CREF Policy Update Feb. 4, 2021

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

1. Senate Banking Committee Holds Hearing to Consider the Nomination of Fudge to be HUD Secretary

On Thursday, the Senate Banking Committee conducted a hearing on the nomination of Congresswoman Marcia Fudge (D-OH) to serve as the Secretary of Housing and Urban Development (HUD). The nominee received strong support from both Ohio senators. Senators on both sides of the aisle spoke of the need to expand affordable housing nationwide, particularly in areas hit hard by unemployment, and in rural and minority communities. In her opening statement, Congresswoman Fudge pledged to increase the supply of affordable homes. The hearing also covered the adequacy of housing policies to ensure homeowners are able to access forbearance and avoid foreclosures and evictions. Senator Toomey (R-PA) raised the Fair Housing Act and argued, “now is not the time to impose new, unfunded mandates on community housing.” He also asked that the nominee work with Congress before making any changes to the FHA’s Mutual Mortgage Insurance Fund (MMIF). Asked by Senator Rounds (R-SD) about plans to release the GSEs from conservatorship, Congresswoman Fudge affirmed that their future is Congress’ decision to make.

• Why it matters: The hearing is the first step in the confirmation process for Congresswoman Fudge to serve as HUD Secretary. The discussion highlighted a host of pressing housing issues before the committee, including affordable housing reforms, economic inclusion, and changes to federal regulations established by the previous administration.
• What’s next: Given the narrow majority in the House, and the busy Senate floor schedule in the weeks ahead, a swift vote on Fudge’s nomination is not expected. Prior to her confirmation vote, she will be asked to respond to questions for the record and will continue to meet with Senators who do not serve on the Senate Banking Committee.

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

2. MBA Joins Coalition Letters on Treasury Rental Assistance FAQs

This week, MBA joined two coalition letters urging Treasury to clarify and expand on rental assistance FAQs. The letter sent on Tuesday asked for Treasury Secretary Janet Yellen to clarify that “rent on a residential dwelling” include land rent for manufactured housing. A joint letter sent on Thursday to Secretary Yellen and HUD Secretary nominee Rep. Marcia Fudge (D-OH) asked for Treasury and HUD to clarify and address a variety of important interpretive and operational issues.

• Why it matters: Treasury’s FAQ guidance on rental assistance is not sufficiently clear or complete to ensure that rental assistance funds are distributed appropriately.
• What’s next: MBA will continue work with its coalition partners and the Administration to most effectively and efficiently deliver rental assistance to eligible renters.

For more information, please contact Bruce Oliver at (202) 557-2840 or Grant Carlson at (202) 557-2765.

3. Extensions of NAIC TDR Relief for Life Companies

On Monday, the Statutory Accounting Principles Working Group (SAPWG) extended TDR relief under INT 20-03, until the earlier of January 1, 2022, or 60 days after the end of the National Emergency of the COVID-19 pandemic. The SAPWG also clarified that the CARES Act TDR relief referenced within INT 20-03 applies to life companies. The SAPWG took this action to conform to December 27, 2020, amendments to the CARES Act.

• Why it matters: The extended modification period and clarification that CARES Act TDR relief applies to life companies provides flexibility to modify loans affected by the pandemic in 2021, including modifications that total more than six months.
• What’s next: On Friday, MBA and the American Council of Life Insurers (ACLI) requested that the National Association of Insurance Commissioners (NAIC) Life Risk-Based Capital Working making a conforming change to the modification period covered by NAIC’s RBC TDR Guidance, to the earlier of January 1, 2022 or 60 days after the end of the National Emergency, and to make that change before March 31, 2021. The Working Group is next scheduled to meet on February 25, 2021.

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

4. State Updates

New York Governor Signs Extension of Commercial Eviction & Foreclosure Moratorium

New York Governor Andrew Cuomo is expected to sign the COVID-19 Emergency Protect Our Small Businesses Act of 2021, which extends previous executive action limiting some commercial evictions and foreclosures until May 1, 2021. The legislation will be effective immediately.

• Why it matters: New York is the only state with a statewide commercial eviction moratorium. The legislation extends and revises an existing moratorium put into place that expires on January 31, 2021. Please follow this link for a detailed summary of the legislation.
• What’s next: The legislation includes a number of limits the eviction and foreclosure protections to small New York based commercial tenants and landlords. In addition, it requires tenants and landlords to file a financial attestation to qualify for relief. It is effectively immediately.

