CREF Policy Update March 28: MBA’s Fratantoni Testifies Before Key House Housing Subcommittee
MBA’s Fratantoni Testifies Before Key House Housing Subcommittee
Last Wednesday afternoon, MBA Chief Economist Mike Fratantoni delivered testimony before the Housing and Insurance Subcommittee of the House Financial Services Committee at a hearing titled “The Characteristics and Challenges of Today’s Homebuyers.”
Why it matters: Fratantoni reviewed current data on various aspects of the mortgage market with the subcommittee members, focusing on homebuyer characteristics, a range of loan products, available sources of financing, and obstacles that housing consumers and lenders are facing. He also examined trends in the rental market, including that for single-family rentals (SFR), housing supply concerns, and regulatory and insurance availability challenges facing our industry.
• Fratantoni fielded questions on a wide range of topics, including: the efficacy of the Low Income Housing Tax Credit (LIHTC) program, inflation and its impact on the housing market, “non-traditional” avenues for the financing/purchasing of housing (e.g., accessory dwelling units), mortgage assumptions, demand-based housing incentives (e.g., downpayment assistance, first time home buyer tax credits, etc.), the essential role of title insurance, small-dollar mortgage lending by banks, the role of institutional investors in the current marketplace, Veterans’ housing, causes of the housing supply shortfall, local zoning strategies, and the rising cost of homeowners’ insurance due to wildfires and other natural disasters.
Go deeper: Mike’s oral and written statements are available here. A summary of the full hearing may be found here. Click here to view a recording of the livestream of this hearing.
What’s next: MBA will continue to press Congress to advance legislation aimed at housing affordability and supply challenges–both multifamily and single-family–including many of the targeted bills prioritized during this past week’s MBA National Advocacy Conference.
For more information, please contact Rachel Kelley at (202) 557-2816, Madisyn Rhone at (202) 557-2741, or Mike Fratantoni at (202)-557-2935.
Commercial and Multifamily Mortgage Delinquency Rates Increased in Fourth Quarter 2023
Commercial mortgage delinquencies increased in the fourth quarter of 2023, according to the MBA’s latest Commercial Delinquency Report, released last Monday.
Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “Commercial mortgage delinquency rates rose again during the fourth quarter of 2023. Every major capital source has seen an increase over the last six months, as higher interest rates, uncertainty about property values, and challenges in some property fundamentals work their way through the markets.”
Go deeper: Banks and thrifts (90 or more days delinquent or in non-accrual): 0.94%, an increase of 0.09 percentage points from the third quarter of 2023.
For more information, please contact Jamie Woodwell at (202) 557-2936.
Federal Reserve Maintains Federal Funds Rate
The Federal Reserve in its ongoing efforts to slow inflation decided to hold the federal funds rate to a target range of 5.25-5.50% last Wednesday.
Why it matters: The Federal Open Market Committee (FOMC) emphasized that, “the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%. 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 Fratantoni noted, “The FOMC held rates unchanged at its March meeting and continued to signal its next move will be a rate cut. The only question is when. Their new projections indicate three cuts for 2024, unchanged from their December projections for 2024, but with one less rate cut expected in 2025. We are forecasting that the first rate cut will be in June, and a total of three rate cuts this year. The committee did not indicate any changes to the pace of quantitative tightening. We continue to expect longer-term rates, including mortgage rates, to decline gradually over the course of this year.”
For more information, please contact Mike Fratantoni at (202) 557-2935.
Approximately 100 CREF Members Attend MBA’s National Advocacy Conference 2024 (NAC24)
Last week, approximately 100 CREF industry member advocates attended MBA’s NAC24–meeting with several key lawmakers and regulatory officials.
Why it matters: Those MBA members pressed lawmakers on CREF policy priorities ranging from property insurance to low-income housing tax credits to FHA programmatic improvements. Elected officials and their top aides heard from commercial/multifamily finance industry professionals about issues that impact the CREF markets across the country.
Go deeper: The CREF specified track registrants had the opportunity to hear directly from four key members of the House Ways and Means Committee–Mike Carey (R-OH), Claudia Tenney (R-NY), Jimmy Gomez (D-CA), and Jimmy Panetta (D-CA)–on real estate tax issues such as the LIHTC, a proposed middle-income (or workforce) housing tax credit (MIHTC), and proposed office conversion tax credits. Those CREF members also heard from FDIC Director Jonathan McKernan, staff from the FHFA, and property/casualty insurance experts.
What’s next: Armed with the results of those direct constituent visits made this past week during the NAC, MBA’s lobbyists will continue to advocate for action on CREF industry issues that impact our members’ business operations, end users, and the communities they serve.
For more information, please contact Jamey Lynch, AMP at (202) 557-2818 or Erin Reilly at (202) 557-2751.
Federal Funding Bill Signed Into Law
On Saturday, President Biden signed a $1.2 trillion funding bill into law, avoiding a partial government shutdown.
CNN reported the spending package funds the federal agencies that were not affected by the last spending agreement, including the Labor, Health and Human Services, Defense, Education and State departments.
MBA is tracking the budget negotiations and will keep you updated.
White House Releases Economic Report – Full Chapter Devoted to Housing Supply
Last week, the White House Council of Economic Advisors (CEA) released the 2024 Economic Report of the President. The 2024 Report provides economic analysis to support issues important to the President’s agenda. This year, an entire chapter is devoted to increasing the supply of affordable housing, raising the issue as a top priority for the Administration.
