MBA Advocacy Update: MBA-Supported ‘Trigger Leads’ Bill Introduced in Senate; Act Today on MBA’s MAA Call to Action
MBA-Supported “Trigger Leads” Bill Introduced in Senate
Last week, Senators Jack Reed (D-RI) and Bill Hagerty (R-TN) introduced the Homebuyers’ Privacy Protection Act (S.3502), which would restrict the use of prescreened reports (trigger leads) under the Fair Credit Reporting Act (FCRA) to limited circumstances during a real estate transaction.
In a press statement in support of the bill, MBA President and CEO Bob Broeksmit, CMB, said, “MBA and its members have led the industry in advocating for legislative reforms to stop the unwanted harassment of consumers resulting from trigger lead abuses.”
Why it matters: Eliminating trigger lead abuses while preserving their use in appropriately narrow circumstances (current relationship or consent) remains an MBA priority. The introduction of this Senate companion bill – along with H.R. 4198, the Protecting Consumers from Abusive Mortgage Leads Act, led in the House by Reps. John Rose (R-TN) and Ritchie Torres (D-NY) – is directly in response to MBA’s leading advocacy efforts on this issue.
Go deeper: Though not identical to H.R. 4198, S.3502 targets widespread abusive trigger lead practices while preserving the legitimate use of these leads in a narrow set of market-based circumstances. A consumer reporting agency (CRA) would not be able to furnish a trigger lead to a third party unless: (1) the third party certifies to the CRA that the consumer has authorized the solicitations; OR (2) the third party certifies it has originated the consumer’s current residential mortgage loan, is the servicer of the consumer’s current residential mortgage loan, or is an insured depository institution or insured credit union and holds a deposit account for the consumer to whom the consumer report relates.
What’s next: Participate in MBA’s two Mortgage Action Alliance (MAA) Call to Actions today (click here: H.R. 4198 and S.3502) and urge your U.S. Representative and U.S. Senators to co-sponsor the two MBA-supported “trigger leads” bills. MBA will continue its focused advocacy to advance both of these bills as soon as possible.
For more information, please contact Bill Killmer at (202) 557-2936, Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797 and Rachel Kelley at (202) 557-2816.
MBA Supports FHA’s New Loss Mitigation Program
On Tuesday, MBA and the National Mortgage Servicing Association responded to the Federal Housing Administration’s (FHA) revised loss mitigation proposal, the Payment Supplement. Released to the Drafting Table last month, the Payment Supplement establishes a custodial account to allow a borrower to receive a reduced monthly payment for three years without completing a traditional modification.
The letter outlined the support of FHA’s proposal to help struggling borrowers avoid foreclosure in today’s high-interest rate environment and included several suggestions to improve a servicer’s implementation of the novel program.
Why it matters: This is FHA’s second round of stakeholder comments posted to the Drafting Table – a process MBA strongly supports. As a result of our previous feedback, the Payment Supplement simplifies much of the operational complexity that existed with FHA’s initial proposal, the Payment Supplement Partial Claim. For instance, instead of filing monthly claims, servicers are able to file a single claim to fund the buydown account. Nonetheless, FHA’s proposal remains resource intensive and complex.
Go deeper: The joint letter recommended that FHA:
Increase the incentive payment from $1,000 to $3,500. At a minimum, FHA should consider paying the $1,000 incentive for each year the loan is in the program.
Provide the Model Note and Payment Supplement Agreement for review and stakeholder comment. FHA should also remove the requirements for servicers to be responsible for the enforcement of the Payment Supplement Documents.
Terminate the PSA if a Borrower Redefaults during the Supplement Period. The Payment Supplement should automatically terminate if a borrower misses two payments.
Allow for 12 months to implement the Payment Supplement and extend the sunset date of the COVID-19 Recovery Loss Mitigation waterfall for six months beyond the mandatory compliance deadline for the Payment Supplement. Servicers should focus all efforts to establish a permanent program.
