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May 10,  2013
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WEBExpress
90-minute sessions for one low per location connection fee

May 21

Ask the Lawyers: UCC Lien Perfection and Lien Priorities
(Tom Hofstetter & Nick Jellum)

June 6
7(a) Servicing & Liquidation Policy Updates in SOP 50 57
(including Technical Corrections and the Matrix!)
(Margherita Stutz & Jane Butler)


CLASSROOM Training

June 3-7- Dallas, TX
Understanding the SOP 50 10; SBA  Application Processing; Fundamentals of SBA Credit Underwriting)

June 10-11: Laurel, MD
Fundamentals of SBA Credit Underwriting

June 17-20: Albuquerque, NM
SBA Loan Servicing & Liquidation; Advanced SBA Loan Servicing and Liquidation

August 19-22: Stockton, CA

September 16-17: Laurel, MD
Closing & Funding the SBA Loan

ONLINE Training
Standard courses offered online

June 12
Establishing Internal Policies and Procedures for SBA Lending   (Lisa Preston)


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Prime Rate = 3.25%

SBA Peg Rate = 2.50%
[April 1-June 30, 2013]

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Electronic Fingerprints - 5000-1265

Line of Credit Coding Error when using E-Tran
Lender Action Needed
5000-1268
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NAGGL News Flash
SOP 50 10 5(E) - Posted April 12, 2013

You may have missed it, but SBA posted a slightly updated version of the SOP 50 10 5(E) on April 12, 2013.  This version incorporates the 504 streamlined closing process detailed in Information Notice 5000-1273.
 
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Technically Corrected SOP 50 57 Available

NEW Servicing & Liquidation Matrix (updated May 9)

Based on a great deal of input from the industry, including many suggestions for clarification from NAGGL, SBA released an update to SOP 50 57 containing 'technical corrections', all of which are outlined in the accompanying Information Notice 5000-1276 -- and as we discussed in several breakout sessions during our 2013 SBA Lending Technical Conference in St Louis.

A few notable changes:
  • Loan status determines governing SOP
    • Approved = pre-closing and FINAL disbursement = SOP 50 10
    • Regular Servicing = loan closed and FINAL disbursement =  SOP 50 57
    • Liquidation = loan in default and classified as 'in liquidation' = SOP 50 57
  • Clarifies that E-Tran serves as an acceptable notification method when taking Substantive Unilateral Actions that require notification to SBA (e.g., decrease guarantee percentage; extend maturity for loan in servicing -- see page 24)If E-Tran supports the action, NO FURTHER notification is necessary. The Matrix shows what actions are supported through E-Tran. For actions NOT supported within E-Tran, lenders must notify SBA in writing.     

     
  • Clarifies that lenders should ensure that all required insurance coverage is in place throughout the term of the loan. (page 29)   
  • Added requirement (based on OMB Circular A-129) that lenders report to credit agencies loan activity throughout the life of the loan.

    SOP 50 57 page 30 reads: "In accordance with the Debt Collection Improvement Act of 1996, Lenders are required to report information to the appropriate credit reporting agencies whenever they extend credit via an SBA loan. Thereafter, they should continue to routinely report information concerning servicing, liquidation, and charge-off activities throughout the life-cycle of the loan. (See Chapter 26 for more information regarding credit reporting requirements for loans in charge-off status.)"   

