CARES Act Impacts Regulatory Compliance for Financial Institutions

John Zasada, Compliance Consulting Director, Financial Institutions Group

The recently passed Coronavirus Aid, Relief, and Economic Security (CARES) Act contains provisions that directly impact financial institution regulatory compliance. The Act requires furnishers of information to credit reporting agencies who provide an accommodation agreement to a consumer affected by COVID-19 to report the account as current, or if the account was delinquent before the accommodation, maintain the delinquent status. This requirement applies from January 31, 2020 to either the later of 120 days after enactment or 120 days after the COVID-19 national emergency ends. This requirement does not apply to accounts that have been charged-off. The Act also permits borrowers to request a forbearance of a federally backed mortgage loan if they are experiencing a financial hardship due to COVID-19. The forbearance is for up to 180 days and may be extended another 180 days. During the forbearance, no fees, penalties or interest beyond the amounts scheduled as if the borrower made the scheduled payments can be assessed. Multifamily borrowers with a federally-backed multifamily mortgage loan, that were current as of Feb. 1, 2020, may request forbearance due to COVID-19 financial hardship for up to 90 days. During the forbearance period, the borrowers must provide renter protections including no evictions or charging of late fees or penalties due to nonpayment or late payment of rent.