CREF Highlights: Setting the Stage for 2016
With Congress approving a $1.1 trillion omnibus appropriations bill as well as a $680 billion tax package that includes a number of MBA priorities, the spending and tax packages will punctuate a productive end to the first session of 114th Congress.
Looking forward, 2016 will be dominated by election-year politics, with the Iowa caucuses scheduled to kick off voting on February 1. Against this backdrop, the House and Senate in the financial services arena will continue their focus on examining Dodd-Frank and providing regulatory relief to the financial sector – though enactment of legislation will remain challenging in the face of the current administration’s opposition to reopening the 2010 law. And there will be fresh opportunities to make incremental reforms to Fannie Mae and Freddie Mac (GSEs), while the possibility of a transition to a new system will likely have to wait until after the election.
For more information, please contact Len Wolfson at lwolfson@mba.org.
Banking Regulatory Agencies Issue Statement on Bank Commercial Real Estate Lending Risk Management Practices
On December 18, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Comptroller of the Currency jointly issued a statement to remind financial institutions of existing regulatory guidance on prudent risk management practices for bank commercial real estate lending activity through economic cycles (available here).
The statement did not introduce new risk management practices or guidance, but reiterates and emphasizes that banks should closely follow existing risk management guidance.
While indicating that CRE market conditions and portfolio asset quality indicators do not currently indicate weaknesses in the quality of CRE portfolios, the agencies raised concerns that underwriting standards have eased. The agencies also noted that multifamily loans had increased by 45 percent between 2011 and 2015.
Finally, the agencies requested that banks should “review their policy and procedures related to CRE lending.”
For more information, please contact George Green at ggreen@mba.org.
FHFA Releases Multifamily GSE Scorecard and Proposes Duty to Served Underserved Markets Rule
On December 17, the Federal Housing Finance Agency (FHFA) released the scorecard that will govern the 2016 multifamily activities of Fannie Mae and Freddie Mac (linked here).
The scorecard provides for multifamily financing volume caps in 2016 that are similar to 2015, while continuing to exempt the GSEs’ activities that support affordable housing and underserved markets. MBA had recommended, among other things, that FHFA hold periodic multifamily market reviews during the year, which FHFA adopted. The scorecard also includes an Appendix containing FHFA’s definitions of the types of multifamily business that will qualify as targeted affordable or underserved markets activities.
Separately, on December 18, FHFA re-proposed the Duty to Serve regulations (linked here) that, if adopted, would require Fannie Mae and Freddie Mac to place greater focus on three underserved markets: manufactured housing, affordable housing preservation, and rural housing markets. FHFA was required to issue Duty to Serve requirements by the Housing and Economic Recovery Act of 2008. Comments are due by March 17, 2016.
For more information, please contact Eileen Grey at egrey@mba.org.
MBA Research Chart of the Week – Net Change in Commercial/Multifamily Debt Outstanding
Commercial and multifamily mortgage debt outstanding continued to climb in the third quarter, driven by increases in the dollar amount of loans held in bank portfolios according to MBA’s Commercial/Multifamily Real Estate Mortgage Debt Outstanding Report.
Overall, the level of commercial/multifamily mortgage debt outstanding increased by $38.0 billion in the third quarter of 2015 to $2.76 trillion. Multifamily mortgage debt outstanding rose to $1.02 trillion, an increase of $19.3 billion, or 1.9 percent, from the second quarter.
To see the chart, click here and to see the report, click here.
For more information, please contact Jamie Woodwell at jwoodwell@mba.org or Reggie Booker at rbooker@mba.org.
2016 MBA CREF Convention
Anticipation continues to build for MBA’s 2016 CREF Convention to be held on January 31 – February 3 in Orlando, FL, the must-attend event will offer unrivaled access to leaders, CEOs and experts in commercial/multifamily real estate finance. We look forward to seeing you there.
If you haven’t yet registered, you can do so by clicking here.