What’s next: The Payment Supplement has been a key priority for the FHA team. MBA will communicate developments to the Loan Administration Committee.
For more information, please contact Brendan Kelleher at (202) 557-2700.
VA Seeks Industry Input on Home Loan Property Standards
Last Monday, the Department of Veterans Affairs (VA) released an Advance Notice of Proposed Rulemaking (ANPR) that requests feedback regarding minimum property requirements (MPRs) for VA-guaranteed and direct loans. The ANPR comes as a result of the Improving Access to the VA Home Loan Benefit Act of 2022, which mandates the VA to explore potential changes to MPRs and update regulatory requirements related to appraisals.
The ANPR seeks to gather industry opinions on enhancing MPRs, including the possibility of aligning them with established property standards in the broader industry.
Why it matters: In February, MBA provided feedback on VA’s MPRs in comments on VA Appraisal Reform.
What’s next: The MBA Government Loan Production Subcommittee will hold a call to gather member feedback on Monday, December 18th. If you would like to be included, please reach out to Darnell Peterson at (202) 557-2922.
MBA, Trades Press VA on Key Feature of VASP Program
On Thursday, MBA, along with the Housing Policy Council, National Consumer Law Center, and Center for Responsible Lending cautioned the VA regarding a key feature of its forthcoming loss mitigation program, the Veterans Assistance Servicing Purchase (VASP). Specifically, the organizations urged the VA to target payment reduction instead of a uniform interest rate when modifying a Veteran borrower’s loan. Designing VASP based on an interest rate reduction will produce unintended outcomes.
Why it matters: MBA has been extensively engaged with the VA throughout 2023 on the VASP program. While the VA has still not released any written policy for review, it is anticipated that servicers are expected to modify a qualified borrower’s loan to 2.5% before the VA purchases the loan. VASP is not expected to be available until March 2024 – an unrealistic implementation timeline that MBA has strongly urged to be revised. The VA should address these and other issues the industry has raised before formally announcing the program.
Go deeper: Specifically, the joint trades are concerned that:
Borrower payment reduction will vary widely and inequitably. The amount of payment relief received will not be based on the Veteran’s financial need;
Insufficient payment reductions could lead to redefaults while excessive reductions could produce surplus benefit relative to need for some borrowers; and
Targeting a 2.5% interest rate could create an exceedingly large payment reduction that could incent some veterans to intentionally default to obtain the benefit.
What’s next: VASP, along with additional changes to VA’s loss mitigation program, are expected to be released in the near term. MBA will communicate developments to the Loan Administration Committee
For more information, please contact Brendan Kelleher at (202) 557-2700.
Seventh Circuit Reviews Landmark Townstone case
The U.S. Seventh Circuit Court of Appeals recently heard oral arguments in the Townstone case.
The big picture: The U.S. District Court for the Northern District of Illinois previously granted Townstone’s motion to dismiss the Consumer Financial Protection Bureau’s (the Bureau) complaint on the grounds that the Equal Credit Opportunity Act (ECOA) applies to applicants and not to prospective applicants. The Bureau then appealed to the Seventh Circuit.
MBA filed an amicus brief earlier this year in the U.S. Seventh Circuit Court of Appeals.
While MBA concurs with the District Court’s decision, MBA’s brief suggested two limiting principles should the Appeals Court find that the anti-discouragement provision is in fact valid. First, the Bureau should be required to prove that a lender affirmatively discouraged an applicant on a prohibited basis. Secondly, the Bureau should be required to prove that a discouraging statement caused identifiable applicants to be discouraged from applying.
Why it matters: The District Court finding was a setback for the Bureau’s “redlining” theory used against independent mortgage banks (IMBs), which relied on the discouragement of prospective applicants rather than demonstrating discrimination towards actual applicants. The Townstone case has been closely watched as one of the first to be litigated under the Bureau’s theory.
