Overview Of The Paycheck Protection Program Under The Cares Act (Title I)

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was enacted, an economic relief package in response to the COVID-19 pandemic. The CARES Act provides economic support at the federal level to the business sector, employees, individuals and families, and specific industries that have been impacted, including air transportation, healthcare, and education.

Summarized below are key aspects of the Paycheck Protection Program, a $349 billion SBA-administered loan and loan forgiveness program described in Division A, Title I – Keeping American Workers Paid and Employed Act of the CARES Act. Continue Reading

Troubled Debt Restructuring: Phase 3 Stimulus Bill

On March 25, 2020, the Senate passed an amendment to H.R. 748, the Coronavirus Aid, Relief, and Economic Security Act (as amended, the “CARES Act”), which (as of March 26, 2020) is being considered in the House.

The complete text of the current draft of the CARES Act can be found here. Continue Reading

SFA Urges the Fed to Include Non-Qualified Mortgages, MSRs and Unsecured Consumer Loans in revamped TALF

In order to properly address the impact of the Covid-19 crisis on today’s capital markets, the Structured Finance Association (“SFA”) is urging the Board of Governors of the Federal Reserve System and the U.S. Department of Treasury to “move as quickly as possible” to introduce a new version of the Term Asset-Backed Securities Loan Facility (“TALF”) program to include important consumer credit products and remove impediments that would delay the speed with which the program can become fully operational.  In a March 22nd letter to the Board of Governors of the Federal Reserve System and the U.S. Department of Treasury, the SFA proposed a new version of TALF, referred to as Solutions to Power the Advancement and Revitalization of Consumer Credit (“SPARCC”),  which, notably, expands the categories of assets eligible to back ABS to include non-QM mortgage loans, unsecured personal loans and MSRs.  The recommended changes include: Continue Reading

Update for Mortgage Lender Operations in California

On the evening of March 19, 2020, the Governor of California issued an order which requires all individuals living in the State to stay home or in their place of residence, except as needed to maintain continuity of operations of the federal critical infrastructure sectors, which include the financial services industry.  Governor Newsom issued a list of Essential Critical Infrastructure Workers “to help state, local, tribal, and industry partners as they work to protect communities, while ensuring continuity of functions critical to public health and safety, as well as economic and national security.”  The Mayor of Los Angeles issued a “Safer at Home” Order which temporarily prohibits events and gatherings of 10 persons or more in Los Angeles County.  “Non-Essential Retail Businesses” were ordered to be immediately closed.  “Essential Retail Businesses,” which include banks, credit unions and related financial institutions, are permitted to stay open, provided they comply with the following rules:

(1) Practice social distancing within the confined space by requiring attendees to be separated by six (6) feet;

(2) Provide access to hand washing facilities with soap and water or hand sanitizer that contains at least 60 percent alcohol;

(3) Post a sign in a conspicuous place at the public entry to the venue instructing members of the public to not attend if they are experiencing symptoms of respiratory illness, including fever or cough; and

(4) Adhere to communicable disease control recommendations provided by the Los Angeles County Department of Public Health.

 Coronavirus, employers

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Mortgage Servicing in the Time of COVID-19

The announcement last week by Freddie Mac, Fannie Mae and other agencies that they will provide mortgage loan forbearance arrangements for up to 6 months, subject to an extension of an additional 6 months, directly impacts mortgage servicers in two significant respects.  First, mortgage servicers have to quickly pivot from a stable mortgage servicing environment to a servicing environment requiring a huge influx of financial resources and people necessary to service a potentially massive number of borrower’s requiring forbearance, loss mitigation and other disaster relief measures.  Second, although there is a forbearance arrangement in place with a borrower, the mortgage servicer is still responsible for advancing monthly principal and interest payments to investors, and advancing amounts to pay for property taxes and insurance premiums when they remain unpaid by the borrower.

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Impact of COVID-19 on Municipal Finance: Restructurings Inevitable (Part 1)

“Only when the tide goes out do you discover who’s been swimming naked” – Warren Buffet

The tide has gone out on the municipal finance market.

While much of the discussion about the financial fall-out of the COVID-19 virus has focused on the massive wealth destruction in stock markets and pressure on corporates around the world, the impact on the largest financial market in the world- the $3 trillion US municipal finance market- cannot be ignored. Simply put, the market is imploding. Continue Reading

UPDATE – Lenders Encouraged to Work with Customers in Response to COVID-19 Challenges

The Federal Deposit Insurance Corporation (the “FDIC”) issued updated statements on March 19, 2020 and March 22, 2020, supplementing their earlier statement on March 13, 2020, encouraging financial institutions to take prudent steps to assist customers and communities affected by the Coronavirus Disease 2019 (“COVID-19”).

The FDIC statements and other information about the impact of COVID-19 on banking regulations can be found here.

Coronavirus; COVID-19 Continue Reading

When the “Lights Go Out on Broadway” Will the Lights on Tribal Slot Machines be Next? What Do State COVID-19 Emergency Actions Mean for Tribal Gaming Operations?

President Trump has declared a national emergency as a result of the novel coronavirus (COVID-19) pandemic, and more than 30 States have made emergency declarations in response to COVID-19. Governors of the States of California, Washington, Oregon and New York have issued executive orders or proclamations prohibiting “large gatherings,” which in California, Washington and Oregon include gatherings of 250 people or more. California’s Executive Order and accompanying public health directives include specific guidance for gambling venues.

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Force Majeure Clauses and COVID-19 – Can Force Majeure Clauses Excuse Performance Under New York or Delaware Law in a Pandemic?

With the World Health Organization declaring COVID-19 a pandemic on Wednesday, March 11, 2020, businesses are likely to continue to feel its effects.  When businesses are unable to perform their contractual obligations as a result of COVID-19, force majeure clauses may become important. Continue Reading

Dealing with the Financial Impact of the Coronavirus

With the continuing spread of the Coronavirus Disease 2019 (“COVID-19” or “coronavirus”), hospitality service providers are facing a number of issues that have already exacted a heavy financial toll. With consumers staying home and employers limiting travel, there is currently significant pressure on revenues and operating margins. Regardless of the ultimate health impact of this crisis, there is already a significant economic crisis and it may get worse before it gets better.

COVID-19; Coronavirus Continue Reading

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