MBA Advocacy Update Apr. 10, 2023

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

MBA Urges CFPB to Reconsider Consent Order Registry for Nonbank Mortgage Companies

Last Friday, MBA submitted comments on the Consumer Financial Protection Bureau’s proposed rule requiring nonbank financial firms that are under a final court order or regulatory order to enter those into an online registry. MBA strongly opposes creation of the registry because almost all the information sought by the CFPB is already available in a consumer database maintained by the Nationwide Multistate Licensing System. The letter notes that the Bureau is required to use reports that have already been provided to federal and state agencies, use information that has been reported publicly, and tailor rules with consideration of the extent of current state supervision. MBA urged the CFPB to exempt nonbank mortgage companies rather than creating redundant reporting requirements.  

• Why it matters: If finalized, applicable MBA members would incur the costs required to register and submit the requested information to the Bureau and have appropriate compliance infrastructure in place, including designating a senior-level executive to attest to compliance with each order. MBA’s letter urged the Bureau to be more “focused on helping mortgage lenders lower origination costs by removing – and not proposing – duplicative regulatory requirements that will provide little benefit to consumers.”
• What’s next: MBA will continue to monitor this rulemaking and keep members aware of any changes. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557-2811.

MBA Submits Comments on CFPB’s Contracts Registry Proposal

On Monday, MBA submitted comments to the CFPB on its proposed rule creating a registry of certain contract terms and conditions used by nonbank entities. MBA opposes creation of the registry and highlighted the insufficient analysis that went into the proposal. The comments also suggested changing the exemption for nonbank mortgage lenders that exclusively use online mortgage forms into a forms-based exemption, which would exempt from registration all forms required by government regulators, agencies, insurers or guarantors in connection with the origination and servicing of a home mortgage. MBA also asked the CFPB to ensure the online mortgage form exemption covers the use of internet accessible riders, addendum, state required forms, and loss mitigation documents. 

• Why it matters: MBA believes the Bureau has not done the necessary cost-benefit analysis and should withdraw this proposal for further study and analysis. Rather than creating a complex and difficult to comply with registry, the Bureau’s rulemaking resources should be directed to lowering the costs for borrowers instead of raising costs on mortgage lenders through a proposal that will provide little benefit to those consumers. 
• What’s next: MBA will continue to monitor this rulemaking and keep members aware of any changes. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557-2811.

CFPB Releases Policy Statement on Abusive Acts or Practices

On Monday, the CFPB released a policy statement summarizing past enforcement actions brought under its Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) authority. This policy statement is intended to articulate how the Bureau understands the prohibition on abusive conduct and – at least in theory – is not meant to impose new legal requirements. It is also intended by the Bureau to be used by other federal and state regulators who examine for or enforce UDAAP violations. At a high level, the Bureau summarizes abuses practices as (1) obscuring important features of a product or service or (2) leveraging certain circumstances to take an unreasonable advantage. Specifically, the Bureau writes that using “dark patterns” in certain disclosures is a practice that obscures important features of a product or service. Additionally, a company can be considered to take advantage of a consumer when the consumer did not choose to enter a relationship with an entity or where that entity has an unreasonable advantage over the consumer. Although these circumstances are not per se abusive, companies may not take advantage of consumers in this situation.       

• Why it matters: The policy statement attempts to provide financial services providers with an understanding of how the Bureau views its enforcement authority and which practices it will seek to stop with its UDAAP authority. 
• What’s next: The policy statement provides the public until July 3, 2023, to submit written comments. MBA will be discussing the statement with members to inform our comments. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557-2811.

FHFA Announces Updated Equitable Housing Finance Plans for the GSEs

On Wednesday, the Federal Housing Finance Agency announced release of Fannie Mae’s and Freddie Mac’s updated Equitable Housing Finance Plans for 2023. The revised plans build on the first iterations released last year and include updates based on initial findings and research. Updates include an enhanced focus on loss mitigation support, the inclusion of financial coaching to build credit and savings, support for locally owned modular construction facilities in communities of color, continued focus on multifamily rehab and construction, and increases to the reach of the GSEs’ Special Purpose Credit Programs (SPCPs). The GSEs also published performance reports outlining the progress made on the 2022 plans. 

• Why it matters: The implementation of these plans is an important step in addressing our nation’s long-standing challenges related to housing equity. Many of the activities included in the plans align with MBA recommendations developed through the Building Generational Wealth through Homeownership initiative. MBA has led industry efforts to facilitate greater use of SPCPs, including releasing an SPCP toolkit last year.  
• What’s next: MBA will continue to engage with FHFA and the GSEs on efforts to close the racial homeownership gap and boost the supply of affordable rental housing. MBA will also review the GSE plans to ensure new initiatives are being developed in alignment with MBA’s policy on pilot programs (open architecture with multiple vendors) and on new activities (no encroachment on primary market functions).  

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

MBA, NYMBA Comment on Proposed NYDFS Climate Risk Mitigation Guidance

Late last week, the New York Mortgage Bankers Association and MBA filed a comment letter in response to the New York Department of Financial Service’s Proposed Guidance for New York State Regulated Banking and Mortgage Institutions Relating to Management of Material Financial Risks from Climate Change. In recent weeks, NYDFS also hosted a webinar that provided an overview of the proposed Guidance. The recording is available here and the slide deck here. The industry comments reiterated the key provisions of a previously submitted MBA letter to the Federal Housing Finance Agency’s Climate and Natural Disaster Risk Management RFI. The NYDFS proposal is sweeping in its scope and represents one of the first attempts by a state financial services regulator to establish regulatory expectations specifically designed to mitigate climate risks. To ensure alignment with federal financial regulators, MBA urged NYDFS to leverage the work of these agencies to the maximum extent possible to help produce a common approach on mortgage-specific topics.

• Why it matters: Addressing climate risk will require an aligned approach between state and federal financial regulators rather than a patchwork quilt of requirements and supervisory expectations.
• What’s next: MBA and NYMBA will continue to collaborate and respond to NYDFS questions.

For more information, please contact William Kooper (202) 557-2737.

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:

• Warehouse Lending: Latest Activity, Trends and Developments – April 12
• Multifamily Finance Faces Headwinds Head-On – April 18
• Turn Distressed Mortgage Loans into Performing Portfolios Faster – April 20
• ROI Guide to Risk & QC Technology – April 25
• MSR Transfers: Balancing Risk, Customer Experience and Efficiency – May 11
• What Trends will Shape the Lending Space in the Second Half of 2023 – June 1

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.