CREF Policy Update Aug. 19, 2021

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

Last Tuesday Judge Dabney Friedrich of the U.S. District Court for the District of Columbia denied an emergency motion request from the Alabama and Georgia associations of Realtors to block the new order from the CDC that temporarily halts residential evictions through October 3, 2021. MBA and a coalition of 10 industry trade groups submitted a letter and a report to FHFA highlighting the industry’s concerns to proposed changes to radon testing standards for the GSEs.

Last Tuesday, Senate Banking and Housing Committee Ranking Member Pat Toomey (R-PA) launched a campaign to overturn the CDC’s eviction moratorium that was issued on August 3. And on Wednesday, the Senate voted along party lines to adopt a $3.5 trillion budget resolution framework for fiscal year 2022, another step toward the crafting of the actual tax provisions that will offset the cost of President Joe Biden’s broad infrastructure package.

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

1. Federal Judge Rejects Request to Block CDC’s Eviction Moratorium

Judge Dabney Friedrich of the U.S. District Court for the District of Columbia denied an emergency motion request from the Alabama and Georgia associations of Realtors to block the new order from the Centers for Disease Control and Prevention that temporarily halts residential evictions through October 3, 2021.

In her ruling on keeping the eviction moratorium in place, Judge Friedrich said the “Court lacks the ‘power or authority’ to reach the opposite conclusion of the D.C. Circuit on the same issues, in the same emergency posture, and in the same case.”

Why it matters: The CDC’s eviction moratorium is intended to “target specific areas of the country where [COVID-19] cases are rapidly increasing, which likely would be exacerbated by mass evictions.” Given current COVID-19 case counts, it covers a substantial part of the country. MBA opposes any potential attempts by Congress to legislatively extend the CDC’s eviction moratorium, and continues to believe the ruling is not appropriate, given the $46 billion in Emergency Rental Assistance 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: 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.

2. U.S. Supreme Court Blocks Part of New York Eviction Moratorium

Last Thursday, the U.S. Supreme Court temporarily blocked part of New York’s eviction moratorium, which had prevented landlords from challenging a tenant’s self-certified claim of financial hardship, an attestation that had automatically paused eviction proceedings.

Why it matters: New York’s eviction moratorium, which is set to expire on August 31, is one of the strictest in the nation that prevents landlords from filing evictions.

What’s next: The state legislature is expected to return to address the court’s ruling.

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

3. Senator Pat Toomey Launches Effort to Overturn CDC Eviction Moratorium

Last Tuesday, Senate Banking and Housing Committee Ranking Member Pat Toomey (R-PA) launched a campaign to overturn the Center for Disease Control and Prevention’s eviction moratorium, which was issued on August 3 after the most recent nationwide eviction moratorium expired on July 31, 2021. The new order temporarily halts residential evictions through October 3, 2021. MBA opposes any potential legislative attempts by Congress to extend the CDC’s eviction moratorium, given the $46 billion in Emergency Rental Assistance available.

Why it matters: This campaign includes a letter requesting the Government Accountability Office (GAO) decide as quickly as possible whether the CDC’s latest eviction moratorium constitutes a rule for purposes of the Congressional Review Act (CRA). The CRA allows the Senate to overturn rules under expedited procedures and with a simple majority vote. Senator Toomey also filed a joint resolution with Senators Richard Burr (R-NC) and Roger Marshall (R-KS) that would enable Congress to repeal the eviction moratorium under the CRA.

What’s next: Due to the significant impact, the CDC’s eviction moratorium is having on the legal and property rights of landlords and renters, Ranking Member Toomey asked that GAO make a determination no later than August 16 and is planning in the coming weeks to introduce a nondebatable motion to consider the resolution, which only requires a simple majority for passage. MBA will continue to monitor developments regarding the CDC’s new eviction moratorium and continue to urge the Biden administration to work with Congress, states, and localities to help disburse rental assistance funds to landlords and tenants.

For more information, contact Tallman Johnson at (202) 557-2866.

4. MBA Leads Industry Coalition Efforts on Radon Testing Standards

On August 6, MBA and a coalition of 10 industry trade groups submitted a letter to the Federal Housing Finance Agency that highlighted reservations and offered recommendations on the proposed changes to radon testing standards for Fannie Mae and Freddie Mac (the GSEs). The proposed changes would mirror those under the U.S. Department of Housing and Urban Development (HUD) Multifamily Accelerated Processing (MAP) guide. Attached to the letter was a report conducted by Exponent, of its review of the Kitto “Evaluating and Assessing Radon Testing in Housing” (EARTH) Radon Study that HUD used to adopt new standards. 

