MBA CREF COVID-19 Update

A summary of the legislative, regulatory and operational items our membership has asked MBA to help address, including actions, next steps and how you can get involved.

This week, MBA had a number of successes on the state advocacy front, working hand-in-hand with our member advocacy teams as well as our state and local MBA chapters.

MBA’s Recent State Advocacy Successes

California: Bill Drops Mandatory 25% Rent Reduction Provision

On Tuesday, a California bill, AB-828, was amended to remove its most problematic provision. As amended, the bill no longer would grant a one-year, 25 percent rent reduction for any tenant facing eviction who can establish that the COVID-19 pandemic decreased income or increased household expenses. In its current form, the bill would grant a tenant facing eviction whose income or expenses are affected by the pandemic a right to repay unpaid rent in 10 equal payments, along with timely payments of monthly rent.

• Why it matters: The rent reduction provision would have created an incentive for borrowers to cease paying rent so they could benefit from the mandatory rent reduction.
• What’s next: MBA will continue to work with the California MBA on this and other impactful legislative proposals responding to the COVID-19 pandemic.

For more information, contact William Kooper at (202) 557-2737 or Grant Carlson at (202) 557-2765.

Washington, D.C.: City Council Exempts Loans Under CARES Act Forbearance from 90-Day Deferral Law

On Tuesday, the D.C. City Council amended the legislation that requires commercial and residential mortgage servicers to develop and implement a program that includes 90-day deferral of mortgage payments. In response to issues raised in a letter last Friday from MBA and regional MBAs, the Council exempted any federally related single-family and multifamily mortgage that is covered by CARES Act forbearance provisions from coverage under the D.C. law. The Council also shortened the maximum repayment period under the D.C. law from five years to three and pushed the initial reporting date out from May 8 to June 4. 

• Why it matters: The D.C. law and CARES Act forbearance are similar but not identical, so a servicer cannot simultaneously comply with both. The amendment resolves this conflict in favor of the CARES Act.
• What’s next: MBA will continue to explore opportunities to improve the D.C. law.

For more information, contact Kobie Pruitt at (202) 557-2870 or Grant Carlson at (202) 557-2765.

MBA COVID-19 STATE RESOURCE PAGE

MBA created a Coronavirus State Resource page that highlights legislative, regulatory, and administrative guidance and directives, including shelter-in-place orders, essential services designations, governors’ orders and moratoriums on foreclosures and evictions. This page also provides links that track county recording status and closures, local SBA assistance programs and state and local association resource pages.

For more information, contact William Kooper at (202) 557-2737 or Kelli Burke at (202) 557-2742.

MAY is MAA ACTION MONTH
It’s not too late to organize your company enrollment campaign and join industry peers CBRE, Gantry, Grandbridge Real Estate Capital, MetLife and NorthMarq Capital by running an MAA enrollment campaign aimed at growing our collective voice in key states and congressional districts to better explain to policymakers the unique role our market segment plays in financing local businesses and the national and international economy. 

The Mortgage Action Alliance (MAA), MBA’s free grassroots advocacy network, has over 47,000 active members nationwide in an industry of over 250,000 employees. Roughly 2,800 MAA members are commercial/multifamily member company employees. MAA members have collectively sent over 50,000 emails to state and federal elected officials supporting calls to action to protect and secure our industry. This is the most critical time for our industry to unite and play an active role in shaping legislation and regulations that impact our companies, our customers and the broader economy.

• What’s next: Our goal is to grow our active commercial/multifamily MAA membership to at least 5,000 through company enrollment campaigns and continue helping members become informed and engaged industry advocates.

For more information, contact Alden Knowlton at (202) 557-2816.

INSURANCE COMPANY RELIEF
MBA Leads Coalition Request to Extend RBC Modification Period for Life Companies

On Tuesday, MBA, the American Council of Life Insurers (ACLI) and eight other trades submitted a letter requesting an extension of the modification period covered by Life Company Risk-Based Capital Guidance issued March 27 by the National Association of Insurance Commissioners (NAIC) Financial Condition Committee. The modification period covered by that RBC Guidance currently ends June 30, 2020.

