Posts tagged ‘Super Bowl’

SBA sets the stage for credit unions to take lead on PPP

The SBA has issued guidance and regulations in the last three days laying the groundwork for a continuation and expansion of the Paycheck Protection Program. What’s most striking to yours truly is just how much the SBA is establishing a regulatory framework to encourage community-based lenders to take the lead in making these loans, particularly when it comes to minority and women-owned businesses. 

Most importantly, the SBA issued this guidance which describes specific set-asides for “new and smaller borrowers, for borrowers in low- and moderate-income communities, and for community and smaller lenders.” These include:

  •  $15 billion across first and second draw PPP loans for lending by community financial institutions; 
  •  $15 billion across first and second draw PPP loans for lending by Insured Depository Institutions, Credit Unions, and Farm Credit System Institutions with consolidated assets of less than $10 billion; 
  • $35 billion for new first draw PPP borrowers; and 
  • $15 billion and $25 billion for first draw and second draw PPP loans, respectively, for borrowers with a maximum of 10 employees or for loans less than $250,000 to borrowers in low-or moderate-income neighborhoods. SBA has determined that at least 25 percent of each of those set-asides will go to each one of the groups: loans to borrowers with a maximum of 10 employees and loans less than $250,000 to borrowers in low-or moderate-income neighborhoods.

In addition to this guidance, there were two important interim regulations issued. By being designated “interim,” these regulations take effect immediately upon being published in the Federal Register. One of these regulations consolidates the existing PPP regulations, and makes amendments mandated by the recently-passed federal legislation. Keep in mind that the legislation expanded the uses that PPP loans could be put to while still qualifying for loan forgiveness. 

Some large credit unions and banks have faced litigation related to the payment of agent fees. Specifically, several unsuccessful class-action lawsuits have been brought against financial institutions for refusing to pay fees to agents who assisted borrowers in submitting PPP loan applications. The updated regulations make it crystal clear that financial institutions are not on the hook to agents unless they entered into a contract with them to cover their fees. 

A third new regulation issued by the SBA deals with the eligibility of businesses to take out a second round of loans. Consistent with the legislation, institutions seeking to take a second draw will have to meet several criteria, including demonstrating a 25% reduction in gross income over the last year. 

Tier I Super Bowl Prediction

It’s that time of year again when yours truly tells you who will win the Super Bowl – a prediction so accurate that it is certified for use as Tier I capital by all the federal financial regulators and New York’s Department of Financial Services. The Baltimore Ravens will win the Super Bowl, defeating none other than the Ageless Wonder, Thomas Edward Patrick Brady, Jr., who asked Bill Belichick during a pre-game interview if he was enjoying his time off.

On that note, enjoy your weekend.

January 8, 2021 at 9:31 am Leave a comment

Are You Using Your Credit Reports Illegally?

I’m asking this question to highlight an enforcement action announced by the CFPB yesterday against several companies which, if the allegations are true, blatantly violated several sections of the Fair Credit Reporting Act (FCRA) by obtaining credit reports under false pretenses and passing them around like stewardesses passing  out airline peanuts. I want to highlight the case not only because of its accusations, but because I wanted to provide you an ever so gentle reminder to use your credit reports consistent with the reasons you obtained them in the first place.

15 U.S.C. 1681b(f) permits entities to obtain prescreened credit reports provided that the individuals who qualify under the criteria will receive a firm offer of credit. A “firm offer” is an offer that will be honored subject to certain exceptions. The bottom line is that credit reports are not to be used simply to facilitate marketing, but are instead to be used for legitimate underwriting purposes.

The lawsuit that the CFPB announced yesterday is against several companies, ranging from a mortgage broker to a student loan debt consolidator to a mortgage lender that apparent did not get this memo. For instance, Monster Loans obtained prescreened lists from Experian, ostensibly to offer mortgage loans. There would, of course, be nothing wrong with this if that was all that Monster Loans used these lists for. However, Monster Loans subsequently distributed these lists to third parties, including an entity that specialized in student loan debt consolidation.

Although I’m concentrating on the FCRA part of the complaint, the defendants are also accused of engaging in unfair and deceptive practices, and the Telemarketing and Consumer Fraud and Abuse Prevention Act by marketing these deceptive loan products over the phone. This allegation underscores, yet again, why it is so important for all institutions to understand TCPA and ensure proper compliance.

On that brief note, its time for you to receive my annual Super Bowl prediction, which as you all know, is considered tier-one capital for credit unions and their employees. I like the Seahawks to take on the Chiefs with the Seahawks winning in a dramatic last-second field goal by the score of 20-17. Peace out.

January 10, 2020 at 9:18 am Leave a comment

The Military Lending Act May Apply To That Car Loan After All

Image result for north korean president

We have the greatest military in the world but judging by the way the DOD has gone about implementing the Military Lending Act it is safe to say that if the military was as bad at defending us as they are at promulgating consumer protection regulations, the United States would be a protectorate of a united Korea under the leadership of great leader Kim Jong-un.

If you think I’m being too tough then perhaps you haven’t been paying attention to the latest developments. The Military Lending Act was passed by Congress in 2007 in response to wide-spread reports of abusive loan practices towards our military personnel such as pay-day loans. The basic idea is that when consumer credit is extended to a member of the military or their relatives, they are to be given additional protections. Most importantly, the Military Lending Act mandates that covered products are subject to a Military APR (MAPR) which caps the amount of interest that can be charged at 36%. Since the original regulations applied to a narrow group of products, they didn’t get all that much attention.

But then in 2015 the Department of Defense extended the coverage of regulation to most consumer loan products and placed an affirmative obligation on institutions to identify covered individuals. This was bad but at least the final regulations did not apply to car loans. Unfortunately on December 14th, the DOD gave compliance people everywhere an early Christmas present when it issued an updated Q&A in which it explained that automobile purchases generally are not considered consumer credit for purposes of the Act, but “The answer will depend on what the credit beyond the purchase price of the motor vehicle or personal property is used to finance. Generally, financing costs related to the object securing the credit will not disqualify the transaction from the exceptions, but financing credit-related costs will disqualify the transaction from the exceptions.”

In other words, if you have the audacity to offer GAP insurance to your military members you must comply with the Military Lending Act when making car loans. Try explaining that one to your software vendor.

Yesterday CUNA joined other associations in calling for the DOD to withdraw this ridiculous interpretation which contradicts the DOD’s earlier decision that car loans are not consumer credit products for purposes of the Military Lending Act. I wish I could give you more helpful advice than this but just remember that everyone is in the same boat.

DeFrancisco Runs For Governor

Quick witted, long serving Republican Senator John DeFrancisco announced on Tuesday that he would run for Governor against incumbent Andrew Cuomo. DeFrancisco joins Brian Kolb, the Republican minority leader in the Democrat-dominated Assembly, and Joel Giambra, the former Erie County executive. Here’s a good bit of trivia for you: When’s the last time a Republican won state-wide office in New York? 2002.

My Good As Gold Super Bowl Prediction

Well it’s that moment you’ve all been waiting for when I give you my Super Bowl prediction. My predictions are so good that you can actually use them as collateral under NCUA regulations. New England 27, the Eagles 14. Brady cements his legacy as the greatest quarterback of all time and after some early success, the Eagles are unable to move the ball against the Patriots. At least we can all watch bits and pieces of that ridiculous Tom Brady video.

 

February 2, 2018 at 8:55 am Leave a comment


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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