CREF Policy Update March 31, 2022

Commercial and multifamily developments and activities from MBA relevant to your business and our industry.

Last Monday the SEC voted to release a Notice of Proposed Rulemaking that would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as Form 10-K. HUD last week withdrew its November 15, 2021, memorandum that clarified how appraisers should appraise non-shelter services at Section 8 assisted properties.

Also last week, MBA Research released several reports on commercial/multifamily market conditions, including 2021 mortgage firm originator volumes, fourth-quarter 2021 delinquencies, fourth-quarter 2021 mortgage debt outstanding and rental market affordability.

Sign MBA’s Home for All Pledge: Join the 200+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting affordable rental housing; minority homeownership; and company diversity, equity, and inclusion. One senior executive (e.g., CEO, COO, President, Head of Lending, SVP) is encouraged to sign this online form on behalf of your organization. 

View Any Session You Missed from MBA CREF22: Were you one of the over 2,400 registrants that attended MBA’s Commercial/Multifamily Finance Convention & Expo? If you weren’t able to attend every session, they are available to you online for the next month. Simply access the program videos by clicking here. 

1. SEC Releases NPRM on Climate and ESG Disclosures

On Monday, the U.S. Securities and Exchange Commission (SEC) voted 3-1 to release a Notice of Proposed Rulemaking (NPRM) proposing rule amendments that would require a domestic or foreign registrant to include certain climate-related information in its registration statements and periodic reports, such as Form 10-K. The SEC also released a fact sheet on the NPRM. As described by the SEC, registrants would need to disclose “climate-related risks and their actual or likely material impacts on the registrant’s business, strategy, and outlook; the registrant’s governance of climate-related risks and relevant risk management processes; the registrant’s greenhouse gas (‘GHG’) emissions, which, for accelerated and large accelerated filers and with respect to certain emissions, would be subject to assurance; certain climate-related financial statement metrics and related disclosures in a note to its audited financial statements; and information about climate-related targets and goals, and transition plan, if any.” In addition, the proposal calls for phased in disclosure of “indirect emissions from upstream and downstream activities in a registrant’s value chain (Scope 3), if material, or if the registrant has set a GHG emissions target or goal that includes Scope 3 emissions.” Scope 3 emissions can include emissions from investments and loans, such as emissions from a property that a company finances.

• Why it matters: While some firms have already begun making climate-related disclosures, the final climate risk/ESG disclosure rules will create operational burdens for affected entities, and the resulting disclosures may have market impacts.
• What’s next: MBA will prepare a summary of the 510-page proposal to share with members, form a working group to help develop MBA’s response, and also coordinate with other trade associations. The comment period will run at least through May 20, 2022. 

For more information, please contact Adrian Ballinger at (202) 557-2774.

2. HUD Withdraws November Memorandum on the Valuation of Non-Shelter Services 

Yesterday, the U.S Department of Housing and Urban Development (HUD) withdrew its November 15, 2021, memorandum that clarified how appraisers should appraise non-shelter services at Section 8 assisted properties. 

• Why it matters: Industry stakeholders expressed concerns that the most recent memo would limit property valuations for non-shelter services and disincentivize the provision of critical resident services, particularly for seniors. 
• What’s next: Revisions will be available for public comment and review. 

For more information, please contact Stephanie Milner at (202) 557-2747.

3. MBA Releases 2021 Rankings of Commercial/Multifamily Mortgage Firms’ Origination Volumes 

On Tuesday, MBA released its 2021 Commercial Real Estate/Multifamily Finance Firms – Annual Origination Volumes report, the only report of its kind to present a comprehensive set of listings of 149 different commercial/multifamily mortgage originators, their 2021 volumes, and the different roles they play. The report presents origination volumes in more than 140 categories, including by role, investor group, property type, financing structure type, and the location of the originating office.    

• Why it matters: The following firms were the top commercial/multifamily mortgage originators in 2021: JLL; CBRE; Eastdil Secured; Wells Fargo; Meridian Capital Group; JP Morgan Chase & Company; Newmark; Walker & Dunlop; KeyBank; and Berkadia. 
• What’s next: The report is available for purchase through MBA’s online store: click here  

For more information, please contact Jamie Woodwell at (202) 557-2936.

4. Commercial and Multifamily Mortgage Delinquency Rates Remain Low in Fourth-Quarter 2021  

Commercial and multifamily mortgage delinquencies declined in the fourth quarter of 2021, according to last Monday’s release of MBA’s latest Commercial/Multifamily Delinquency Report.

• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “Commercial and multifamily mortgage performance continues to normalize, with delinquency rates down or flat for every major investor group. Delinquencies for some sectors appear to remain elevated for one of two reasons. For some, lenders and servicers continue to work-out loans that were hard hit by the pandemic. For others, the method of reporting may classify forborne or other loans as delinquent, even when they are back on track.” 
• Added Woodwell, “Delinquency rates are back down to at or near their pre-pandemic levels in the other sectors.”    

For more information, please contact Jamie Woodwell at (202) 557-2936.

5. Commercial/Multifamily Mortgage Debt Outstanding Jumps to Record Quarterly High in Fourth-Quarter 2021   

The level of commercial/multifamily mortgage debt outstanding during the final three months of 2021 was $287 billion (7.4 percent) higher than at the end of 2020, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, released on Wednesday. 

