CREF Policy Update: June 29, 2023

1. Federal Reserve Chair Testifies in House and Senate

Federal Reserve Chair Jerome Powell testified before the House Financial Services Committee and Senate Banking Committee last week as part of his semi-annual report to Congress. Chair Powell discussed the Federal Open Markets Committee’s justification for holding interest rates steady at its most recent meeting – quickly dismissing the decision’s characterization as a “pause” – and signaled that additional rate hikes are likely this year. Chair Powell faced numerous questions from both sides of the aisle over concerns regarding Vice Chair for Supervision Michael Barr’s anticipated recommendation to increase capital requirements at the conclusion of a “holistic review.” A summary of both hearings can be found here.

-Why it matters: Republicans mainly focused their questions on Vice Chair Barr’s review of bank capital requirements, the impact of higher capital requirements, and the Fed’s process for changing capital requirements. Democrats mainly focused their questions on how monetary policy can impact low and moderate-income communities, inflation in other jurisdictions, diversity at the Fed and climate policy.
-What’s next: The Federal Reserve will outline plans to overhaul capital and liquidity rules later this summer, which would initiate an ambitious rule rewriting process for banking regulators.

For more information, please contact Alden Knowlton at (202) 557-274, Borden Hoskins at (202) 557-2712, Ethan Saxon at (202) 557-2913, or Bill Killmer at (202) 557-2736.

2. Bipartisan Flood Insurance Legislation Introduced

Last week, Senators Bob Menendez (D-NJ) and Bill Cassidy (R-LA) introduced legislation to reauthorize the National Flood Insurance Program (NFIP) and limit recent premium increases. The National Flood Insurance Program Reauthorization (NFIP-RE) Act of 2023 has a House companion offered by Reps. Frank Pallone (D-NJ) and Clay Higgins (R-LA). The text of the legislation can be found here.

-Why it matters: The legislation updates the claims process, caps annual premium increases at 9 percent – down from 18 percent – and provides funding for mitigation and vouchers to boost flood insurance affordability.
-What’s next: Congress has enacted 25 short-term reauthorizations of the NFIP since its last five-year renewal lapsed in 2017. The current reauthorization will expire September 30, 2023.

For more information, please contact Bill Killmer at (202) 557-2736 or Ethan Saxon at (202) 557-2913.

3. HUD Publishes Final Inspection Requirements

Last Wednesday, the Department of Housing and Urban Development (HUD) published the National Standards for the Physical Inspection of Real Estate (NSPIRE) final inspection requirements for assisted and Federal Housing Administration-insured properties. HUD also published a list of inspectable items. The new standards place significant emphasis on deficiencies found in units over building components or common areas. MBA has expressed concern with this shift, as tenants often create the issues noted.

-Why it matters: The implementation notice for NSPIRE was published in May and is effective beginning July 1, 2023.
-What’s next: HUD will publish the two remaining notices – Scoring, and Administrative Notices – this summer. MBA will continue to work with HUD to ensure that property inspection standards are fair and balanced and do not place undue burdens on property owners/servicers, who are working to provide safe, quality housing.

For more information, please contact Megan Booth at (202) 557-2740.

4. Second Nevada Rent Control Bill Vetoed

MBA this year has been working with the Nevada Mortgage Lenders Association to oppose rent control proposals. Earlier this month, Nevada Governor Joe Lombardo vetoed AB 298, which included state-wide rent control for certain tenants. However, the Legislature also passed SB 371, which clarified local governments’ ability to pursue affordable housing initiatives, which could include rent control. Last week, Governor Lombardo cited “government overreach” by the Legislature and vetoed this bill.

-Why it matters: The veto represents another successful result of an MBA Mortgage Action Alliance (MAA) Call to Action.
-What’s next: MBA will continue to work with its member companies and state association partners to oppose rent control.

For more information, please contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870.

5. Rent Control Map and State Trackers

Given the ongoing proposals and ballot initiatives across the country, MBA has published an online map that provides an overview of state and local rent control laws. MBA will follow ongoing developments on this issue and will update the map accordingly.

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

6. Upcoming MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely single-family and commercial/multifamily 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:

-Mastering Revenue Metrics of Construction to Permanent Loans – July 18
-Managing Costs and Compliance of Lead Generation in a Purchase Market – July 19
-Office Doldrums: Challenges, Opportunities, and Nuances – July 26

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

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