    This was the final addition to the 'corrected' SOP and one that generated a great deal of unanswered questions and discussion during the conference and in subsequent days. NAGGL is gathering and digesting information on the requirement and its impact on SBA lenders and will provide clarification in the future.  For now, it's important to note that the 52-page OMB Circular A-129 reads in part: "Referring account information to Credit reporting agencies. Agency servicing systems must be able to identify and refer debts to credit bureaus in accordance with the requirements of 31 U.S.C. 3711. Agencies shall refer all non-tax, non-tariff commercial accounts (current and delinquent) and all delinquent non-tariff and non-tax consumer accounts. ...The reporting of current data (in addition to any delinquencies) provides a truer picture of indebtedness while simultaneously reflecting accounts that the borrower has maintained in good standing. There is no minimum dollar threshold, e.g., accounts (debts) owed for as low as $5 may be referred to credit reporting agencies. Agencies shall require lenders participating in Federal credit programs to provide information relating to the extension of credit to consumer or commercial credit reporting agencies, as appropriate. For additional information, agencies should refer to Treasury/FMS Guide to the Federal Credit Bureau Program."     
  • Updates/Clarifies order of application of payments on loans in regular servicing status.  Unless the terms of the NOTE state otherwise, funds from payments on loans in regular servicing are applied to: Accrued Interest; Principal; SBA permitted loan fees.  
  • Updates/Clarifies order of application of payments on loans in liquidation status,that is, "After acceleration and demand due to default ...", stating the rarity of payments (versus recoveries) from a borrower on a loan in liquidation status.  If borrower can resume regular payments, the loan should be returned to servicing. However, unless the terms of a workout or other legally binding document specify otherwise, payments on loans in liquidation are applied: Principal, Accrued Interest, SBA allowed loan fees.    
  • Clarifies that SBA approval NOT needed to extend maturity date up to 10 years beyond original maturity date in order to aid in the orderly repayment of the loan (subject to extension being completed prior to SBA guarantee expiration).   
These are just a few of the major technical corrections in the SOP 50 57.  Industry experts Margherita Stutz (Borrego Springs Bank) and Jane Butler (NAGGL) explore all the 7(a) servicing and liquidation policy changes in the 50 57, the technical corrections, and the Matrix in a specially-priced WEBExpress on June 6.

Note: The SOP is (was) effective March 1, 2013. However, there are now 2 versions posted on sba.gov:  a "clean" version and a "tracked changes" version that shows the technical corrections made. (Multiple iterations carrying the same effective date might be confusing to anyone who prefers to print the clean copy of the SOP, or who maintains the current PDF on their PC to consult daily. One idea is to add a self-created 'footer' on the PDF that distinguishes the clean 'technically corrected' version from the 'original'. The other option is to visit sba.gov every time you need to consult the 50 57.)
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The 7(a) Servicing & Liquidation MATRIX version 9 
Since late April, SBA has posted several iterations of the Matrix version 9 dated April 30, 2013, with the most recent one being made available on THURSDAY MAY 9.

How can you distinguish if the file available at sba.gov is different than the one you may have downloaded and printed on Wednesday, May 8?
One way is by looking at the file name, which appears to use a revision number naming convention (YYYYMMDD.revision) -- this seems to be revision 5 of the April 30 Matrix: 
Unilateral Action Matrix for 7(a) Loan Servicing-Liquidation 20130430.5.pdf

What's different in this Matrix than the one you downloaded a few days ago?

An eagle-eyed NAGGL member noticed that in the section on Actions taken on Loans in Servicing & Liquidation that require E-Tran Update or SBA Notification there were 2  line items that read identically:

Extend maturity prior to stated maturity date for loans in Regular Servicing
Extend maturity prior to stated maturity date for loans in Regular Servicing

However, one said that E-Tran supported the action and one said it required Center notification. It was a simple typo: The second line item should read (as it now does in the .5 Matrix)

Extend maturity prior to stated maturity date for loans in Liquidation 
E-Tran functionality coming soon!
(and the X is in the Center notification column)

WHAT's THE MORAL OF THIS TALE?
Always, always go to sba.gov to download the current Matrix when needed -- or ask NAGGL for the current version. 

Here's the link - bookmark it for ease of use:
http://www.sba.gov/content/servicing-and-liquidation-actions-7a-lender-matrix

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NEW Form 912

As first noted following NAGGL's Lender Leadership Summit in February, SBA was completing and has now published a recreated the Form 912, Statement of Personal History.  A full-length article on the changes will be published next week in the In Focus; but it's important to note that we learned from SBA leadership at the spring conference that they are fully aware that the SOP 50 10 5(E) conflicts with the new Form since the questions (and the numbering of them) have changed, including the removal of the phrase 'currently on parole or probation'.  However, SBA policymakers also confirmed that in addition to being 'currently under indictment' -- being on parole or probation makes an applicant INELIGIBLE.

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