MBA Urges Senate Approval of Industry Priorities in T-HUD, Financial Services Appropriations Bills

The Senate meets today to vote on key appropriations legislation for fiscal year 2019. Ahead of its session, the Mortgage Bankers Association asked approval of key provisions that support FHA and Ginnie Mae technology upgrades, as well as safeguards for multifamily loans and other funding priorities.

The Senate will consider, among other bills, S. 3023 and S. 3197, the respective Transportation, Housing and Urban Development (T-HUD) and Financial Services and General Government appropriations bills for fiscal year 2019.

MBA expressed support for the following provisions in the T-HUD bill:

—FHA Administrative Resources. MBA supports the provision providing FHA with $150 million in administrative contract expense resources, both in staffing and systems upgrades, a $20 million increase from fiscal 2018. HUD General Deputy Assistant Secretary for Housing Dana Wade noted this $20 million would be used to support much-needed modernization of FHA Single-Family information technology systems. “We agree that given the scope of need to modernize the decades-old IT infrastructure at FHA, additional ongoing appropriations or set-asides from the HUD ITF for FHA systems improvements are warranted,” MBA said.

—$280 million for the Information Technology Fund within HUD. The Committee also recognized the need to allocate the additional $20 million in funding to IT infrastructure upgrades and included report language to support the use of these funds to improve FHA IT infrastructure. “We appreciate the Committee’s work to provide necessary funding to improve single-family insured mortgage processing and delivery along with asset management and claims systems,” MBA said.

Beyond funding levels, MBA has been a long-time proponent of potential improvements to FHA’s IT and systems that would allow the agency to better manage the risks to its Mutual Mortgage Insurance Fund. MBA has also urged FHA to implement a new quality assurance program and defect taxonomy that would provide lenders with greater certainty regarding loan review–and, in doing so, expand access to credit for low- to moderate-income homebuyers.

—No funding for FHA Administrative Fee. MBA expressed its ongoing concerns with a renewed proposal by HUD that would permit it to charge an administrative fee (on a per loan basis) to fund IT and QA enhancements. “We continue to believe the Congress should ideally fund FHA’s IT and QA needs through the regular appropriations process, as the Senate has done in this bill and has been the practice for decades,” MBA said.

—Ginnie Mae Staffing and Training. MBA supports the Senate’s commitment to adequately funding Ginnie Mae’s staffing, training and technology needs with an appropriation of $27 million. “Given Ginnie Mae’s stated role in providing liquidity targeted to low- and moderate-income families, first-time homebuyers, renters, veterans and rural households, this funding level is necessary to prudently manage the increased loan volume in the single-family and multifamily mortgage markets,” MBA said.

FHA Multifamily/Healthcare Finance Programs. MBA supports the recommendation to again provide $30 billion in commitment authority for the General and Special Risk Insurance Fund in FY 2019, as well as adequate funding for rental assistance, particularly Section 8 Project Based Rental Assistance. “Together, these programs permit private sector lenders to continue to finance workforce and affordable apartments and residential healthcare facilities that serve millions of Americans,” MBA said.

Ginnie Mae Safeguards in HUD Risk-Sharing Programs. MBA expressed continued support for a congressionally established protection for the government with regard to financing FHA multifamily loans through Ginnie Mae by providing a statutory prohibition on the use of Ginnie Mae securitizations in HUD’s risk sharing programs, also known as Sections 542 (b) and (c), by Housing Finance Agencies.

“MBA strongly supports retaining this safeguard, which would support standardized underwriting guidelines, protect taxpayers and ensure a competitive market,” MBA said. “MBA recommends maintaining a level playing field for private sector, FHA-approved multifamily lenders relative to HFAs. We believe it is appropriate that the Senate maintain the prohibition. In addition, we recommend that the Senate consider the operational costs of and risks to the Federal Financing Bank for HUD Section 542 loans–which is a direct loan program that utilizes a government-to-government execution–that operates separately from the well-established Multifamily Accelerated Processing (MAP) program.”

—Eminent Domain. MBA commended the Senate for maintaining the prohibition on federal funds being used to facilitate eminent domain seizures of performing mortgage loans. “By enacting this prohibition for the past four fiscal years, Congress was able to defuse this threat,” MBA said. “If the ban is not renewed, the threat posed by these schemes would undoubtedly return. The introduction of this new risk to the housing finance system would severely impact the return of private capital to our markets, and would undermine congressional efforts to successfully transition to a new housing finance system.”

—Homeownership Counseling. MBA urged the Senate to adopt the Committee’s recommendation for the full $45 million requested for this purpose. “These funds are critical to assisting homeowners facing foreclosure, helping first-time homebuyers navigate the challenges of the purchase process and counseling for reverse mortgages (a program requirement) for seniors, a traditionally high-risk group for financial fraud,” MBA said.

Additionally, in the FSGG appropriations bill, MBA urgeds the Senate to adopt the Committee’s recommendations for additional Internal Revenue Service funding so that it can accurately implement provisions of the Tax Cuts and Jobs Act (Public Law 115-97) and improve technology, publications and forms to support that implementation. “While MBA is supportive of several policy changes included in the recently-passed House “minibus” containing its FSGG subcommittee mark, we recognize the Senate’s commitment to moving through regular order and look forward to additional discussions about those issues when you meet with your House colleagues in conference,” MBA said.