• Why it matters: The extension would provide life companies with time to work with borrowers as facts evolve, and to make prudent modifications to address COVID-19 impacts.
• What’s next: NAIC staff has indicated that the Committee is likely to discuss the request in a public conference call to be scheduled in the next few weeks. Details to follow.

For more information, contact Bruce Oliver at (202) 557-2840.

NON-BANK LENDING
MBA Urges Bank Agencies to Clarify that Interagency Statement on TDR Applies to Warehouse Lending for Nonbank Lenders

On Friday, MBA joined with other trades in a letter urging the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) to clarify that, in addition to traditional loan products, lending and financing arrangements, such as warehouse lines and repurchase agreements secured by multifamily and commercial real estate loans and commercial mortgage-related securities, are within the scope of the guidance in the agencies’ Interagency Statement on TDR.

• Why it matters: The liquidity provided to NBLs via warehouse lines and repurchase agreements allows NBLs to, in turn, extend debt capital to the commercial and multifamily marketplace, which represents a vital component of the U.S. economy, responsible for some $1.14 trillion in commercial real estate development and operations or 18.1 percent of GDP.
• What’s next: MBA will continue to identify areas where existing standards need to be clarified or modified to help CREF members prudently work with all borrowers to address COVID-19 impacts.

For more information, contact Bruce Oliver at (202) 557-2840.

CMBS and TALF
Latest Round of TALF FAQs Lists Three Eligible Rating Agencies

Last week, the Federal Reserve released an updated set of Frequently Asked Questions (FAQs) regarding the Term Asset-Backed Securities Loan Facility (TALF). The FAQs limited eligible TALF rating agencies to three. However, the FAQs also state that the Federal Reserve “may consider including other NRSROs under TALF.”

• Why it matters: The U.S. Securities and Exchange Commission (SEC) lists nine credit rating agencies as registered nationally recognized statistical ratings organizations (NRSROs). Limiting eligible ratings agencies could limit eligible transactions for the TALF program.
• What’s next: MBA will work with its industry partners to ensure that all eligible NRSROs are also eligible for TALF.

For more information, contact Bruce Oliver at (202) 557-2840.

MULTIFAMILY
FHFA Expected to Release Capital Rule ‘Very Soon.’

Speaking at MBA’s State of the Industry Live event yesterday, FHFA Director Mark Calabria stated that the agency expects to release a reproposal of Fannie Mae and Freddie Mac’s post-conservatorship capital rules “very soon.” Last November, the FHFA announced that it would repropose the capital framework, likely in the first quarter of 2020. However, the reproposal had been delayed as the FHFA and the GSEs responded to the COVID-19 crisis.

• Why it matters: The proposal will set the table for the amount of capital required for the GSEs to exit conservatorship. “Having a reproposed capital rule is not the same as having capital. But it is a critical step on the path toward building the capital necessary to end the conservatorships and to stand between mortgage credit risk and the American taxpayers,” stated Calabria.
• What’s next: Upon its release, MBA will work with its members to respond to the proposal.

For more information, contact Bruce Oliver at (202) 557-2840 or Sharon Walker at (202) 557-2747.

OCC UPDATE
OCC Releases Final Rule Overhauling CRA; FDIC Declines to Join

Today, the OCC issued a final rule overhauling Community Reinvestment Rules (CRA) for banks whose primary regulator is the OCC. MBA submitted comments in April to the OCC and the FDIC in response to a Joint Notice of Proposed Rulemaking on CRA. MBA’s comments noted, “[W]e are very concerned that the proposal would have the effect of ‘devaluing’ secondary market activities for banks with the dramatic discounting of CRA credit for mortgage loans sold on the secondary market.” In addition, MBA outlined our concerns about the enormous reporting burdens the rule would impose, along with its impediments to giving banks CRA credit for Low-Income Housing Tax Credit (LIHTC) and affiliate activities. The Federal Reserve did not join the OCC and FDIC in this CRA proposed rule.

Today, the FDIC issued a statement declining to join the OCC in issuing the final rule.

• Why it matters: The revised rule will impose significant operational and regulatory burdens on banks.
• What’s next: Bank will be given substantial time to transition to the new rules which will be implemented in 2024. MBA will continue to work to address problematic provisions during this period.
  
  For more information, contact Fran Mordi at (202) 557-2860 or Grant Carlson at (202) 557-2765