Why it matters: The multifamily industry supports environmental testing that balances the need to protect tenants’ health, while not unduly impacting the financing and production of much-need affordable multifamily housing. The new proposed standard of 100% ground floor testing, with an additional 10% upper floor testing, is based on what MBA and many in the industry believe is a biased study that is not risk-based and would result in substantial delays in the GSEs’ multifamily pipelines, while also increasing the cost of closing loans.

What’s next: MBA and its members will continue to engage with the FHFA and industry stakeholders on this important issue.

For more information, contact Mike Flood at (202) 557-2745 or Sharon Walker at (202) 557-2747.

5. Senate Passes Bipartisan Infrastructure Bill

Last Tuesday, the Senate voted 69-30 to approve the Infrastructure Investment and Jobs Act (H.R. 3684), which focuses on investments in bridges, roads, railways, and broadband.

Why it matters: The infrastructure bill does not include investments that the Biden administration has referred to as “human infrastructure,” including affordable housing provisions. Democrats are looking to address those priorities separately in a reconciliation package.

What’s next: The bipartisan legislation will now go back to the House, where Speaker Nancy Pelosi (D-CA) has made clear that she will not bring the bill to the floor until the Senate passes the broader reconciliation package.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866. 

6. Senate Adopts $3.5 Trillion Budget Resolution Framework

The Senate voted along party lines last week to adopt a $3.5 trillion budget resolution framework for fiscal year 2022, following a lengthy “vote-a-rama” debate on amendments.

As previously reported, congressional Democrats are pursuing a dual-track strategy to pass major infrastructure and economic legislation, and this reconciliation package will allow Democrats to enact key Biden priorities left out of the bipartisan deal that passed earlier in the week. Included in the framework is a “historic” level of investments in public housing, green and sustainable housing, housing production and affordability, which will be offset by a series of proposed tax changes, including several that could directly impact our industry.

Why it matters: During the “vote-a-rama” debate, Senators Steve Daines (R-MT), John Thune (R-SD), and John Kennedy (R-LA) offered amendments regarding section 199a pass-through deductions, “stepped-up” basis provisions, and 1031 like-kind exchanges. Notably, these amendments urging the preservation of current tax treatment of these provisions passed with bipartisan support. While these amendments carry no force of law, they do offer directional insight to the various committees as they begin to craft the legislative text to implement tax increases, tax credits, and spending increases.

What’s next: The $3.5 trillion framework now heads to the House, with lawmakers scheduled to return during the week of August 23 to consider the resolution and trigger the reconciliation process. MBA will continue to advocate with the administration and on Capitol Hill against any possible threat to real estate finance markets as the reconciliation process advances. In the meantime, Mortgage Action Alliance (MAA) members need to take action TODAY to urge Congress to preserve industry tax priorities that support real estate investment.

For more information, contact Ethan Saxon at (202) 557-2913, Tallman Johnson at (202) 557-2866, Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

7. U.S. Attorney General and Associate U.S. Attorney General Meet with State Chief Justices on Evictions

Last Wednesday, U.S. Attorney General Merrick B. Garland and Associate U.S. Attorney General Vanita Gupta met with over 35 Chief Justices of state supreme courts to discuss evictions, eviction diversion programs, and housing.

Why it matters: In a Department of Justice press release, the Attorney General “thanked the Chief Justices for their work on the issue and highlighted the Associate Attorney General’s recent letter outlining steps that state courts could take to raise awareness of emergency rental assistance and to implement eviction diversion strategies in their jurisdictions.”

What’s next: The Attorney General and Associate Attorney General pledged to “continue working together on this critical issue and to identify obstacles that the federal government can help address” on issues with delivering rental assistance.

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

8. HUD Provides Updated Multifamily COVID-19 Q&As 

On August 3, HUD updated its COVID-19 Questions & Answers for Multifamily Housing Stakeholders to reflect the CDC’s new eviction moratorium order that temporarily halted evictions in counties experiencing high levels of transmission of COVID-19. The Q&As also address the action that will be taken in the event an owner or landlord violates the CDC order and refers people to the U.S. Department of Health and Human Services (HHS) and CDC Temporary Halt in Residential Evictions to Prevent the Spread of COVID-19 FAQs, CDC Declaration Form. 

Why it matters: The Q&As provide current guidance for responding to servicing inquiries related to the COVID-19 pandemic.

What’s next: The order remains in place through October 3, 2021. MBA will continue to provide timely updates as it relates to the ongoing COVID-19 pandemic. 

For more information, contact Sharon Walker at (202) 557-2747.

