MBA Advocacy Update July 25 2022

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

The following are activities of note during a busy week on Capitol Hill:

• the full House advanced legislation to partially fund the government (including HUD) for Fiscal Year (FY) 2023;
• House Energy and Commerce Committee unanimously approved remote online notarization (RON) legislation;
• House Committee on Veterans’ Affairs advanced VA home loan appraisal modernization legislation that was first supported by MBA via May testimony by 2022 Vice Chair Mark Jones;
• House Financial Services Committee held an oversight hearing with FHFA Director Sandra Thompson; and the
• Senate Banking and Finance Committees each held hearings on housing affordability.  

Meanwhile, MORPAC entered record fundraising territory for the real estate finance industry – having now raised over $2.7 million dollars this political cycle.

Join the 320+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting minority homeownership; affordable rental housing; and company diversity, equity, and inclusion. One senior executive (e.g., CEO, COO, President, Head of Mortgage, SVP) is encouraged to sign this online form on behalf of your organization.

House Advances Fiscal Year (FY) 2023 “Minibus” Appropriations Legislation

The House on Wednesday passed H.R. 8294, a “minibus” package of six FY 2023 federal funding bills, which included an increase of $8.9 billion for the Department of Housing and Urban Development (HUD).

• Why it matters: Earlier this week, MBA submitted a letter to House leaders advocating for specific industry priorities at HUD and the Treasury Department, including a Federal Housing Administration (FHA) mortgage insurance premium reduction, appropriate funding recommendations for FHA single-family and multifamily lending programs, and the IRS’s process for verifying tax transcript data.
• What’s next: House appropriators will consider the remaining funding bills for FY 2023 before the August congressional recess, while Senate appropriators finalize bills for HUD and the other federal agencies. With Congress unlikely to reach agreement to move all 12 appropriations bills before September 30, legislators will need to pass a “stop-gap” Continuing Resolution to keep the government operating until an “omnibus” package can be agreed upon after October 1 (most likely during a “lame duck” congressional session following the November midterm elections).

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

House Committee on Veterans’ Affairs Advances MBA-Supported Legislation 

On Wednesday, the House Committee on Veterans’ Affairs advanced H.R. 7735, the Improving the VA Home Loan Benefit Act of 2022. The bill received unanimous support from the panel. The measure would require the U.S. Department of Veterans Affairs (VA) to review appraisal certification requirements, encourage hybrid appraisals and leverage emerging technologies, and to revisit policies on property inspection waivers, minimum property requirements, and comparable sales. MBA’s letter of support can be found here.

• Why it matters: MBA Vice Chairman Mark Jones testified in May before the House Veterans’ Affairs Subcommittee on Economic Opportunity in support of this bicameral VA home loan appraisal modernization legislation. The reforms included in H.R. 7735 would direct the VA to revisit existing program requirements to make VA appraisals more readily available and less cumbersome for buyers and lenders.
• What’s next: MBA is pushing committee leaders to seek a full House floor vote on H.R. 7735 as quickly as possible.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

FHFA Director Testifies Before House Financial Services Committee

On Wednesday, the House Financial Services Committee (HFSC) convened an oversight hearing with recently confirmed Federal Housing Finance Agency (FHFA) Director Sandra Thompson. Topics discussed at the hearing included several matters that MBA has actively advocated for, including: the agency’s capital rule for the GSEs, expansion of credit risk transfers, adoption of Special Purpose Credit Programs (SPCPs), concerns about the uniform mortgage-backed securities re-securitization fee, re-examination of the role of the Federal Home Loan Banks, and concerns about the potential expansion of the agency’s supervisory authority to regulate “third party service providers.”

• Why it matters: Hearing questions from elected officials can sometimes place pressure on an agency like FHFA to resolve issues garnering significant attention, including the implementation of specific programs and the nature of enforcement actions. A summary of the hearing can be found here.
• What’s next: A similar oversight hearing involving Director Thompson in the Senate Banking Committee is unlikely this Congress. MBA will continue to work with both FHFA and Congress on a broad range of issues impacting housing, the GSEs, and the secondary mortgage market.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

House Energy and Commerce Committee Holds Full Committee Markup on Remote Online Notarization (RON) and Data Privacy Legislation  

On Wednesday, the full House Energy and Commerce Committee advanced a number of bills, including H.R. 3962, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2021, and H.R. 8152, the American Data Privacy and Protection Act (ADPPA). The MBA-supported SECURE Notarization Act creates a set of minimum federal standards for RON utilization. The ADPPA would create a new comprehensive data privacy and security regime that would apply to financial institutions not in compliance with the Gramm-Leach-Bliley Act (GLBA), expand private right of action enforcement capacities, and initiate a patchwork state preemption regime. MBA has expressed our industry’s concerns with the current construct of the bill.