Go Deeper: While a decision has yet to be released and it is unclear which way the Court will decide, it is notable that one judge asked the Bureau’s counsel to address whether the two limiting principles proposed in MBA’s amicus brief should apply. The Court specifically mentioning the MBA brief demonstrates the value of MBA’s amicus program, which seeks to ensure CFPB’s expansive views and interpretations of its regulations are challenged when they exceed the underlying rules and statutes.
What’s next: MBA will continue to monitor and provide an update when a decision is released.
For more information, please contact Justin Wiseman at (202) 557-2854..
House Ways and Means Subcommittee Holds Tax Hearing
The House Ways and Means Tax Subcommittee recently held a hearing titled, Tax Policies to Expand Economic Growth and Increase Prosperity for American Families. A central focus was the 2017 Tax Cuts and Jobs Act (TCJA), including the potential renewal of business-related provisions within that law that have expired or are set to expire at the end of 2025.
Go deeper: Republicans touted the TCJA’s benefits to consumers and businesses, highlighting its small business deduction and creation of Opportunity Zones – and also called for restoring immediate R&D expensing. Another main focus of the discussion were proposals for the creation of a new consumption tax system, such as the value-added tax (VAT).
Democrats criticized Republican proposals such as the Fair Tax Act (H.R.25), which would replace income, capital gains, payroll, and estate taxes with a 23 percent national sales tax – and used the hearing to push for restoration of an expanded Child Tax Credit (CTC).
Why it matters: Republican and Democratic tax writers (in both the House and Senate) have been negotiating quietly to gauge the potential for some form of tax package, including a group of so-called tax “extenders,” at some point this Congress.
What’s next: MBA will continue to monitor any potential tax changes – including action on housing-related tax credits geared towards increasing housing supply – in 2024 and beyond.
For more information, please contact Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2936.
FSOC Releases 2023 Report
On Friday, the Financial Stability Oversight Council (FSOC) released its 2023 Annual report. This year’s report highlights new risks – including AI and access to property insurance – and continues its assessments of previously identified risks, including nonbank financial institutions.
With respect residential mortgage finance – and the Council’s recent focus on nonbank mortgage servicing — the report notes that residential housing and mortgage market indicators are healthy, but highlights the risks of rising mortgage delinquencies and foreclosures and their adverse impact on nonbank servicers’ advancing obligations, lack of federal liquidity backstops, and the risk of warehouse lines being withdrawn.
Why it matters: FSOC’s annual report assesses financial stability risks and trends across market segments and makes recommendations to the federal financial agencies on their supervisory activities and priorities. FSOC member agencies include the Treasury Department, Federal Reserve, FDIC, OCC, CFPB, FHFA, as well as the Conference of State Bank Supervisors as a nonvoting member.
Go deeper: FSOC’s recommendations include:
Supporting recent actions by FHFA, Ginnie Mae and state regulators to enhance oversight of nonbank servicers, including coordination (“where possible”) between state and federal agencies on data collection, risk identification
State and federal regulators/agencies should enhance or establish information sharing protocols for monitoring risks
Reviewing and evaluating loss mitigation options for affordability and sustainability of loss mitigation options in a high interest rate environment
FSOC’s Nonbank Mortgage Servicing Task Force should identify options to enhance resilience of nonbank servicing sector and mitigate risks associated with the failure of one or more large nonbank servicers
Regulators should ensure the largest and most complex nonbank servicers are prepared for rising delinquencies and foreclosures and for orderly servicing transfers. Regulators should have information sharing to enable coordinated responses in responding to distress at a large servicer.
What’s next: MBA will continue to engage with the White House, Treasury Department, and FSOC agencies and staff on all issues related to real estate finance, while continuing to object to regulators using their authority to designate IMB servicers as Systemically Important Financial Institutions.
For more information, please contact Matt Jones at (202) 557-2933 or Pete Mills at (202) 577- 2878.
Updates on Mortgage Call Report Version 6 Preparedness
Monday, Dec. 18 will be 2023’s last office hours provided by the Conference of State Bank Supervisors (CSBS). While office hours will continue through first-quarter 2024, work to begin collecting the data to be filed in the new Mortgage Call Report Version 6 (MCRV6) starts January 1. MBA urges members to participate in these calls to ensure CSBS understands any roadblocks the industry is still facing in the implementation of MCRV6.
