CREF Policy Update Aug. 26, 2021

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

A three-judge panel of the U.S. Court of Appeals for the District of Columbia today allowed the CDC’s COVID-19 residential eviction ban through October 3, 2021, to remain in place. On Wednesday, FHFA proposed new housing goals for Fannie Mae and Freddie Mac, including raising each of their multifamily housing purchase requirements for low-income units. On Wednesday, Senate Finance Committee Chairman Ron Wyden (D-OR) introduced a new bill, which, among other things, expands the Low-Income Housing Tax Credit (LIHTC) and establishes a Renter’s Tax Credit and Middle-Income Housing Tax Credit (MIHTC). Also on Wednesday, MBA signed a joint trade letter providing suggestions to the Biden administration on implementing improvements to the Emergency Rental Assistance Program.

Finally, we encourage you to participate in a new DEI survey, run by McLagan. See below for more information.

1. U.S. Appeals Court Upholds CDC’s Eviction Moratorium 

A three-judge panel of the U.S. Court of Appeals for the District of Columbia today allowed the Centers for Disease Control and Prevention (CDC) COVID-19 residential eviction ban through October 3, 2021, to remain in place, rejecting an emergency request by the Alabama and Georgia associations of Realtors®. The decision comes after Judge Dabney Friedrich of the U.S. District Court for the District of Columbia denied their request last Friday.  

• Why it matters: MBA opposes any potential attempts – legislative or non-legislative – to extend the CDC’s eviction moratorium, and continues to believe the ruling is not appropriate, given the $46 billion in Emergency Rental Assistance (ERA) available. MBA and industry trade groups are urging the Biden administration to work with Congress, states, and localities to help disburse rental assistance funds to landlords and tenants.  
• What’s next: The plaintiffs have indicated that they would go to the U.S. Supreme Court if their emergency challenge failed in the lower courts. MBA will continue to follow developments regarding the CDC’s eviction moratorium, including the likelihood of an appeal from the plaintiffs as well as any other challenges by state and federal courts.

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

2. Key Senator Introduces New Housing Affordability Legislation

On Wednesday, Senate Finance Committee Chairman Ron Wyden (D-OR) introduced a new bill that seeks to expand access to housing for first-time homebuyers and low-income individuals by investing in existing programs, and establishing new tax credits geared toward renters and middle-income homeowners. The Decent, Affordable, Safe Housing for All (DASH) Act, which includes both tax and spending measures, would increase the production of affordable housing, invest in homeownership in underserved communities, and incentivize jurisdictions to modify zoning and land-use practices to encourage affordable housing.

• Why it matters: Specifically, the bill would expand the Low-Income Housing Tax Credit (LIHTC), establish a Renter’s Tax Credit and Middle-Income Housing Tax Credit (MIHTC), and create a new down payment tax credit for first-time homebuyers. Additionally, it would establish the Neighborhood Homes Investment Act (NHIA), a proposed federal tax credit targeted to the new construction or substantial rehabilitation of affordable, owner-occupied housing located in distressed urban, suburban, and rural neighborhoods – a key issue during MBA’s virtual National Advocacy Conference earlier this year.
• What’s next: As Chairman of the congressional tax-writing committee, Senator Wyden is well-positioned to push to include some version of this and other tax proposals in the Senate reconciliation package this fall. The reconciliation process could begin in earnest as early as next week following House action on the Senate-passed budget resolution. Though MBA will continue its direct lobbying efforts, Mortgage Action Alliance (MAA) members need to take action TODAY to urge Congress to support our industry tax priorities.

For more information, please contact Ethan Saxon at (202) 557-2913.

3. MBA Signs Joint Trade Letter Suggesting Emergency Rental Assistance Program Improvements 

On Wednesday, MBA signed a joint trade letter providing suggestions to the Biden administration that implement improvements to the Emergency Rental Assistance Program (ERAP) to improve the distribution of ERAP funds to renters and landlords in need.

• Why it matters: While many jurisdictions are successfully increasing their ERAP disbursement, others are fraught with significant application processing and payment delivery delays.
• What’s next: If jurisdictions fail to meet certain distribution benchmarks for ERAP funds by September 30, 2021, these funds could potentially be returned to the U.S. Treasury.

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

4. FHFA Proposes New Multifamily Housing Goals

On Wednesday, the Federal Housing Finance Agency (FHFA) proposed new housing goals for Fannie Mae and Freddie Mac, including raising each of their multifamily housing purchase goals from 315,000 low-income units to 415,000 low-income units. The proposed purchasing goal would include requiring each enterprise to purchase 88,000 units considered “very-low-income,” and 23,000 considered “small multifamily (5-50 units) low-income.” These are increases of 18,000 and 13,000 units, respectively, when compared to the 2018-2021 period.

• Why it matters: The new multifamily housing goals are part of the broader push by FHFA to increase the affordable housing purchase goals for single-family and multifamily housing during the 2022-2024 period.
• What’s next: MBA will analyze the impacts and implications of the proposed rule and work with the Multifamily Council to develop and review potential comments.

For more information, please contact Sharon Walker at (202) 557-2747 or Grant Carlson at (202) 557-2765.