• Why it matters: The SECURE Notarization Act passed with unanimous support, and the ADPPA garnered widespread bipartisan support – with further changes expected should the bill progress to the House floor for consideration. 
• What’s next: MBA is encouraging Energy and Commerce Committee leaders to seek a full House floor vote on the SECURE Notarization Act as quickly as possible, while simultaneously advocating for significant changes to the ADPPA before it advances. 

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

Senate Finance Committee Discusses Affordable Housing Tax Incentives

On Wednesday, affordable housing experts, advocates, and stakeholders testified before the Senate Finance Committee on the impact tax incentives have on affordable housing. Witnesses, including [MBA member] Walker & Dunlop’s Dana Wade, discussed several topics such as the ongoing shortage of housing supply, the increased costs to building new – or rehabilitating old – homes, housing-related tax credits, and rising rent and home prices. A summary of the hearing can be found here. 

• Why it matters: The persistent low supply of available single- and multi-family housing throughout the country has affected affordability – further adding to the challenges faced by first-time and low- to moderate-income buyers and renters.
• What’s next: Movement on housing-related tax credit legislation may take place in a “lame-duck” session following the November mid-term elections.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866.

Senate Banking Committee Holds Separate Hearing on Housing Affordability

On Thursday, the Senate Banking Committee held a lightly-attended hearing on home-price appreciation and low housing supply. Senators focused their questions on expanding affordable housing, the impact of rising interest rates on monthly mortgage payments, and minority homeownership rates. Chairman Sherrod Brown (D-OH) criticized congressional efforts to date on housing affordability and supply concerns. Ranking Member Pat Toomey (R-PA) criticized the GSEs’ proposed equitable housing finance plans, referring to them as an attempt at ”social engineering.” A hearing summary can be found here. 

• Why it matters: The hearing highlighted the lack of progress the Senate has made advancing the Biden administration’s housing agenda.
• What’s next: MBA will continue to advocate for targeted legislation to help advance our industry’s housing affordability priorities.

For more information, please contact Ethan Saxon at (202) 557 2913 or Tallman Johnson at (202) 557 2866.

MORPAC Raises Record Amount of Political Dollars for Industry

Earlier this month, and on the heels of our highly successful Action Week efforts in June, MORPAC reached its most significant milestone to date by raising an aggregate total of more than $2.7 million during the current 2022 election cycle, thus breaking our 2020 record fundraising cycle amount of $2,659,406 – and putting us 90% of the way toward our ambitious fundraising cycle goal of $3 million by year’s end. MORPAC currently ranks in the top 10 of trade association PACs in terms of individual contributions, and in the top 5 in contributions to candidates – having disbursed more than $2.1 million to federal candidates, party committees, and leadership PACs. Late last month, MORPAC hosted its 5th annual Action Week, with 20 MBA member organizations running concurrent MORPAC company campaigns. Those efforts recruited over 400 individual donors and raised roughly $150,000 in individual contributions to MORPAC. 

• Why it matters: The “hard” dollars raised for MORPAC serve as political capital for our industry to support congressional candidates and incumbents that support our industry. These efforts keep the MBA Advocacy team “at the table” during discussions on the broad range of congressional issues that impact our members, their businesses, consumers, and other end users. 
• What’s next: This MORPAC dollar total represents participation across all market segments of the real estate finance industry and our membership: Associate, Commercial/Multifamily, and Residential. The MORPAC team will continue to pursue our ambitious political cycle goal — while broadening participation for our grassroots PAC from a growing number of industry members. Thank you to all of our contributors.

For more information, please contact Rachel Kelley at 202-557-2816 or Jamey Lynch at 202-557-2818.