Why it matters: The Administration not only prioritized housing affordability during the State of the Union through this Fact Sheet, but also followed up two weeks later with forty-five pages of economic analysis supporting the President’s thoughts. The CEA’s analysis gives a window into how President Biden would address affordable housing supply should it be re-elected to a second term.
Go deeper: For multifamily and rental housing policy, the CEA analysis focuses on four core areas: (1) Zoning and Land Use Regulations, (2) Hard, Soft and Land Costs, (3) Manufactured and Rural Housing, and (4) Tax Subsidies, with a specific focus on LIHTC.
What’s next: The Department of Treasury has announced that it will hold stakeholder meetings to discuss affordability issues. At the same time, MBA will continue follow up from its successful NAC24 to press both Housing and Urban Development as well as Fannie Mae and Freddie Mac to focus on processing efficiencies as well as their counter-cyclical roles during this period in the market.
For more information, please contact Stephanie Milner at (202) 557-2747 or Megan Booth at (202) 557-2740.
Treasury Hosts Roundtable on Climate-Related Risks and Insurance Challenges
Last Wednesday, the U.S. Department of Treasury hosted a virtual roundtable with industry stakeholders to discuss how the risks of climate change are impacting U.S. insurance market. The discussion included representatives from insurers, reinsurers and catastrophe modeling firms and covered insurance challenges and possible regulatory and policy responses.
Go deeper: Wednesday’s event was conducted in support of President Biden’s Executive Order 14030 which calls on the Federal Insurance Office (FIO) to “asses climate-related issues or gaps in the supervision and regulation of insurers” and further assess the potential for disruptions in insurance coverage. FIO has recently launched an effort to work with state insurance regulators and the National Association of Insurance Commissioners (NAIC) to collect more data to better understand the impacts of climate change.
Why it matters: Property premiums in the U.S. increased 14% in the third quarter of 2023, the 24th consecutive quarter of premium increases. The increases are driven by continued losses, rising costs in reinsurance, and limited new capacity from insurers. However, even with higher premiums, insurance (and re-insurance) companies still face significant financial losses and thus have withdrawn many of their offerings in high-risk areas.
What’s next: MBA will continue to work with federal and state policymakers to find innovative solutions to the rising costs of property insurance in the commercial/multifamily real estate markets.
For more information, please contact Stephanie Milner at (202) 557-2747.
Senate Finance Committee Holds Hearing on President’s FY 2025 Budget
Last Thursday, the Senate Finance Committee held a hearing on the President’s Fiscal Year 2025 budget proposal with testimony from Treasury Secretary Janet Yellen.
Why it matters: Several Senators spoke in support of the Tax Relief for American Families and Workers Act of 2024 (H.R. 7024), which has overwhelmingly passed the House and includes a targeted expansion of the LIHTC program. Senator Ben Cardin (D-MD) also highlighted that the President’s FY25 budget includes support for the MBA-endorsed Neighborhood Homes Investment Act to expand single-family housing supply.
What’s next: Despite the public opposition of some key Senate Republicans, Senate Majority Leader Chuck Schumer (D-NY) may schedule a procedural vote on H.R. 7024 in April.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
[VIDEO]: mPower Moments: Forging New Paths with Nina Tassler and Geena Davis
mPower Founder Marcia M. Davies sits down with Nina Tassler, Advisor and Former Chairman, CBS Entertainment and Managing Partner of PatMa Productions, and Geena Davis, an award-winning actress and Founder of the Geena Davis Institute for Gender in Media, for an inspiring conversation on forging new career paths and opportunities for women.
Go deeper: During the interview, Tassler and Davis discussed the significant impact of Davis’ organization on the entertainment industry and how it has improved its efforts to provide more opportunities for women in media. They also discuss their decades-long friendship and how they have supported and advocated for each other while on different career tracks.
What’s next: To watch more mPower Moments, click here.
For more information, please contact Marcia Davies at (202) 557-2707.
Register: MBA’s mPact Summit on April 4 in Texas
Meet us in Texas for a full day of career development and networking on Thursday, April 4, 2024. Back by popular demand, this event is built by – and for – young professionals in the real estate industry who are focused on helping you get to the next level.
Why it matters: Event topics include developing leadership skills, learning how to navigate your career, and building and practicing networking skills. MBA mPACT professionals have completed over $1.4 billion in commercial real estate transactions by meeting through this program. You don’t want to miss this opportunity.
What’s next: Registration closes in one week! Register now to reserve your spot!
For more information, please contact Jacky Salazar at (202) 557-2746.
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:
• The Intersection of Pricing Concessions and Fair Lending – April 4
• Mastering Compliance, Efficiency, and Successful Adoption with Consumer Permission Platforms – April 11
• Rethink Everything: You “Know” To Be A Next Gen Loan Officer – A Deeper Dive With the Writers & Experts Webinar Series: Social Media – April 17
• Climate-Change Disclosure Rules and Impact on Mortgage Lending – April 18
• Basics of Commercial Loan Closing and Loan Documentation – May 9
• Introduction to Commercial Mortgage-Backed Securities – May 23
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For any questions, please contact David Upbin at (202) 557-2931.
