MBA Advocacy Update Mar. 28 2022

Bill Killmer bkillmer@mba.org; Pete Mills pmills@mba.org

On Wednesday, the Biden administration released its Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) Action Plan. Yesterday, the Senate Banking Committee held a hearing on the PAVE report. On Tuesday, the CFPB issued a compliance bulletin addressing various unfair and deceptive practices affecting consumer reviews. And on Monday, the SEC voted to release a Notice of Proposed Rulemaking that would require domestic and foreign registrants to include climate risk and impact information in registration statements and periodic reports.

Federal Agencies Release Action Plan to Address Appraisal Bias

On Wednesday, the Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) published its action plan to address bias in residential property appraisals. The 13 federal agencies and offices in the PAVE task force conducted a six-month examination of existing research on property valuations, as well as the causes and impacts of appraisal bias. MBA President and CEO Bob Broeksmit, CMB, issued a press statement welcoming the report and emphasized MBA’s commitment to “working with policymakers and other stakeholders, including appraisers, to develop solutions that ensure borrowers receive a fair and accurate estimate of the value of their homes.” Following the publication of the PAVE task force action plan, the Senate Banking Committee yesterday held a hearing on “Strengthening Oversight and Equity in the Appraisal Process.” A similar hearing in the House is expected to follow. Although the Task Force indicated most of its recommendations can be implemented under existing authorities, MBA anticipates the report will spawn appraisal-related legislative proposals. A summary of the hearing can be found here.

• Why it matters: The recommendations in the action plan cover a wide range of areas, including oversight of the appraisal industry, reconsideration of value processes, barriers to entry for new appraisers, data collection and analysis, and consumer education. Each of these issues have the potential to impact mortgage industry stakeholders and alter the processes, costs, timelines, accuracy, and equity associated with property valuations.
• What’s next: The action plan represents the first step in the PAVE task force’s work, with the focus now turning to implementation of its recommendations. MBA urged the agencies to leverage notice and comment processes to the greatest extent possible to ensure stakeholder engagement. MBA will work closely with the relevant agencies, as well as Congress, as this implementation process unfolds.  

For more information, please contact Dan Fichtler at (202) 557-2780 or Hanna Pitz at (202) 557-2796. For information on Capitol Hill actions in response to the PAVE report, please contact Ethan Saxon at (202) 557-2913 or Alden Knowlton at (202) 557-2741.

SEC Proposes Rule on Required Climate Risk and Environmental Impact Disclosures for Public Companies

On Monday, the Securities and Exchange Commission voted to release a Notice of Proposed Rulemaking that would require domestic and foreign registrants to include climate risk and impact information in registration statements and periodic reports. The SEC also released a fact sheet on the proposed rule.

• Why it matters: As proposed, the SEC rulemaking would begin requiring registrants to disclose a variety of climate-related information, including likely material impacts of climate-related risks on the registrant’s business, strategy, and outlook; greenhouse gas emissions (GHGs); certain related audited financial statements; and information about climate-related targets and goals. This announcement provides further confirmation that federal agencies, supervisors, and regulators are increasing momentum in developing and enhancing climate-risk related policies. Although the proposal makes it clear that asset-backed securities issuance is not covered by the rule, the SEC indicated that they are continuing to consider how such disclosures might apply to ABS issuers.  
• What’s next: Comments on the proposed rule are due no earlier than May 20. MBA has started working with members to gather feedback and plans to submit comments. 

For more information, please contact Hanna Pitz at (202) 557-2796.

CFPB Issues Warning on Fake or Manipulated Consumer Reviews

On Tuesday, the Consumer Financial Protection Bureau issued a compliance bulletin addressing various unfair and deceptive practices affecting consumer reviews. The bulletin explains that contractual provisions that restrict a consumer’s ability to leave a review can be deceptive, given that such provisions are generally unenforceable under federal law. Further, practices that aim to manipulate consumers’ understanding of reviews, such as displaying fake reviews or suppressing negative reviews, could also trigger UDAAP liability as unfair or deceptive practices. Although the bulletin does not cite any recent exam findings or research indicating problems with financial services reviews, the bulletin piggy backs on a recent Federal Trade Commission action that sent 700 notices to online advertisers warning about fake consumer reviews.

