SBA Provides Workaround For Platform Glitches

February 11, 2021 at 9:46 am Leave a comment

If you are among the financial institutions that are providing PPP loans, I have some good news for you. Although the rollout of the program following its reauthorization by Congress in December has gone relatively well, it has not been without its glitches. Incidentally, I belong in the group of people who believe the SBA has done a good job administering a program doling out billions of dollars within weeks of Congressional approval. 

Under the procedural notice, lenders will be allowed to certify that a loan meets SBA requirements notwithstanding the fact that it has been flagged for rejection by the SBA platform. The updated guidance provides a list of error codes to which this flexibility will apply, such as a potential match to the OFAC sanction list, or a tax ID mismatch. The guidance explains that when a lender resolves a compliance error through this lender certification process, the lender must submit all information and documentation supporting the certification to the SBA when the lender submits a forgiveness decision or guarantee purchase request. As a result, keep in mind that the certification override is an option – not a requirement – for lenders. The guidance also points out that not all platform red flags can be resolved through this process, and provides a list of examples of the type of documentation which lenders could provide to the SBA to resolve these issues as quickly as possible. 

While we are on the subject of the PPP, today’s American Banker is reporting that more than $93 billion of the roughly $101 billion worth of loans approved by the SBA since January 12th have involved second-draw loans. I was talking to an accountant friend the other day, and as he noted, either you are comfortable relying on the government, or you simply don’t trust it enough to take it in the first place. 

Setting the Record Straight When it Comes to FOM Proposal

When I started blogging oh-so-many years ago, I quickly decided to ignore the white noise of banker attacks as much as possible. After all, there’s only so much you can say on the same topic, and when it comes to dealing with the inevitable attacks, the industry has to be able to walk and chew gum at the same time. But, I’m more than a little amused this morning by the banking industry’s reaction to a common-sense proposal by the NCUA. 

Under existing regulations, only multiple common-bond credit unions that qualify as investors in a shared branching network, such as New York’s USNet, can use the branches in that network to satisfy physical facility requirements. Mere participants in such a network cannot. This distinction is of course arbitrary, since any credit union which contracts to participate in a shared branching network is making a legal commitment to helping other participating credit unions and their members, regardless of their status as an investor in the network. In fact, the existing regulation simply makes it more difficult for smaller credit unions to fully realize the benefits of shared branching. In other words, this is the latest example of how banker opposition hurts consumers by minimizing the potential financial options that could be made available to them. I strongly suspect that the banker’s hyperbole is motivated by a desire to signal their concern to steps that NCUA may take to further expand field of membership flexibility in the aftermath of the decision by DC’s court of appeals to uphold NCUA’s field of membership improvements. 

Sounds like it’s time to get the lawyers and money ready to go. Personally, I can’t wait.

Entry filed under: Compliance, Federal Legislation, Legal Watch, Mortgage Lending, New York State, Regulatory. Tags: , , , .

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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