In an effort to provide relief to homeowners, businesses, landlords, and tenants affected by COVID-19, Governor Brown signed two bills that impose significant limitations on lenders and landlords. Under HB 4204, lenders cannot foreclose on loans secured by real estate in Oregon and must defer payments for borrowers on those loans who are unable to pay because of loss of income due to COVID-19. HB 4204 may provide some relief to landlords that, under HB 4213, are prohibited from taking specified eviction and termination actions based on tenants’ nonpayment. Lenders and landlords should be aware of the important requirements and limitations created by the new bills and how these bills affect their current practices. Continue Reading
Ever since Congress passed the 2018 Farm Bill and hemp was declassified under federal law as a Schedule I controlled substance, financial institutions have struggled with whether and how to bank the hemp industry. Many bankers simply feared that the distinction between legal hemp (which cannot contain more than 0.3 percent THC on a dry-weight basis) and illegal marijuana placed too high a burden (and cost) on banks to police compliance and too much risk without sufficient reward to enter the fray. Those fears might soon fade thanks to recent materials published by the regulators with the Financial Crimes Enforcement Network (FinCEN). Continue Reading
The Small Business Administration (SBA) has issued an Interim Final Rule controlling how $349 billion in short-term business loans under the CARES Act will be allocated. While the SBA is seeking comments from the public, the rule is effective immediately to provide immediate relief to businesses affected by the COVID-19 emergency. Applications for lenders and borrowers are available now.
The interim rule clarifies—and in some cases contradicts—the text of the CARES Act. But one provision will interest lenders and borrowers alike: payroll protection loans will be made on a “first come, first served” basis until the program’s funds are exhausted. The rule may also allay concerns from lenders skeptical of the government’s promise to guarantee 100 percent of these loans: it says banks that participate in the program as lenders will be held harmless for misrepresentations in the borrower’s application. Other noteworthy rule provisions are summarized below. Continue Reading
Section 1113 of the CARES Act amends certain provisions of the Bankruptcy Code and will apply to the year following the date on which this new law goes into effect. These changes are primarily designed to benefit small businesses and individuals who need to seek bankruptcy protection (and some who have already sought it). Creditors should be aware that the changes may make it easier for debtors to qualify for the bankruptcy cases of their choice and for Chapter 13 wage-earner debtors to confirm and modify their plans in light of federal payments that will be made to alleviate the harm of the COVID-19 pandemic and otherwise remedy the hardship it creates. Continue Reading