• Why it matters: MBA’s report found that total mortgage debt outstanding rose by 2.9 percent ($116.0 billion) in fourth-quarter 2021. Multifamily mortgage debt grew by $42.1 billion (2.4 percent) to $1.81 trillion during the fourth quarter, and by $121.9 billion (7.2 percent) for the entire year.  
• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “Strong borrowing and lending backed by commercial and multifamily properties drove the level of mortgage debt outstanding to a new high at the end of 2021. The last three months of the year marked the largest quarterly increase in mortgage debt outstanding on record, as every major capital source increased their holdings. The 7.4 percent annual increase in outstanding debt compares to a 19.5 percent increase in underlying property values.”  

For more information, please contact Jamie Woodwell at (202) 557-2936.

6. MBA Releases New Monthly Affordability Index Based on Weekly Applications Survey Data; Comparison to Asking Rents Included 

Yesterday, MBA released its first monthly Purchase Applications Payment Index (PAPI), which will report out Weekly Applications Survey (WAS) data every month by loan type, geography (state), and race, as well as how it compares to recent asking rents. The index itself measures how new monthly mortgage payments vary across time – relative to income. An FAQ document can be found here.

• Why it matters: Higher mortgage rates and loan application amounts led to the median mortgage application payment jumping 8.3% in February from January to $1,653 (principal and interest). The median application payment was also $337 higher than in February 2021. Furthermore, the PAPI increased (affordability decreased) because these increased rate and loan amounts outpaced strong income gains. MBA’s national mortgage payment to rent ratio (MPRR) – this month comparing median purchase mortgage application payments to median asking rents in December 2021 from November 2021 – increased to 1.15 from 1.14 and was up from 1.01 in December 2020, meaning mortgage payments for home purchases have increased relative to rents.
• Edward Seiler, MBA’s Associate Vice President, Housing Economics, and Executive Director, Research Institute for Housing America, said, “Asking rents from first-quarter 2020 to fourth-quarter 2021 increased 16 percent, even outpacing the steep growth in mortgage application payments over that period. MBA’s mortgage payment to rent ratio is now at roughly the same level it was at the start of the COVID-19 pandemic in March 2020.”  

For more information, please contact Eddie Seiler at (202) 557-2739.

7. State Trackers

• State eviction moratorium and legislative activity tracker available here.

For more information, please contact William Kooper at (202) 557-2737 or Grant Carlson at (202) 557-2765.

8. [WATCH]: mPower Moments: On Love, Work and Balance with Marcus Buckingham 

In this episode of mPower Moments, mPower Founder Marcia M. Davies chats with Marcus Buckingham, New York Times Best-Selling Author, and Researcher and Founder, Strengths Revolution. During this insightful conversation, Buckingham discusses work-life balance and enjoying the things at work and in life that you love and bring you joy. Buckingham also explains why it’s so important for women leaders to capture and cradle “red threads” moments to avoid burnout.

• What’s next: To watch more mPower Moments, click here. 

For more information, please contact Marcia Davies at (202) 557-2707.

9. CREF Track at MBA’s Technology Solutions Conference and Expo in Las Vegas – Register Today (April 11-14, 2022) 

Register today for MBA’s Technology Solutions Conference and Expo in Las Vegas on April 11-14. This year’s conference will include the first in-person get together of the CREF Technology Officers Roundtable since the onset of the pandemic. Join us for a great set of sessions as well as ample time for discussion and networking.

• Why it matters: The CREF Track will include: emerging technologies; a view of tech from the C-suite; cybersecurity and privacy; mapping and GIS; cloud innovation; office 2.0/adaptation; documentation and automation; career development; creating a tech platform/tech adoption; and climate-risk and ESG.
• What’s next: The full schedule can be viewed here. Let us know if you have any questions, and please share the registration information with the right people on your team.

For more information, please contact Jamie Woodwell at (202) 557-2936.

10. Register Today: MBA’s National Advocacy Conference – April 26-27

Registration is open for MBA’s National Advocacy Conference (NAC) to be held April 26-27 in Washington, D.C. NAC allows you to connect directly with elected officials in our nation’s capital. Your story matters – share it with key policymakers as they consider and pass legislation that affects all of us. 

• Why it matters: The last two years have been unprecedented for millions of Americans, and the real estate finance industry is no different as we navigate new terrains. NAC gives you the opportunity to share your narrative with the key staff and decision-makers while networking with your colleagues from all over the industry. When we work together and combine our voices, we can do great things.  
• What’s next: Share your experiences, your voice, and your passion for our industry April 26-27! Register today at mba.org/nac.

For more information, please contact Rachel Kelley at (202) 557-2816.

12. MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of recent and upcoming webinars, which are complimentary to MBA members:

• Special Purpose Credit Programs: The What, the Why, and the How – April 12
• CFPB Enforcement Authority Over Student Loans and Impact on Mortgage Lending – April 21
• Introduction to Commercial Mortgage-Backed Securities – May 19

MBA members can register for any of the above events and view recent webinar recordings.

For more information, please contact David Upbin at (202) 557-2931.