CREF Policy Update Feb. 18, 2021
Commercial and multifamily developments and activities from MBA relevant to your business and our industry.
On Thursday, an NAIC working group agreed to expose revised guidance to extend life company TDR relief for risk-based capital reporting through January 1, 2022. Also this week, Treasury released a list of recipients of Emergency Rental Assistance funds; the OCC released a LIBOR self-assessment tool; and MBA released an updated 2021 commercial/multifamily forecast, as well as reports on fourth-quarter 2020 originations, 2020 servicer rankings, annual loan maturity volumes, and a fourth-quarter 2020 update to the Research Institute for Housing America (RIHA) research on the pandemic’s impact on housing and student loan payments. And yesterday, the House Financial Services Committee finalized its portion of the emerging Biden COVID-19 relief package, including an additional $25 billion in emergency rental assistance.
1. NAIC Gets Set to Extend Life Company RBC TDR Relief
On Thursday, the National Association of Insurance Commissioners (NAIC) Life Risk-Based Capital Working Group agreed to expose draft guidance that would extend existing RBC Troubled Debt Restructurings (TDR) relief to the earlier of January 1, 2022, or 60 days after the end of the National Emergency. This action is responsive to a joint MBA/American Council of Life Insurers (ACLI) request to conform NAIC RBC TDR relief with TDR accounting relief under the CARES Act and NAIC accounting interpretations. Another NAIC working group had extended the NAIC’s TDR accounting interpretations on January 25, 2021. The exposure is available under the Exposure Drafts tab here.
- Why it matters: The NAIC’s TDR relief would not serve its intended purpose of supporting prudent modifications unless both the accounting and RBC relief apply.
- What’s next: The NAIC Life RBC Working Group will expose the draft guidance for 10 days and consider it at its February 26 meeting. MBA and ACLI will join in a letter supporting the exposure. In addition, MBA will continue to support an ACLI proposal to revise the RBC factors for equity investments in commercial real estate, which is also before the NAIC Life RBC Working Group.
For additional information, please contact Bruce Oliver at (202) 557-2840.
2. House Committee Advances Legislative Components of the Stimulus Reconciliation Package
Yesterday, the House Financial Services Committee passed legislation that includes key housing provisions of President Joe Biden’s $1.9 trillion American Rescue Plan. The Financial Services Committee title included $25 billion for Emergency Rental Assistance (ERA), to provide relief for renters in the form of rent payments, rent arrearages, utilities, home energy costs, arrearages for utilities and energy costs, as well as other expenses related to housing. This tranche of ERA funding is in addition to the $25 billion previously allocated by Congress as part of the December 2020 pandemic stimulus legislation that is already law. Separately and of note, the House Small Business Committee approved a $25 billion grant program for restaurants this week.
- Why it matters: As the Centers for Disease Control and Prevention (CDC) eviction moratorium is likely to be extended for 18 months, additional ERA funding will be critical to provide funding shortfalls to landlords and property managers.
- What’s next: The Senate will take up the House’s bill, with the possibility of amending it, in the coming weeks in order to allow Congress to send the bill to be signed into law by President Biden by mid-March. That action would bring the total amount of funding allocated for ERA to a total of $50 billion.
3. MBA Joins White House Meeting on CDC Eviction Moratorium
On Thursday, MBA and other trades met with White House and other government officials to discuss the CDC national eviction moratorium. The meeting was attended by senior White House advisors and officials from various federal agencies, including the CDC and HUD.
- Why it matters: MBA and meeting participants discussed current market dynamics in the rental housing market and the effect of the moratorium. In addition, MBA and the group discussed the importance of providing rental assistance that is quickly and efficiently delivered to support renters and property owners. Last week, MBA joined other trades in a letter to HUD, the CDC, and the White House regarding the extended CDC eviction moratorium order.
- What’s next: The CDC’s current eviction moratorium is set to expire on March 31, 2021.
4. Treasury Publishes List of Rental Assistance Recipients
This week, the Treasury Department published a list of state and local governments that received Emergency Rental Assistance Program (ERAP) relief under the December 27, 2020, COVID-19 relief legislation. The ERAP program provides $25 billion in rental assistance to state and local governments. A detailed breakdown of the amount of rental assistance each state and local governments have received can be found by following this link .
- Why it matters: ERAP was included in stimulus legislation passed by Congress in December 2020. The program’s passage made funding available to state and local governments to assist households that are unable to pay rent and utilities due to the COVID-19 pandemic.
- What’s next: State and local governments have begun distributing the $25 billion in rental assistance.
For more information, please contact Grant Carlson at (202) 557-2765.
5. OCC Introduces LIBOR Transition Self-Assessment Tool
On February 10, the Office of the Comptroller of the Currency (OCC) issued a bulletin that provides a self-assessment tool for banks to evaluate their preparedness for the expected cessation of the London Interbank Offered Rate (LIBOR).
- Why it matters: Found here, the tool is useful to asses three areas: 1) the appropriateness of a bank’s transition plan; 2) bank management’s execution of the bank’s transition plan; and 3) related oversight and reporting.