Additionally, Ohio MBA has succeeded in receiving a grace period, bringing the total states providing this needed flexibility to 24 (plus Washington, D.C.). The full tracker on MCRV6 grace period can be found on the V6MCR Resource Page.
MBA and state partners continue to request for a grace period in the remaining states.
Why it matters: During office hours, CSBS will answer your questions regarding timelines, changed or added report elements, and available support resources. These office hours are held bi-weekly every Monday 1-2p ET. The bi-weekly schedule will re-start on 1/15/24. To join the Zoom meeting (all sessions), use the following link and ID and Passcode:
Link: https://us02web.zoom.us/j/82102995323?pwd=dTV6WHdXWjZNUWVsQzVmVmpUdTR2UT09
Meeting ID: 821 0299 5323
Passcode: 102696
What’s next: MBA will continue to support state partners in their request for grace periods in states that have yet to provide one.
For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Key Illinois Committee Requires Re-Proposal of State’s CRA Rules
Earlier this week, the Illinois Legislature’s Joint Committee on Administrative Rules (JCAR) was set to vote to either approve or reject the Illinois Department of Financial and Professional Regulation’s (IDFPR) proposal to implement the state’s Community Reinvestment Act. As a result of industry advocacy, JCAR instead delayed consideration of the rule until February 6, 2024 (at the earliest), and directed IDFPR to “refile” the proposed regulation JCAR and incorporate several changes.
Go deeper: Since releasing its second notice of proposed regulations in September, IDFPR has engaged in stakeholder discussions and made concessions on elements of the rules for IMBs, credit unions, and community banks. This included the news last month that they would remove a controversial Disparity Study that MBA and the Illinois MBA objected in its comment letter, MBA now expects legislation to be introduced during the 2024 legislative session to amend the CRA to authorize the study. IDFPR will now propose revised regulations to and provide an update to JCAR in the February meeting.
Why it matters: MBA voiced significant concerns related to the second notice rules, and the direction to re-propose them is a positive development stemming from coordinated advocacy engagement.
What’s next: MBA and the Illinois MBA will continue to collaborate in reviewing the new proposal and call for continuity with existing CRA requirements.
For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Federal Reserve Maintains Federal Funds Rate
The Federal Reserve, recognizing the current slowdown in inflation, decided to hold the federal funds rate to a target range of 5.25-5.50% on Wednesday.
Why it matters: The FOMC emphasized that, “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.”
What they are saying: MBA’s SVP and Chief Economist Mike Fratantoni noted, “Additional rate hikes no longer appear to be part of the conversation. It is all about the pace of cuts from here. This is good news for the housing and mortgage markets. We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market. We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations, following an extraordinarily slow 2023.”
For more information, please contact Mike Fratantoni at (202) 557-2935..
[VIDEO]: mPower Moments: Hard Work and Limitless Opportunities with Fannie Mae’s Priscilla Almodovar
mPower Founder Marcia M. Davies sits down with Priscilla Almodovar, CEO at Fannie Mae, for an insightful interview on Priscilla’s career, including her “dream job” at Fannie Mae. She also shares the many lessons she has learned and emphasizes how hard work and effort have helped her thrive.
Go deeper: Almodovar also talks about the importance of affordable housing, and how it is her mission to ensure that her employees feel motivated and connected to Fannie Mae’s mission of creating affordable housing opportunities.
What’s next: To watch more mPower Moments, click here.
For more information, please contact Marcia Davies (202) 557-2707.
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 and recent webinars – which are complimentary to MBA members:
C-PACE for New Development, Refinance, Renovation, and Rescue – Jan. 30
Transforming Lending Operations: How to Leverage Intelligent Automation – Jan. 30
Builder’s Risk Insurance: Analysis & Perspectives – March 20
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 or (202) 557-2931.