California Governor Signs Budget with Eviction and Rent Forgiveness Provisions

California Governor Gavin Newsom is expected to sign the state 2021-2022 budget plan (SB-91), which would extend the state’s eviction moratorium on July 1, 2021, and would also provide rental assistance to tenants and relief to landlords. The eviction moratorium protects tenants as long as they’re paying a total of 25% of their rent starting in September 2020 and can prove pandemic-related adversity, such as job or salary loss. The new proposal also establishes a rent subsidy program using $2.6 billion in federal aid to help renters and landlords. The bill pays landlords 80% of any missing rent accrued between April 2020 and March 2021, provided they agree to forgive the remaining 20% and promise not to pursue eviction in order to qualify for the benefits. In cases in which landlords do not agree to forgive unpaid rent, the state would pay 25% of the rent in arrears.

• Why it matters: The budget deal passed days before the state’s residential eviction moratorium was set to expire on February 1, 2021.
• What’s next: MBA will continue to work with the California MBA to address state legislation that could affect CREF members.

State Highlights this Week

• MBA Supports NY LIBOR Legislation: See the legislation here (pg. 233).

NMHC Amicus Brief on NYC Rents Stabilization Law: NMHC on Friday submitted an amicus brief supporting a challenge to New York’s Rent Stabilization Law (RSL) or statewide rent control legislation passed last year.

Stay Compliant with MBA’s State Eviction and Rental Assistance Trackers

• State eviction moratorium and legislation trackers are available here.
• Information on state and local distribution of the new $25 billion in Emergency Rental Assistance is not yet available. A Treasury FAQ on that rental assistance is available here. 

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

. MBA’s Jamie Woodwell: A Post-Pandemic World: Getting from Here to There

MBA’s Jamie Woodwell, Vice President of Commercial Real Estate Research, recently wrote a guest column for Commercial Real Estate Direct that takes a look at the effects of the COVID-19 pandemic on commercial and multifamily properties, investors, and lenders. Read the column here.

• Why it matters: When the pandemic hit the United States last March, it raised two fundamental questions for owners, lenders and others involved in commercial real estate: a) How would properties get through the pandemic and recession and b), What would the “new normal” be for the sector post-pandemic?
• Woodwell’s outlook: The effectiveness of vaccines that now are being produced would seem to indicate that by this summer, a large share of Americans will have been vaccinated against the virus, allowing a more widespread re-opening of the economy. That would be a welcoming reprieve for some of the hardest hit sectors of the economy and for the commercial real estate industry, in particular the retail, leisure and hospitality sectors. But there is still a great deal of uncertainty ahead, and a difficult period between “here” and “there.” In the short-term, the expectation is for continued challenges for some, and opportunities for others, before we get to our new post-pandemic normal.

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

6. Fed Names Official to Lead New Climate Change Group

On Monday, the Federal Reserve announced it is tapping Kevin Stiroh to lead the newly-formed “Supervision Climate Committee.”

• Why it matters: Kevin Stiroh, who previously led bank supervision at the Federal Reserve of New York, will gather senior Fed officials to study what climate change could mean for banks and financial markets.
• What’s next: Financial regulators are increasingly focused on climate change’s impact on financial risk.

• What it says: The balance of commercial and multifamily mortgages that are not current increased last month, driven by more loans becoming newly delinquent. 94.0% of outstanding loan balances were current – down from 94.3% in November – and loans backed by lodging and retail properties continue to see the greatest stress.
• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “For several months, delinquency rates declined as the economy stabilized. But more recently, the added stress from a winter wave of the virus has weakened the economy and challenged some owners, as property income has been disrupted. The roll-out of multiple COVID-19 vaccines is good news for the long term, but last month’s rise in commercial mortgage delinquencies reinforces that many challenges remain between now and when the economy can fully reopen.”

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

7. 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:

• The State of the Non-QM Market – February 3
• Introduction to the MISMO API Toolkit for General Audiences – February 8
• Top 5 Areas of LO Litigation and Ways to Avoid Them – February 9
• 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

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.