MBA Continues Advocacy on GSE Appraisal Requirements for Manufactured Housing

On Monday, MBA and the Manufactured Housing Institute (MHI) submitted joint recommendations to Fannie Mae and Freddie Mac (the GSEs) regarding their appraisal requirements for high-quality manufactured housing. The comments focus on the selection of comparable sales by appraisers for purposes of the GSEs’ MH Advantage and CHOICEHome offerings. To reduce instances of undervaluation of high-quality manufactured housing, MBA and MHI recommended modest adjustments to the GSEs’ appraisal requirements that would require appraisers to use site-built homes as comparable sales when sales of similar types of manufactured housing are not available.

• Why it matters: New building technology has led to the development of manufactured housing that closely resembles site-built housing in terms of both appearance and build quality. Industry contacts have reported that valuations of these properties, however, often come in lower than expected due to the use of older manufactured housing as comparable sales. Adjustments to the GSEs’ appraisal guidelines would require the use of site-built homes as comparable sales in more cases, thereby addressing one of the primary constraints to further investment in high-quality manufactured housing.
• What’s next: MBA will continue to work closely with the GSEs and FHFA on policy reforms that increase the supply of affordable housing.

For more information, please contact Dan Fichtler at (202) 557-2780.

MBA Submits Letter to FHA on its Servicing Defect Taxonomy 

On Tuesday, MBA submitted feedback to FHA recommending that they propose the next iteration of the Servicing Defect Taxonomy to the drafting table for a 60-day industry comment period. MBA believes the continued use of the drafting table is the appropriate next step in the process to ensure the servicing taxonomy is developed as a long-term initiative. MBA urged FHA to prioritize the application of “material risk” to the most severe defects. The transparent use of the drafting table will allow the industry to arrive at consensus on how FHA prioritizes risk within each servicing defect area and throughout the servicing lifecycle.

• Why it matters: Increasing the fairness and predictability of FHA’s quality control process is critical to increasing participation in FHA’s program. Originally proposed in 2021, the Servicing Defect Taxonomy seeks to hold servicers accountable for loan-level compliance with servicing requirements. A January 2022 joint trades response, emphasized the importance for FHA to clarify how FHA intends to calibrate loan-level compliance errors to the most appropriate and proportionate remedy available.
• What’s next: MBA will continue to advocate for the use of the drafting table for industry collaboration and will emphasize the importance of correctly prioritizing material defects to the most severe defects and calibrating the appropriate corresponding remedies.

For more information, please contact Brendan Kelleher at (202) 557-2779.

Federal Reserve Issues Proposal to Establish Replacement Benchmarks for LIBOR Transition

On Tuesday, the Federal Reserve issued a proposed rule that would establish benchmarks to replace the London Interbank Offered Rate (LIBOR) for certain financial contracts. The proposal, which follows enactment of federal LIBOR transition legislation earlier this year, would establish these replacement benchmarks for contracts governed by U.S. law that reference certain tenors of U.S. dollar LIBOR (overnight, 1M, 3M, 6M, 12M) and that do not already contractually require use of a clearly defined replacement after June 30, 2023 – so-called “tough legacy” contracts.

• Why it matters: LIBOR-indexed, single-family, adjustable-rate mortgages that do not have adequate fallback language would be covered by this legislation. The proposed replacement benchmark for these loans would be the applicable term Secured Overnight Financing Rate (SOFR), plus a “transition tenor spread adjustment.” These fallback rates will be published by Refinitiv. The proposal includes a separate replacement benchmark for multifamily loans and securities indexed to LIBOR. In accordance with the federal legislation, the proposal provides strong legal protections for institutions that choose the (SOFR-based) replacement benchmark selected by the Federal Reserve. The proposal also, however, limits the ability of federal bank supervisors to take enforcement actions against banks solely because they choose replacement benchmarks that are not based on SOFR.
• What’s next: Comments on the proposal will be due 30 days after its publication in the Federal Register – likely leading to a deadline in late August. As a reminder, U.S. Dollar LIBOR will be discontinued or determined unrepresentative after June 30, 2023.

For more information, please contact Dan Fichtler at (202) 557-2780.

