MBA CREF Policy Update Oct. 27, 2022
Bill Killmer bkillmer@mba.org; Mike Flood mflood@mba.org
Last Wednesday, a federal appeals court found that the CFPB’s independent funding structure is unconstitutional; because the case involved the CFPB’s payday lending rule, there are no immediate or short-term impacts to any mortgage rules from this decision. On Tuesday, the SEC published a notice in the Federal Register announcing they are reopening 11 rulemakings due to a technical error, including its climate-risk disclosure rule. Also last week, the Treasury Department’s Federal Office of Insurance released a proposal to collect data from property and casualty insurers to assess climate-related risk.
The MBA CREF team is happy to announce that Megan Booth joined us as Associate Vice President of Commercial/Multifamily Policy. Megan has had a distinguished career in real estate policy at the Manufactured Housing Institute and the National Association of Realtors (NAR). Join us in welcoming Megan to the team!
MBA is now accepting applications for its Commercial/Multifamily Diversity, Equity, & Inclusion Leadership Awards. For more information and to apply, click here.
Sign MBA’s Home for All Pledge: Join the 320+ 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.
Fifth Circuit Court Rules CFPB Funding Structure Unconstitutional
In an opinion issued last Wednesday, a three-judge panel of the Fifth Circuit Court of Appeals invalidated the Consumer Financial Protection Bureau’s Payday Lending Rule, reasoning that the CFPB’s independent funding structure is unconstitutional under the Constitution’s Appropriations Clause and general separation of powers principles.
- Why it matters: This ruling is currently limited to the CFPB’s Payday Lending Rule. There are no immediate or short-term impacts to any mortgage rules from this decision, but the logic of the decision raises interesting questions about Bureau rules and operations going forward. MBA is currently evaluating the potential impact on existing Bureau regulations.
- What’s next: While still unclear, the CFPB has the option to appeal this decision. This could result in a lengthy process. MBA will continue to monitor and inform members of any new developments as they arise.
For more information, please contact Justin Wiseman at (202) 557-2854.
SEC Reopens Comment Period for Climate Risk Disclosure Rule; 10 Other Rulemakings
Last Tuesday, the U.S. Securities and Exchange Commission (SEC) published a notice in the Federal Register announcing they are reopening 11 rulemakings due to a technical error.
- Why it matters: Notably, the Enhancement and Standardization of Climate-Related Disclosures for Investors rulemaking was included in the announcement. MBA’s comments were submitted to the SEC in June 2022 and are published on the SEC’s website.
- What’s next: MBA will follow developments to determine if the reopening of the comment period delays the date of a final rulemaking and/or opens any potential final rule to legal challenges.
For more information, please contact Grant Carlson at (202)-557-2765.
Treasury Federal Office of Insurance Issues Proposed Climate Data Collection from Insurers
The U.S. Department of the Treasury’s Federal Office of Insurance recently released a proposal to collect data from property and casualty insurers to assess climate-related risk.
- Why it matters: The proposal is in response to the Biden administration’s agenda to respond to climate charge.
- What’s next: MBA is reviewing the proposal and other actions taken by FIO concerning climate change and climate risk.
For more information, contact Grant Carlson at (202)-557-2765.
Freddie Mac Announces Increased Financing for Multifamily New Construction and Rehab Properties
Freddie Mac announced that it will increase the use of forward commitments to provide more financing for new construction and heavily rehabbed properties. Forward commitments allow developers to lock in financing terms and give more certainty to lenders and developers. The execution is available to new construction or substantial rehabilitation affordable properties that do not have Low-Income Housing Tax Credits in place. The affordability requirements vary based on whether the project is receiving public support with rent restrictions in place and can be found here.
- Why it matters: The announcement comes after the Biden administration released its progress report on implementing its Housing Supply Action Plan, where it was noted that the Federal Housing Finance Agency (FHFA) would exempt $3 billion in forward commitments from the multifamily lending caps for each Enterprise.
- What’s next: MBA will continue to follow the progress of the program and communicate all relevant information to our members.
For more information, contact Stephanie Milner at (202) 557-2747.
Commercial and Multifamily Mortgage Delinquency Rates Declined Through the Third Quarter of 2022
Delinquency rates for mortgages backed by commercial and multifamily properties declined through the third quarter of 2022, according to the Mortgage Bankers Association’s latest CREF Loan Performance Survey, released Monday.
- MBA’s Jamie Woodwell, Vice President of Commercial Real Estate Research, said, “Commercial and multifamily mortgages continued to perform well through the third quarter. A much smaller share of loans backed by the property types hardest hit at the onset of the pandemic – lodging and retail – were delinquent. For those property types, very few new loans faced difficulties and lenders continued to work through those that had. Additionally, loans backed by property types that have been performing well throughout the pandemic – including multifamily, industrial, and office – continued to see few delinquencies. After a strong start to the year, commercial real estate is being hit by significant transitions in the space, equity, and debt markets. As those forces unfold, they will no doubt have an impact on commercial mortgage loan performance in coming quarters and years. Given recent years’ growth in property values and incomes, the impacts will likely vary considerably.”
- To see the latest CREF Loan Performance Survey, click here.
For more information, please contact Jamie Woodwell at (202) 557-2936.
State Trackers
For more information, contact William Kooper at (202) 557-2737 or Grant Carlson at (202) 557-2765.
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:
- Climate Risk in CREF – What we know and are learning – November 1
- Augmenting Talent with Technology – November 8
- TRID Housekeeping & Latest Information – November 15
- Inflation, Interest Rate, Cap Rates & Values: What Do We Really Know? – November 30
- Ensuring HMDA Data Integrity and Common Reporting Issues – December 14
- Ten Things Your Company Must Do in 2023 – January 18
MBA members can register for any of the above events and view recent webinar recordings.
For more information, contact David Upbin at (202) 557-2931.