• Why it matters: Along with providing examples of potential UDAAPs related to consumer reviews, the compliance bulletin makes clear that the Bureau intends to exercise its enforcement and supervisory authorities on this issue. Regulated entities are urged to “ensure that their customer review practices comply with all applicable laws.” 
• What’s next: The bulletin notes that it is a general statement of policy and is therefore effective immediately.  

For more information, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.

Georgia Legislative Committee Unanimously Passes Revision to State Licensing Laws

On Wednesday, the Georgia House Banks and Banking Committee held a hearing for SB 470, which would make important revisions to Georgia’s state licensing laws to create greater consistency with the federal SAFE Act and the laws of other states. Prior to the hearing, MBA shared a letter of support with members of the committee, which then passed the bill unanimously. If enacted, SB 470 will limit the scope of the state’s licensing law to only those with access to residential mortgage loan origination, processing, or underwriting information. Specifically, the prohibitions on employing individuals with prior nonfinancial felony convictions would only apply to “covered employees” who have access to Georgia loans. With this change, a company’s Georgia license would no longer be threatened by the qualifications and backgrounds of staff who do not have access to the financial and personal identifiable information of consumers with Georgia loans. 

• Why it matters: The current provisions in Georgia law are the most restrictive in the nation and create enormous legal uncertainty and compliance risk for MBA members. 
• What’s next: SB 470 has already passed the Georgia Senate chamber and must now be approved by the Georgia House before the legislature adjourns at the end of the month; MBA will continue to work towards that goal.

For more information, please contact Kobie Pruitt (202) 557-2870.

South Dakota, Kansas Advance Remote Work Legislation  

South Dakota Governor Kristi Noem signed legislation (HB 1271) that would permit mortgage loan originators to work away from a licensed branch location. HB 1271 unanimously passed both the House and the Senate prior to being signed by Governor Noem. On Wednesday, the Kansas Senate passed legislation (HB 2568) to enable remote work and will now be sent to Governor Laura Kelly for her signature. HB 2568 was developed in collaboration with MBA and the Kansas real estate finance industry, and was introduced on behalf of the Kansas Office of the State Bank Commissioner. MBA’s Kobie Pruitt testified in the Kansas House and Senate to support HB 2568’s passage.

• Why it matters: The provisions of both the South Dakota and Kansas bills are consistent with the MBA model and other states that have acted to permit remote work. South Dakota is the 15th state to enact legislation or promulgate rules that permanently allow MLOs to work away from a licensed branch.
• What’s next: MBA will continue to work with our state and local association partners to advocate for licensing flexibility nationwide. 

For more information, please contact Kobie Pruitt at (202) 557-2780.

MBA Releases New Monthly Affordability Index Based on Weekly Applications Survey Data 

Yesterday, MBA released its first monthly Purchase Applications Payment Index (PAPI), which will report out Weekly Applications Survey 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.  
• Edward Seiler, MBA’s Associate Vice President of Housing Economics, and Executive Director of the Research Institute for Housing America, said, “Low unemployment has spurred strong income growth in early 2022, but homebuyer affordability has decreased due to the quick rise in mortgage rates amidst steep home-price growth. The 30-year fixed-rate mortgage spiked 73 basis points from December 2021 through February 2022. Together with increased loan application amounts, a mortgage applicant’s median principal and interest payment in February jumped $127 from January and $337 from one year ago.”

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

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

Registration is open for MBA’s National Advocacy Conference, 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.

Upcoming 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 upcoming webinars – which are complimentary to MBA members:

• Tomorrow’s Servicing: Automated Transfers, Recoverables and Accuracy – March 29
• Desktop Appraisals at the GSEs: What, When, and How? – March 30
• Special Purpose Credit Programs: The What, the Why, and the How – April 12
• Technology Investment: Keeping Pace with Your Peers – April 19
• 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.