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Additional guidance regarding Paycheck Protection Program
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 The Treasury Department released new guidance Wednesday pertaining to how the government will review PPP loan borrowers' good-faith certifications of loan necessity. SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA's review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith. SBA has determined that this safe harbor is appropriate because borrowers with loans below this threshold are generally less likely to have had access to adequate sources of liquidity in the current economic environment than borrowers that obtained larger loans.
This safe harbor will also promote economic certainty as PPP borrowers with more limited resources endeavor to retain and rehire employees. In addition, given the large volume of PPP loans, this approach will enable SBA to conserve its finite audit resources and focus its reviews on larger loans, where the compliance effort may yield higher returns.
Borrowers that receive loans in excess of $2 million may also be deemed to have made the necessity certification in good faith, based on their individual circumstances in light of the language of the certification and SBA guidance (as will likely be determined under an audit). This guidance will likely be good news to many NAR members who received PPP loans of $2 million or less. |
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FHFA announces payment deferral
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New repayment option is for homeowners in COVID-19 Forbearance plans
 To help homeowners who are in COVID-19 related forbearance, the Federal Housing Finance Agency (FHFA) announced earlier this week that Fannie Mae and Freddie Mac (the Enterprises) are making available a new payment deferral option. The payment deferral option allows borrowers, who are able to return to making their normal monthly mortgage payment, the ability to repay their missed payments at the time the home is sold, refinanced, or at maturity.
"For homeowners in forbearance due to COVID-19, payment deferral allows them to make up missed forbearance payments when they sell their home or refinance," said FHFA Director Mark Calabria. "This new forbearance repayment solution responsibly simplifies options for homeowners while providing an additional tool for mortgage servicers. Borrowers who can pay their mortgage should, because missed payments remain an obligation that will ultimately have to be repaid."
In response to the COVID-19 national emergency, borrowers with a financial hardship due to the pandemic have been able to receive forbearance, which is a pause or reduction in their monthly mortgage payment. The missed payments will have to be paid back by the borrower after the forbearance ends. FHFA and the Enterprises do not require lump sum repayment at the end of the forbearance. Servicers are required to evaluate borrowers for one of several repayment options, generally referred to as a "hierarchy" of repayment and loan modification options.
Payment deferral is one of the repayment options. Payment deferral takes the missed mortgage payments and puts them into a payment due at the sale, or refinancing of the home, or the end of the loan. The borrower's monthly mortgage payment will not change. Mortgages that exercise the payment deferral option will remain in Enterprise Mortgage-Backed Securities, subject to the terms of the trust agreements.
Servicers will begin offering the payment deferral repayment option starting July 1, 2020. In addition to the new payment deferral option, borrowers with COVID-19 related hardships can still utilize other options that include reinstatement, repayment plan, or loan modifications based on their individual situations.
Fannie Mae: Understand Your COVID-19 Mortgage Options
Freddie Mac: Lump Sum Repayment is Not Required in Forbearance
FHFA will continue to monitor the coronavirus situation and update policies as needed. |
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Quick Reference Guide on the Main Street Lending Program
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 The Main Street Lending Program is intended to provide loans to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.
Under the program, the Federal Reserve will support up to $600 billion of loans to eligible small and medium-size businesses. The loans will be made by federally insured banks and savings associations and credit unions and foreign banks operating in the U.S. The loans will be available until September 30, 2020, and are not forgivable. The Main Street Lending Program facilities are not yet operational, but continues to be a top priority for the Federal Reserve to implement. Click here to learn more about the Program.
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Nevadans eligible for the