- What’s next: MBA has been an active participant in the Alternative Reference Rates Committee (ARRC) and continues to engage with regulators on different elements of the transition, working to ensure it does not disrupt markets or expose market participants to undue litigation risk.
For more information, please contact Andrew Foster at (202) 557-2740.
6. Updated RIHA Study Highlights Households’ Ability to Make Housing and Student Debt Payments in Q4 2020
On Monday, MBA’s Research Institute for Housing America (RIHA) released a fourth-quarter 2020 update of its study, “Housing-Related Financial Distress During the Pandemic.” The study contains innovative household survey data on rent, mortgage, and student loan payment patterns from the Understanding America Study (UAS), an internet panel survey of over 8,000 households specially tailored to analyze the impact of the pandemic.
- What it says: The percentage of homeowners and renters behind on their payments has decreased since last year’s second quarter. In December, 7.9% of renters (2.62 million households) missed, delayed, or made a reduced payment, while 5.0% (2.38 million homeowners) missed their mortgage payment. The proportion of student debt borrowers who missed a monthly payment climbed to approximately 43% of borrowers in December from the steady share of around 40% since May.
- Edward Seiler, Executive Director, RIHA, and MBA’s Associate Vice President, Housing Economics, says, “The distribution of several effective vaccines will hopefully slow the pandemic. In the meantime, providing targeted relief for those facing hardships until the ‘new normal’ will be key to preventing wider disruption to the housing market and overall economic recovery.”
For more information, please contact Eddie Seiler at (202) 557-2739.
7. MBA Releases CREF Forecast, Q4 2020 C-MF Originations Report, Annual Servicer Rankings, and Annual Loan Maturity Volumes Report
This week, MBA released an updated 2021 Commercial/Multifamily Forecast, as well as its Q4 2020 Quarterly Index of Commercial/Multifamily Mortgage Bankers Originations, Year-End 2020 Commercial/Multifamily Mortgage Servicer Rankings, and Year-End 2020 Commercial/Multifamily Loan Maturity Volumes Report.
- What they say: The last three months of 2020 were stronger than earlier quarters for borrowing backed by commercial and multifamily properties; commercial and multifamily mortgage maturities among nonbank lenders are the highest since at least 2009; and here’s the year-end ranking of commercial and multifamily mortgage servicers’ volumes as of December 31, 2020.
- On the 2021 forecast, Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “The steep declines in mortgage borrowing and lending seen in 2020 should partially reverse in 2021. The economic rebound MBA anticipates in the second half of the year should bring greater stability to the markets, but with continued differentiation by property type. Much of the path forward will depend on the virus and our confidence and ability to move past it.”
For more information, please contact Jamie Woodwell at (202) 557-2936.
8. State Updates
MBA and NY MBA Respond to NY Department of Financial Services Climate Change Supervisory Expectations
This week, MBA and the New York MBA wrote to the New York Department of Financial Services (DFS) providing feedback to DFS’ October memorandum laying out risks from climate change and also detailing DFS’ expectations for risk mitigation plans. Among other actions, DFS expects that all regulated organizations will begin integrating the financial risks from climate change into their governance frameworks, risk management processes, and business strategies. The letter to DFS urged the Department to review its new policy mandates against the federal affordable housing programs, consider whether its guidance could unintentionally have a disproportionate impact on underserved communities, and asked for additional guidance on how member companies can develop an approach to climate-related financial risk disclosure and the increased risk of climate change on community banks.
- Why it matters: New York DFS is the first state mortgage regulator to issue such a directive, and this could lead to similar action from other states. The federal banking agencies are also considering how to incorporate climate change into their supervisory processes.
- What’s next: MBA and the New York MBA will continue to engage with DFS and brief members on any developments.
- State eviction moratorium and legislative activity tracker available here.
9. [VIDEO]: mPower Moments: On Overcoming Challenges, Promoting DE&I with Wells Fargo’s Kristy Fercho
In this new episode of mPower Moments, mPower Founder Marcia M. Davies sits down with Kristy Fercho, 2021 MBA Chairman-Elect and Executive Vice President and Head of Wells Fargo Home Lending. Fercho shares with viewers the keys to success in her career of transitioning to many different industries and roles, how to overcome adversity, and what organizations need to do to make a difference in Diversity, Equity, and Inclusion (DE&I).
- Why it matters: Fercho also explains what it means to her and the industry when she becomes, this October, the very first Black Chairman – and fourth female – to lead MBA.
- What’s next: To watch more mPower Moments, click here.
For more information, please contact Marcia Davies at (202) 557-2707.
10. 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:
- Pandemic Servicing: Preparing for CFPB Scrutiny – February 17
- Commercial/Multifamily: Market Distress and Loan Workouts – February 24
- Compliance in a Rapidly Changing Servicing Environment – February 24
- MAA Quarterly Webinar: February 2021 – February 25
- Achieving Touchless Mortgage Automation: Insights from Industry Experts – March 3
- Multifamily Real Estate Financial Crimes Training – March 10
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2890.