Updates on the Paycheck Protection Program under the CARES Act: The SBA’s April 2, 2020 Interim Final Rule

On April 2, 2020, the U.S. Small Business Administration (SBA) released its Interim Final Rule[1], which provides further guidance on the Paycheck Protection Program (PPP) as enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. On April 2, 2020 the SBA also issued an updated sample application form.

The SBA’s Interim Final Rule clarifies, contradicts and provides additional interpretative guidance related to the CARES Act.  We highlight the following: Continue Reading

How Can the CARES Act Help My Tribe? A Briefing on Economic Stimulus for Tribes

Tribal leaders and federal officials this week will begin the task of implementing the economic relief programs of the Coronavirus Aid, Relief and Economic Security Act (or “Act”) passed by Congress on March 27, 2020.  The U.S. Department of the Interior will host the first consultations  with Tribes to discuss funding formulas and eligibility rules of the $8 billion Tribal Stabilization Fund through a teleconference on Thursday, April 2, and on Thursday, April 9. The Tribal Stabilization Fund is one of three programs in the Act that Tribes might use to mitigate the downtown of their economic enterprises. Highlights of the three programs and how they might help your Tribe and Tribal businesses follow:

U.S. Department of Treasury Tribal Stabilization Fund[1]:

  • Sets aside $8 billion of the Coronavirus Relief Fund for payments to Tribal governments for increased expenditures of the Tribal government or a tribally controlled entity of the Tribal government;
  • Payments may be used to cover costs that (i) are necessary expenditures incurred due to the COVID-19 public health emergency; (ii) were not accounted for in the most recently approved budget of the Tribal government or tribally controlled entity; and (iii) were incurred from March 1, 2020 to December 30, 2020.

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Funds Available to Businesses Under the Coronavirus Economic Stabilization Act (CARES ACT Title IV)

Major economic stabilization funds are made available to U.S. businesses (including nonprofits), states and municipalities under Title IV of the CARES Act. Title IV itself is titled the “Coronavirus Economic Stabilization Act of 2020” (referred to in this summary as “CESA”).[1]

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The CARES ACT – Tax Relief

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, or the “CARES Act” to provide nearly 2 trillion dollars in aid and relief to individuals, businesses, and other entities in the wake of the spread of COVID-19.  Included in the CARES Act are tax and loan provisions intended to provide financial relief to people and businesses suffering as a result of the disease.

The following summarizes certain key tax-related provisions in the CARES Act. Continue Reading

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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