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CURRENT Newsletter | 19 May 2020

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Headline News

Advocacy / Governmental Affairs News

Compliance / Regulatory Affairs News

Pandemic Response News

Security / Fraud Prevention

News From Credit Unions

Headline News

League to Host Regional, Virtual Meetings Next Week to Facilitate CU Discussion on Pandemic Response Issues

Your League is hosting a series of virtual meetings next week for each of our four geographic regions. All meetings are free to participants.

The schedule is as follows:

If you operate branch locations in multiple regions, feel free to join any of the discussions you might find beneficial.

Possible topics: 

  • Policies
  • Communication tools/signage for both employees and members
  • PPE (Masks and gloves) (Are you supplying to employees? Are they offering these to members, and are they paying for them?)
  • Lobby traffic – how many members in the branch at once? Appointment only?
  • How to identify members with masks
  • How to control social distancing (how to deal with open branch concepts or pods)
  • Sanitizing solutions, ventilation improvement – where are you purchasing supplies?
  • Sneeze guards – who supplies them?
  • Employee/member exposure – how they are handling issues?
  • Privacy issues

Amendment to District of Columbia COVID-19 Emergency Legislation Creates New Requirements for Mortgage Lenders

An amendment to the District of Columbia’s COVID-19 emergency legislation was enacted on May 4, 2020 that impacts credit unions with mortgage loans in DC. In particular, the amendment makes “mortgage lenders” covered entities under the emergency legislation, such that they must develop a deferment program for mortgage borrowers. (The prior law had applied this requirement just to “mortgage servicers”).  The amendment also requires mortgage lenders to give notice to the Commissioner of the Department of Insurance, Securities, and Banking (“Commissioner”) of all approved mortgage loan deferral applications.

Under the amended legislation, any mortgage lender that “makes or holds” mortgages in DC must develop a deferment program that: (i) grants at least a 90-day deferment period for qualified borrowers; (ii) waives any late fee, processing fee, or any other fees that accrue in connection with the deferral; and (iii) does not report to a credit bureau any delinquency or other derogatory information as a result of the deferral. The legislation also specifies application criteria and procedures a mortgage lender must develop and follow with respect to deferral requests from borrowers. 

Credit unions with mortgage loans in DC will want to ensure that they are adhering to these requirements.

Learn more

(League password required. Register here, if necessary.)

FREE League Virtual Call May 20: Managing Pandemic-Related Collections, Bankruptcy Matters

Join our virtual call May 20 with attorney Eddie Whitlock on collections, bankruptcy and court system issues related to the pandemic. The presentation will cover key issues such as foreclosures, repossessions, late payments, modifications and more. We’ll also cover the anticipated uptick in bankruptcies.


FREE Webinar May 27: Compliance Hot Topics

Your League is hosting a Compliance Hot Topics webinar with attorney Jay Spruill, who leads our compliance hotline. Join us on May 27, at 11 a.m.


Topics will include:

  • Holding annual member meetings, board meetings, and other meetings through remote participation: legal and compliance issues
  • Emerging Issues under the Paycheck Protection Program for lenders, including loan forgiveness
  • Legal and regulatory considerations for dealing with troubled borrowers and loans in default as a result of COVID-19
  • Protecting the credit union and its members from new fraud scams as a result of COVID-19
  • New regulatory guidance on compliance obligations in response to COVID-19

Advocacy / Governmental Affairs News

MBL Changes Would Provide $5B for Businesses, Create 50K Jobs

Credit unions can bring billions of dollars into the economy with no cost to the government, CUNA Chief Advocacy Officer Ryan Donovan wrote to all 535 Congressional offices Monday. Donovan highlighted how Congressional changes to the credit union member business lending cap of 12.25% of assets can help America’s communities as they recover from the pandemic.

“You can have a direct impact on rebuilding America’s communities by temporarily removing the statutory business lending cap on credit unions,” Donovan wrote. “Taking action now will free up $5 billion to lend to small businesses [and] create 50,000 jobs to support local employers.”

Donovan linked to a CUNA advocacy document outlining how credit unions are positioned to deploy capital to small businesses and entrepreneurs around the country.

Learn more

Compliance / Regulatory Affairs News

CFPB Releases FAQs Highlighting FIs Regulatory Responsibilities under COVID-19

The Consumer Financial Protection Bureau (CFPB) last week issued a statement and released two FAQ documents to highlight existing regulatory flexibilities for financial firms to quickly assist consumers affected by the pandemic.

First, the CFPB issued FAQs focusing on existing regulatory flexibilities in Regulations E and DD, which may be useful for providers of checking, savings, or prepaid accounts who wish to quickly help their customers.

Second, the Bureau issued FAQs focusing on existing regulatory flexibilities for open-end credit (that is not home-secured) in Regulation Z that may be useful for quickly assisting customers.

The CFPB has also issued a statement outlining the billing error responsibilities of credit card issuers and other open-end non-home secured creditors, and the Bureau’s flexible supervisory and enforcement approach during the COVID-19 pandemic regarding the timeframe within which creditors complete their investigations of consumers’ billing error notices.

Pandemic Response News

Federal Reserve to Host Webinar Sessions May 20 on PPP Liquidity Facility

The Federal Reserve (Fed) is set to host two webinar sessions on its Paycheck Protection Program Liquidity Facility (PPPLF) titled “Update on Pledging Purchased Loans and Operational Details on the Paydown Process for All Eligible PPPLF Participants.” The first of the May 20 webinars will be shown at noon (ET); the second will be at 3 p.m. (ET). They are intended for all eligible PPPLF participants (i.e., all SBA-qualified PPP lenders) and will both provide an update on pledging purchased loans to the facility and discuss operational details on the paydown process. 

