CREF Highlights Sept. 3, 2020

Commercial and multifamily developments and activities from MBA relevant to your business and our industry.

MBA Conducting LIBOR Transition Survey for Commercial/Multifamily Members

MBA circulated a survey on LIBOR transition to commercial/multifamily members on Friday. The brief survey is designed for commercial mortgage lenders, but also includes servicers, special servicers, and service providers that likely may be directly or indirectly impacted by the transition.

• Why it matters: The London Interbank Offered Rate, or LIBOR, serves as the primary interest rate benchmark across numerous financial products, including floating-rate mortgages. Due to structural weaknesses in the benchmark that made it susceptible to manipulation during the last financial crisis, regulators have called for markets to transition to more resilient benchmarks. As a result, LIBOR is likely to be discontinued in late 2021, or perhaps even sooner.
• What’s next: Survey responses are due by close of business on Friday, September 11, 2020. Please reach out to the CREF team if you are unsure about whether your firm was included in the survey and would like to participate. We look forward to your participation and continued involvement in the LIBOR preparation efforts.

For more information, contact Andrew Foster at (202) 557-2740.

Updates to MBA’s New CREF State Eviction Moratorium Tracker and CREF State Legislative Roundup
We will continue provide weekly updates of these new member resources.

• MBA’s CREF State Eviction Moratorium Tracker can be found here.
• MBA’s CREF State Legislation Roundup can be found here.

For more information, contact Grant Carlson at (202) 557-2765.

California Multifamily Forbearance and Eviction Legislation Still in Play
California bill AB-1436, which would enact sweeping new forbearance standards and prohibit multifamily evictions until April 2022, has been referred to the Senate Rules Committee. 

Under the bill, as amended prior to the referral, multifamily borrowers could request up to six months of forbearance if the borrower can show a documented loss of rental income, but the servicer would be able to sweep net operating income (NOI) up to the amount of the loan payments. AB-1436 also would effectively protect any residential tenant from eviction or collection of unpaid rent for up to 12 months after the end of the effective time period simply by notifying their landlord they have been affected by the COVID-19 pandemic. MBA and the California MBA signed on to a broad industry coalition letter opposing the bill, and pointed out its many issues.

• Why it matters: The bill was revised to lessen the burden on multifamily lenders, but it still includes an extended eviction moratorium that would make it highly unlikely that property owners would ever be able to collect unpaid rents due to the moratorium.
• What’s next: The bill was referred to the Senate Rules Committee and must also be approved by the full Senate before it may be considered by the Assembly. MBA and the California MBA will continue to collaborate with industry partners.

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

FHFA to Hold Public Listening Sessions on Re-Proposed GSE Capital Rule
Today FHFA announced it will hold public listening sessions on September 10, 2020, and September 14, 2020.

According to the announcement “These listening sessions are opportunities for interested parties to elaborate on specific subjects and do not substitute for formal comment letters.” The first session on September 10 at 10:00 am EDT and will focus on credit risk transfers. The second session on September 14 at 10:00 am EDT and will focus on affordable housing access. The comment period on the re-proposal ends Monday, August 31, 2020.

• Why it matters: The capital standards for the GSEs lay the foundation for a possible exit from conservatorship, and will influence future GSE business decisions, including pricing.
• What’s next: Interested parties may request a speaking slot here. MBA will submit comments on the re-proposal to FHFA on Monday. FHFA has not yet provided dial-in instructions.

For more information, contact Grant Carlson at (202) 557-2765.

Banking Agencies Issue Final Rule on CECL Implementation
Last Wednesday, the Federal Deposit Insurance Corporation (FDIC), Federal Reserve Board (FRB), and Office of the Comptroller of the Currency (OCC) finalized a rule on the Current Expected Credit Loss (CECL) standard. That rule delays the impact on regulatory capital for a transition period of up to five years –substantially similar to the interim final rule (IFR) issued in March. The final rule expands the pool of eligible institutions to include any institution adopting CECL in 2020. The CECL final rule is effective immediately upon publication in the Federal Register.

• Why it matters: In February 2019, the Agencies released a rule providing banking organizations the option to phase in, over a three-year period, the Day One adverse CECL effects on regulatory capital. While institutions are still allowed to use this, this week’s final rule is offered as an alternative to provide relief to institutions to allow for a primary focus on the pandemic.
• What’s next: MBA will continue to monitor regulatory and other developments as members implement the CECL standard.

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

President Trump Signs Executive Order Targeting Opportunity Zones
Last Monday President Donald Trump signed an Executive Order directing the federal government to prioritize the location of federal properties in Opportunity Zones.

• Why it matters: The Trump administration continues to focus on real estate development in Opportunity Zones.
• What’s next: MBA will continue to work with regulators on regulatory issues impacting Opportunity Zones.

For more information, contact Grant Carlson at (202) 557-2765.

Upcoming and Recent 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:

• MBA CREF Market Intelligence: ESG in CREF – September 3
• Budgeting and Financial Planning for Non-Believers – September 10
• Understanding Reverse Mortgages: Impact on Your Lending Business and Consumers – September 10
• LIBOR Transition: Servicing Issues – September 18
• Lending 2021: Will You Change the Way You Work to Compete? – September 24

MBA members can access the list of recent webinar recordings by clicking here.

For more information, contact David Upbin at (202) 557-2890.