Topic: Pandemic Preparedness and Response
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Do National Flood Insurance Program (NFIP) policies provide a 30-day or 45-day grace period after the policy expiration date? Did the CARES Act extend the grace period to 120 days? We are trying to address the 45-day gap between notifying the borrower that their flood insurance has lapsed and force placement.
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Yes, we believe that NFIP policies typically have a thirty-day grace period and that the grace period was extended to one hundred twenty days for policies that expired between February 13, 2020, and June 15, 2020. Additionally, the newly released 2022 Interagency Q&As Regarding Flood Insurance state that lenders may address a gap in coverage…
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Under Regulation Z, servicers have the option of disclosing the amount due on a billing statement as either the full payment due according to the promissory note or the new payment due under a temporary loss mitigation agreement. However, our vendor provides only the option to bill for the full payment due under the note. This poses a credit reporting issue for us, since the Credit Reporting Resource Guide states that when reporting an account in forbearance, we should report the scheduled monthly payment amount as the new payment due. How should we handle this? We are not a small servicer.
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We believe it would be permissible to provide a customer in forbearance with a periodic statement reflecting the full payment due under the note while reporting the amount due under a temporary loss mitigation agreement to the credit reporting agencies — although we realize that the discrepancies between your periodic statements and amounts reported to…
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Are banks considered “federal contractors” covered under the President’s recent executive order regarding vaccination requirements for federal contractors?
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We do not believe that Executive Order 14042 (Ensuring Adequate COVID Safety Protocols for Federal Contractors) will apply to banks unless they provide services directly to the federal government or federal employees or operate on federal property (such as providing financial services in a federal building or on a military base). Executive Order 14042 generally…
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The U.S. Department of the Treasury has announced that they will be processing advance Child Tax Credit payments authorized by the American Rescue Plan Act starting on July 15. Will there be a process for us if customers come to us after July/August or later in the year stating they didn’t want the credit or didn’t want an advance payment of the credit? Should we return ACH credits back to the Treasury as R-23, Credit Refused by Receiver?
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We are not aware of any process currently set by the Treasury Department or IRS for assisting customers who wish to refuse payments of the 2021 Child Tax Credit after they have automatically received the payments. We recommend that you advise customers that wish to refuse the credit to unenroll from it through the Child…
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Are there any provisions in the CARES Act that would limit a creditor’s ability to garnish Paycheck Protection Program (PPP) loan funds? We received a third-party citation to discover assets for a customer who recently received a PPP loan, and we froze the funds pending the upcoming turnover hearing. Was this appropriate?
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We do not believe there are any provisions in the CARES Act or subsequent American Rescue Plan Act of 2021 that would prevent a creditor from garnishing PPP loan proceeds. Consequently, we believe it was appropriate to freeze your customer’s account on receiving a third-party citation to discover assets — provided you froze no more…
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Can a bank charge non-customers transaction fees when cashing an economic impact payment (EIP) Visa prepaid card or an EIP check?
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We do not believe that the Visa rules permit you to charge fees for manually cashing an EIP debit card, although you may be able to charge certain ATM fees if the card is cashed at an out-of-network ATM. As for cashing an EIP check, we believe that the same rules under the Uniform Commercial…
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Are bank employees included in phase 1C of Illinois’s COVID-19 vaccination plan?
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The Illinois Department of Public Health’s latest COVID-19 Vaccination Plan, dated March 20, 2021, has eliminated Phase 1C from the state’s vaccination rollout. According to previous versions of the plan, Phase 1C would have allowed “other essential workers,” a category that included “finance” employees, with bank tellers provided as an example, to receive vaccinations before…
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Are we required under federal or state law or regulation to return a borrower’s promissory note after a Small Business Administration (SBA) Paycheck Protection Program loan has been forgiven?
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No, we are not aware of any federal or state laws or regulations that would require your bank to return promissory notes to borrowers after the SBA has forgiven their Paycheck Protection Program (PPP) loans. Additionally, we are not aware of any SBA guidance recommending that financial institutions return PPP-related promissory notes after forgiveness. Consequently,…
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We are a small bank, and several of our employees have been diagnosed with COVID-19. We have two employees on site who are maintaining daily operations and addressing customer needs, but they may have been exposed to the disease. We have been in contact with the FDIC and IDFPR regarding the circumstances, and the IDFPR has advised us of the necessary steps to make an emergency proclamation request and temporarily close our bank. We would like to know if there are any other requirements or regulations we should be aware of in the event of a closure, such as any Uniform Commercial Code (UCC) considerations. Also, we note that our ability to handle the daily cash letter would not be impeded as our correspondent bank handles those operational duties.
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If your bank must close due to a large portion of your employees being diagnosed with COVID-19, we believe you generally would be excused from meeting the time limits imposed by the UCC, provided your bank exercises diligence in taking the necessary action as soon as it is able. Delays by collecting banks and paying…
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We received two IRS levies for business customers and would like to know if Illinois Executive Order 2020-55 (EO-55) would prevent us from freezing their accounts. An individual from the IRS told us that they believe EO-55 only affects state agencies, not federal.
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We do not believe EO-55 would prevent you from complying with the IRS levies. Illinois Executive Order 2020-25, as amended by EO-55, suspends the provisions of the Illinois Code of Civil Procedure that permit the service of a garnishment summons, wage deduction summons, or a citation to discover assets on a consumer debtor or garnishee.…