9. Climate/ESG Updates

United Nations Panel Releases Climate Change Report

The Intergovernmental Panel on Climate Change (IPCC) released its sixth assessment report, describing how climate change is now unavoidable and will worsen without additional mitigation efforts. The IPCC is an intergovernmental body of the United Nations tasked with providing objective scientific information relative to understanding climate change and its consequences. The report highlighted that it is unequivocal that humans are causing climate change, temperatures and sea levels are rising, and the weather is getting more extreme. Further, the report described how, without significant action to reduce CO² and other emissions, many of the risks associated with climate change would worsen. 

Why it matters: The Biden administration is likely to use this report as further justification to mitigate climate change risk to the financial system, including additional climate-related disclosures.

What’s next: The IPCC is expected to issue another report later this year describing possible strategies to halt climate change.

For more information or to get involved in climate and environmental, social, and corporate governance (ESG) policy, 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. MBA Chart of the Week: Who Missed Rent Payments in June 2021?         

This week’s MBA Chart of the Week analyzes the number of households that missed rental payments in June 2021. The data is based on last week’s updated second-quarter 2021 results from MBA’s Research Institute for Housing America (RIHA) on how renters, homeowners, and student loan borrowers have fared over the first 15 months of the COVID-19 pandemic.

The 2.86 million households that missed June rental payments, according to the data, have missed an average of 6.2 payments since the onset of the pandemic, with mean cumulative back rent owed of $4,995 (or $14.27 billion in total). Examining the distribution of missed payments (blue line of the chart), a little more than 1 million of these households (37.5%) have missed three or fewer payments since April 2020, while 800,000 (28.1%) have missed 10 or more payments.

What it says: Aggregate missed rental payments have trended down quarter-on-quarter since the beginning of the pandemic, with more than one-quarter of all missed rental payments occurring in the second quarter of 2020 – more than a year ago. During this year’s second quarter, approximately 8.1% of survey respondents had missed a rent payment. Over the 15 months, aggregate missed rental payments were at $41.7 billion, with approximately $31.6 billion in back rent owed as of the end of June 2021. Households that missed June payments account for $14.27 billion of the back rent owed, with the chronically late households in that group (more than 10 missed payments) owing $7.86 billion.

Why it matters: The distribution of the $46 billion in Emergency Rental Assistance is facing a host of challenges, and has been slow to get in the hands of landlords and tenants. Key among these challenges may be the apparent misalignment between when rent payments were missed and when the rental assistance became available.

For more information, please contact Jamie Woodwell at (202) 557-2936 or Eddie Seiler at (202) 557-2739.

12. Commercial/Multifamily Borrowing Bounces Back in the Second Quarter of 2021        

Commercial and multifamily mortgage loan originations were 106% higher in the second quarter of 2021 compared to a year ago and increased 66% from the first quarter of 2021, according to yesterday’s second-quarter 2021 release of MBA’s Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations.

What it says: All property types showed an increase in the second quarter in commercial/multifamily lending volumes when compared to the second quarter of 2020. Among investor types, only the dollar volume of loans for the GSEs decreased. To view the report, please visit:

Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “Mortgage originations doubled compared to the second quarter of 2020, when loan demand cratered and pandemic-related uncertainty made extending credit difficult. Even more notable is that compared to levels seen in 2019, a record year for originations, this year’s second quarter showed a modest 1% increase. Significant differences still exist between property types. Originations of loans backed by industrial and multifamily properties hit second-quarter records, while retail and lodging loan volume remained muted.”

For more information, contact Jamie Woodwell at (202) 557-2936.

13. MBA Forecast: Commercial/Multifamily Lending on Track to Increase 31% to $578 Billion in 2021        

Commercial and multifamily mortgage bankers are expected to close $578 billion of loans backed by income-producing properties in 2021, a 31% increase from 2020’s volume of $442 billion, according to a new MBA forecast released Tuesday.

What it says: Total multifamily lending alone, which includes some loans made by small and midsize banks not captured in the overall total, is forecast to rise to $409 billion in 2021 – a new record and a 13% increase from last year’s total of $360 billion. MBA anticipates additional increases in lending volumes in 2022, with activity rising to $597 billion in commercial/multifamily mortgage bankers originations and $421 billion in total multifamily lending.  

Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “Commercial and multifamily real estate markets are moving past the pain that the COVID-19 pandemic caused in 2020. There remain significant differences by property type, but incomes have rebounded strongly and investor interest in real estate and real estate finance is robust. The result is strong property appreciation and increased transaction activity, both of which are fueling financings.”   

For more information, contact Jamie Woodwell at (202) 557-2936.

14. 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, a 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. We have been engaged with our staff and leaders in the real estate finance industry on how we can eliminate racial and gender inequalities within the mortgage industry, from the perspective of lending and servicing to borrowers as well as staffing our own organizations. 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: Registration and participation in the study is required in order to receive the results. 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, email Dave Rosenthal at McLagan or call (203) 326-4349.

For general questions, 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.