FHFA Announces Office of Financial Technology

This week, FHFA announced the establishment of the Office of Financial Technology. The Office will help develop strategies for Fannie Mae and Freddie Mac (the Enterprises) to advance housing finance fintech and innovation in a safe and sound, responsible, and equitable manner and will engage with market participants, various industry stakeholders, and other agencies to facilitate the sharing of information and best practices. In conjunction with this announcement, FHFA issued a Request for Input (RFI) to gather public input on the role of technology in housing finance, and to better understand the current landscape of innovation in each stage of mortgage lifecycle as well as related processes, risks, and opportunities. 

• Why it matters: The responsible use of fintech has many potential benefits, including increasing efficiencies, lowering costs, and lowering risk. For these reasons, MBA has supported innovation executed in a safe and sound manner at both FHFA and the GSEs.
• What’s next: MBA will be submitting comments in response to the RFI and will continue to work with FHFA and the GSEs as the Office of Financial Technology is established. The deadline for public comments is October 16, 2022.

For more information, please contact Sasha Hewlett at (202) 557-2805.

Rhode Island Governor Signs Remote Work Legislation

Rhode Governor Daniel McKee signed legislation (HB 7781) that will permit mortgage loan originators (MLOs) to work away from a licensed branch location. HB 7781 replaces remote work guidance issued by the Rhode Island Department of Business Regulation and goes into effect immediately.

• Why it matters: HB 7781 is consistent with the MBA model and other states that have acted to permit remote work. There are now 20 states that have enacted legislation, promulgated rules, or issued regulatory guidance that permanently allows MLOs to work from a remote location.
• What’s next: MBA will continue to work with our state and local association partners to advocate for its model legislation and regulation to create licensing flexibility nationwide.

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

CCPA Releases New Data Privacy Regulation 

On June 8, the California Privacy Protection Agency (CPPA) released their proposed regulations implementing the California Privacy Rights Act (CPRA). The CPRA gives consumers the right to opt out of data sharing and sales, the right to limit a business’ use and disclosure of sensitive personal information, the right to request businesses correct inaccurate personal information held by the business, the right to delete information, and the right to know what personal information is held by a business. The CPRA also prohibits the use of “dark patterns” — user interfaces designed to influence online decision making – when presenting privacy options. These rules are set granularly and prohibit commonly used dark pattern practices. The CPRA does include a data-level Gramm-Leach-Bliley Act exemption for personal information subject to the Act that will cover much of the data held by members covered by GLBA.

• Why it matters: California is a leading state in developing data privacy law. In addition to creating obligations in the California market, any regulation created by the CPRA could be used as a blueprint for future rulemaking in other states or on the federal level. It is important that our members make their voices heard and ensure any regulation coming out of the CPRA balances consumer interests with industry data processing needs for financial transactions. 
• What’s next: The CPPA is requesting comments by August 23, 2022. MBA asks members to send us their thoughts on this regulation.

For more information, please contact Kobie Pruitt at (202) 557-2870 or Gabriel Acosta at (202) 557-2811.

[WATCH]: mPower Moments: On Being a CRE Leader with M&T Realty Capital Corporation’s Christine Chandler

In this episode of mPower Moments, Marcia M. Davies sits down with Christine Chandler, Chief Credit Officer and COO at M&T Realty Capital Corporation. As a highly accomplished industry professional, Chandler shares how she got her start in the commercial real estate finance industry and the lessons she’s learned along the way.

• Why it matters: Chandler also discusses the critical moments that have shaped her career and lends inspiring advice to women starting in the industry. Additionally, Christine also addresses how our industry can continue its upward path of ensuring more women rise to the C-suite level.
• What’s next: To watch more mPower Moments, click here .

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

Are You a Diversity Champion? Apply for MBA’s DEI Leadership Awards

MBA’s Diversity, Equity and Inclusion (DEI) Leadership Awards are back! Now in its seventh year of recognizing MBA member companies, this awards program acknowledges the dedication and creativity that increase DEI efforts within a company’s leadership and employee base. If your organization is a champion of diversity, share how you are inspiring change and highlight your success by applying today.

• What’s next: Applications are due August 5, 2022. Prior to getting started, please review application tips to help you prepare your entry.

For more information, please contact MBA’s DEI Team.

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:

• Managing Single-Family Retail Originations in Today’s Volatile Mortgage Market – July 27
• How Technology Helps Drive More LO Value with Realtor Relationships – August 4
• Commercial Real Estate Property Insights – Where are We Now? – August 11
• C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 23
• Risk and Compliance Management: Are You Covered? – August 24

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.