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NAFCU's widely-read NAFCU Today is credit union leaders' go-to source for the latest on issues impacting the credit union industry. For those short on time, here's a roundup of this week's top need-to-know news related to SBA loan programs, student lending, financial regulator supervisory guidance, and federal housing finance efforts.

Report: SBA may have doled out billions in fraudulent EIDL loans

The Small Business Administration's (SBA) Office of Inspector General (OIG) released a report this week that found the agency approved $14.3 billion in potentially fraudulent economic injury disaster loans (EIDLs) as the agency worked to support businesses impacted by the coronavirus pandemic. The EIDL funds were deposited to bank accounts that differed from the original bank accounts listed on the loan applications.

In addition, almost $63 billion in multiple EIDLs went to applicants using the same IP addresses, email addresses, bank accounts, or businesses listed at the same addresses, and roughly $1.1 billion of EIDLs and emergency advance grants went to potentially businesses that were ineligible for the funds.

The OIG outlined 10 recommendations for the SBA to strengthen its fraud controls and recover funds from ineligible businesses. The report followed the SBA's release of its fiscal year 2020 summary loan data, which highlighted an historic $750 billion in loans were made through various SBA programs, including EIDL and the paycheck protection program (PPP).

PPP lenders should expect loan necessity questionnaires from SBA soon

For PPP loans over $2 million, lenders who have submitted loan forgiveness decisions for these borrowers should receive questionnaires from the SBA in the next few days. While the SBA has the ability to review all PPP loans for fraud, the agency has said it will review borrowers' good-faith certifications for all loans over $2 million. The questionnaires will be sent to lenders via the SBA's Forgiveness Platform for borrowers to complete; however, lenders are not required to verify or validate any of the borrowers' responses or supporting documents to these questionnaires.

Lenders that have questions regarding these questionnaires should email PPPForgivenessRequests@sba.gov with the subject line “Loan Necessity Questionnaire” for dedicated assistance.

NAFCU continues to advocate for measures that would simplify the PPP loan forgiveness process for loans under $150,000 and address the issue of EIDL advances being deducted from a borrower's forgivable PPP amount.

Number of student lending complaints fell in 2020

The CFPB's Private Education Loan Ombudsman released its 2020 Annual Report showing that consumer complaints related to private student loans fell roughly 33 percent from 2019 to 2020, while the number of complaints related to federal student loans decreased 24 percent. The bureau received 7,000 of these complaints from Sept. 1, 2019, through Aug. 31, 2020.

While complaints related to student lending have been decreasing since 2017, the report noted that student loan relief made under the CARES Act "likely contributed significantly to the decrease since March 2020." The report highlighted that student loan debt is the second highest share of household debt – behind only home mortgage debt – and currently totals $1.677 trillion.

Regulators seek comment on role of supervisory guidance

After the NCUA Board Wednesday approved a proposed interagency rule clarifying that agency guidance "does not have the force of law" and does not create legally binding obligations for financial institutions, the federal financial regulators are now seeking public comment.

The rule would codify the September 2018 statement, as amended, that sought to distinguish the differences between regulations and guidance.

"Unlike a law or regulation, supervisory guidance does not have the force and effect of law and the agencies do not take enforcement actions or issue supervisory criticisms based on non-compliance with supervisory guidance. Rather, supervisory guidance outlines supervisory expectations and priorities, or articulates views regarding appropriate practices for a given subject area," the agencies said in a statement. "In contrast to supervisory guidance, regulations do have the force and effect of law and enforcement actions can be taken if regulated institutions are in violation. Regulations are also generally required to go through the notice and comment process."

Comments are due 60 days after the proposal is published in the Federal Register.

FHFA outlines GSEs' strategic goals

The Federal Housing Finance Agency (FHFA) this week released its strategic plan for the government-sponsored enterprises (GSEs) covering fiscal years 2021-2024. In the report, FHFA Director Dr. Mark Calabria – with whom NAFCU works closely on housing finance issues – said the plan builds on last year's that established a framework for how the agency will prepare the GSEs to be released from conservatorship.

The three new goals identified in 2021-2024 strategic plan include:

1. ensure safe and sound regulated entities through world-class supervision;
2. foster competitive, liquid, efficient, and resilient (CLEAR) national housing finance markets; and
3. position the agency as a model of operational excellence by strengthening the workforce and infrastructure.

As a leader in housing finance reform efforts, NAFCU advocates for credit unions' unfettered access to the secondary mortgage market and continues to urge the FHFA and Congress to work together on a comprehensive solution.