5. Emergency Unemployment Benefits Available Past September Expiration      

On Thursday, the U.S. Department of Treasury and Department of Labor sent a letter to the Senate Finance and House Ways and Means Committee clarifying that states may use leftover money in the $350 billion American Rescue Plan State and Local Fiscal Relief Fund to continue to pay income support to unemployed workers past the September 6 deadline. According to the letter to lawmakers, in states experiencing high levels of unemployment, “it may make sense for unemployed workers to continue receiving additional assistance for a longer period of time, allowing residents of those states more time to find a job in areas where unemployment remains high.” Pandemic-era unemployment benefits, extended as part of the American Rescue Plan Act, are still expected to expire on September 6, 2021.

• Why it matters: Unemployment insurance extended as part of the American Rescue Plan Act has played an important role in minimizing disruptions to the rental market, as unemployed workers continue to pay their rent using the pandemic aid program.
• What’s next: MBA staff will continue to monitor for additional developments on unemployment insurance and the eviction moratorium.

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

6. MBA Signs Joint Trade Letter on Housing Affordability Proposals 

On Monday, MBA signed a letter with a broad coalition of housing providers outlining policy proposals to address housing affordability.

• Why it matters: The letter outlines a variety of tax, zoning, and other incentives that, if enacted, would allow for the construction and preservation of more affordable housing.
• What’s next: The group will work for these priorities to be included in upcoming infrastructure and budget legislation.

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

7. FHFA Publishes Advisory Bulletin on Agency Commercial Mortgage-Backed Securities Risk Management

On Monday, FHFA published an Advisory Bulletin (AB) pertaining to the Federal Home Loan Banks’ (FHLB) investments in agency Commercial Mortgage-Backed Securities (CMBS) issued and guaranteed by either the U.S. government (Ginnie Mae) or by one of the GSEs.

• Why it matters: The variability of call protection features included in agency CMBS loans, in addition to the complex loan structures, makes estimating prepayments of these loans difficult. This is particularly the case when the borrower determines that the benefits of the prepayment exceed the cost of resulting penalties. Therefore, the guidance recommends risk management practices, including establishing pre-purchase analytics, minimum acceptable risk-adjusted spread requirement, concentration limits, and other risk mitigants to address the risks associated with unexpected prepayments of agency CMBS investments.
• What’s next: FHFA encourages early adherence to the AB. However, by December 31,2021, all banks should have appropriate agency CMBS concentration risk limits in place.

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

8. FASB Votes on CECL Revisions and Post-Pandemic Compliance 

Recently, the Financial Accounting Standards Board (FASB) voted to add bank accounting standards to its technical agenda and voted to reconsider its Current Expected Credit Loss (CECL) accounting standard for loans purchased with credit deterioration.

• Why it matters: The deadline for CECL has been delayed three times, and the changes are intended to address remaining CECL reporting challenges.
• What’s next: MBA will continue to follow developments and FASB actions.

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

9. CLIMATE/ESG Updates

• For information on MBA’s climate and environmental. social and corporate governance (ESG) issues, or how to get involved, please visit MBA’s Climate and ESG webpage.

For more information, please contact Adrian Ballinger at (202) 557-2774.

10. State Trackers

State eviction moratorium and legislative activity tracker available here.

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

11. [VIDEO]: mPower Moments: On Confidence and Knowing Who You Are with MBA’s Lisa Haynes  

In this episode of mPower Moments, MBA COO and mPower Founder Marcia M. Davies chats with Lisa Haynes, MBA’s Chief Financial Officer and Head of Diversity, Equity and Inclusion, about the top qualities that women leaders possess, why confidence is so important, and lessons learned following MBA’s highly successful, three-part series, Voices: Courageous Conversations with Women of Color. 

• What’s next: To watch more mPower Moments, click here.

For more information, please contact Marcia Davies at (202) 557-2707.

12. Participate in the New Diversity, Equity and Inclusion (DEI) Study   

Sign up today to participate in a new offering to MBA members, the Diversity, Equity and Inclusion (DEI) Study. The study is separately designed and compiled for both the residential and commercial/multifamily sides of the real estate finance industry, and is administered by world-class human resources advisory firm McLagan, part of Aon plc. All participating companies are encouraged to complete as many sections of the study template as possible on the following topics: Policy and Initiatives; Headcount by Mortgage Job Function; Headcount by EEO-1 Categories; and Headcount by Movement.  

• Why it matters: Over the past year, racial and gender inequalities have shaped our nation’s conversation, and MBA remains committed to supporting our member companies by forming solutions. Participating will give our industry a baseline from which to improve and to see how member companies compare to the industry as a whole.
• What’s next: Individual company data will be kept confidential in accordance with McLagan’s high standards. As a bonus, MBA members save $1,000 off the regular survey pricing. The general timeline is provided in the registration form, with data due back to McLagan in mid-September and results released in October 2021.  

For specific information about the DEI Study, please email Dave Rosenthal at McLagan or call (203) 326-4349. For general questions, please contact MBA Research members Marina Walsh at (202) 557-2817 or Jamie Woodwell at (202) 557-2936.

15. Upcoming and Recent MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely 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:

Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – August 26

Budgeting and Financial Planning for Non-Believers – September 9

Introduction and Walkthrough of MISMO’s Enhanced Logical Data Dictionary (LDD) – October 6

MBA members can register for any of the above events and view recent webinar recordings here.

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