The PPPLF supports the Small Business Administration’s Paycheck Protection Program (PPP) by supplying liquidity to financial institutions eligible to make PPP loans to small businesses. The PPPLF provides nonrecourse advances to these financial institutions by using PPP loans as collateral. The sessions will feature senior officials from both the Board of Governors and Federal Reserve Banks. 

Questions may be emailed in advance of either session at questions@askthefed.org. The presenters will take questions during the sessions as well, but questions received in advance will receive priority. 

Due to expected high demand, the Fed recommends each institution register no more than two representatives to attend one of the live sessions. 

  • Registration for the May 20, 2020, 12 p.m. ET session is now open. 
  • Registration for the May 20, 2020, 3 p.m. ET session is now open. 

PPP Lending Tops $500 Billion

Credit unions are doing their part in making Paycheck Protection Program loans, according to data from the U.S. Treasury. 692 CUs with less than $1 billion in assets originated 52,373 loans of $3.5 billion, through May 16. There isn’t a further breakdown on lending by credit unions larger than $1 billion in assets.

Small banks have approved a plurality of emergency small business loans, with several taking advantage of the Federal Reserve's liquidity facility for funding.

The data for all lenders shows 4.3 million PPP loans totaling $513.27 billion have been approved through May 16.

Learn more

SBA, Treasury Release More Guidance on PPP Loan Forgiveness

More than two weeks after a congressional deadline passed, the Small Business Administration and the Treasury Department late Friday released the application borrowers will use to seek forgiveness for Paycheck Protection Program loans, along with detailed instructions for its completion.

The 11-page application document contains measures that will benefit borrowers, including an option that lets small businesses calculate payroll costs using an “alternative" eight-week covered period that aligns with their regular payroll cycles. It also includes an exemption from the loan forgiveness reduction for borrowers who have made "a good-faith, written offer to rehire workers that was declined." (Credit Union Journal, May 15)

RELATED: PPP implementation continues to create issues for CUs

ATM Fleets Feeling the Brunt Force of COVID-19

Nearly half of the respondents to a survey on the effects of the coronavirus on the ATM industry said they’ve only been able to operate 75% of their machines during the pandemic.

About 27% of those surveyed reported being forced to get by with less than 50% of their ATMs in operation. Twenty-three percent of that group said they’ve had to survive with less 25% of their ATM fleet up and running.

And a quarter of those surveyed reported that they been able to run 50% to 75% of their ATM fleet.

The survey respondents included Independent ATM Deployers (39% of the respondents), hardware and software vendors (19% of respondents) and banks, SFIs and credit unions (14% of respondents), according to the ATMIA, a global not-for-profit trade association with more than 12,000 members in 70 countries, which conducted the survey. (Credit Union Times, May 14)

Snapshot of YOY Performance of 10 Largest CUs Shows Impact of Pandemic

The 10 largest credit unions at the end of 2019 saw, in aggregate, increases in provisions for loan and lease losses and allowance for loan and lease losses in the first quarter of 2020 compared to a year earlier. These 10 credit unions accounted for almost 18 percent of the system's assets.

  • In aggregate, provisions for loan and lease losses grew by 47.2 percent.
  • Net income fell by a combined 55 percent year-over-year at these 10 credit unions. Two credit unions reported a year-over-year increase in net income, while two credit unions posted losses in the first quarter of 2020 after posting positive earnings a year earlier.
  • Allowance for loan and lease losses grew year-over-year by a combined 19.5 percent.

Learn more

Security / Fraud Prevention

Alert: Massive Fraud Against State Unemployment Insurance Programs Spreading

The United States Secret Service has received a report of a well-organized Nigerian fraud ring exploiting the COVID-19 crisis to commit large-scale fraud against state unemployment insurance programs. The primary state targeted so far is Washington, while there is also evidence of attacks in North Carolina, Massachusetts, Rhode Island, Oklahoma, Wyoming, and Florida. It is extremely likely every state is vulnerable to this scheme and will be targeted if they have not been already.

In the state of Washington, individuals residing out-of-state are receiving multiple ACH deposits from the State of Washington Unemployment Benefit Program, all in different individuals’ names with no connection to the account holder. We have reports from EPCOR members who have received these fraudulent transactions. A substantial amount of the fraudulent benefits submitted have used personally identifiable information (PII) from first responders, government personnel, and school employees. It is assumed the fraud ring behind this possesses a substantial PII database to submit the volume of applications observed thus far.

This fraud network is believed to consist of hundreds, if not thousands, of mules with potential losses in the hundreds of millions of dollars. The financial institutions targeted have been at all levels including local banks, credit unions, and large national banks.

Learn more

News From Credit Unions

1st Advantage Awards $12,000 in Scholarships

1st Advantage awarded a total of $12,000 in scholarships to well deserving Hampton Roads high school students. The recipients of the 2020 Directors’ Scholarships are: Peneeta Wojcik, Tabb High School; Ashlyn Herring, Menchville High School; Tyreece White, Woodside High School; and Tiffini Champion, Phoebus High School. Each scholarship winner received $3,000 to help fund their continued education.

Learn more

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