirements applicable when the current creditor and the original creditor are the same; and
- Revised the introduction and overview to include discussion of December 2020 Final Rule and Section 12 to incorporate requirements and provide guidance on providing validation information.
On April 7, to give affected parties more time to comply due to the ongoing COVID-19 pandemic, the CFPB issued a Notice of Proposed Rulemaking to delay by 60 days the effective date of both the December 2020 Final Rule and October 2020 Final Rule from November 30, 2021 to January 29, 2022.
OCC UPDATES ALLOWANCE FOR CREDIT LOSSES HANDBOOK
The OCC recently updated the “Allowances for Credit Losses” booklet of the Comptroller’s Handbook for national banks, federal savings associations and federal branches and agencies of foreign banking organizations (banks) following the CECL methodology. The OCC will use the booklet to perform reviews beyond the core assessment in the “Community Bank Supervision,” “Federal Branches and Agencies Supervision,” and “Large Bank Supervision” booklets of the Comptroller’s Handbook. In addition to containing general information regarding allowances for credit losses, the booklet describes the scope of the CECL methodology, risks associated with allowances for credit losses and the seven primary components used to estimate allowances for credit losses (i.e., data, segmentation, contractual term of financial assets, credit loss measurement method, reasonable and supportable forecasts, reversion period, and qualitative factor adjustments).
The OCC will continue to follow the “Allowance for Loan and Lease Losses” booklet of the Comptroller’s Handbook when supervising banks that have not yet adopted CECL.
SBA UPDATES GUIDANCE ON DEADLINES FOR PPP EXTENSION
On April 20, the SBA issued a procedural notice addressing revised PPP-related deadlines resulting from the enactment of the Extension Act. The Extension Act extended the PPP application deadline to May 31, 2021 and permitted the SBA to process pending applications through June 30, 2021. The procedural notice addresses the following specific circumstances:
- Increases on First Draw PPP Loans approved on or before August 8, 2020 to Eligible Partnerships, Seasonal Employers, and Farmers and Ranchers;
- Reapplications by Eligible Borrowers that Fully Repaid a First Draw PPP Loan before December 27, 2020;
- Re-disbursements to Eligible Borrowers that Returned Part of a First Draw PPP Loan before December 27, 2020;
- Increases for Eligible Borrowers that did not accept the Full Amount of a First Draw PPP Loan for which they were Approved on or before August 8, 2020; and
- Procedures when these types of PPP loans are delayed by SBA hold codes.