CREF Policy Update July 15, 2021

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

1. MBA Sends Letter to HUD Against FFB Program Reauthorization 

MBA sent a letter to Ethan Handelman, Deputy Assistant Secretary for Multifamily at the U.S. Department of Housing and Urban Development (HUD), expressing concerns about reinstating the Federal Financing Bank (FFB) risk share program.

• Why it matters: In 2014, the U.S. Treasury Department and HUD entered into a partnership under which the FFB provided debt capital for financing multifamily housing. This temporary program expired on December 31, 2018.
• What’s next: The Biden administration has included reauthorization of this partnership in its FY 2022 budget proposal. MBA is urging HUD not to reinstate the program.

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

2. MBA and MLC Send Letter to HUD on the Choice-Limiting Restrictions to FHA-Insured Loans Program 

Last Tuesday, MBA and the Multifamily Lending Council (MLC) sent a letter to Lopa Kolluri, HUD Principal Deputy Assistant Secretary for the Office of Housing and the Federal Housing Administration (FHA), outlining concerns regarding HUD’s guidance on Choice-Limiting Actions (CLA) for FHA-insured loans.

• Why it matters: Borrowers should be able to take reasonable actions to maintain the existing property and to comply with applicable laws without disruption. The letter lays out a comprehensive argument that CLA is not applicable to FHA-insured loans, and urges HUD to withdraw its Office of Community Planning and Development (CPD) guidance and clarify that those participating in applicable HUD mortgage insurance programs are not subject to choice-limiting restrictions.
• What’s next: MBA will continue to work with MLC and Multifamily Accelerated Processing (MAP) lenders in ongoing advocacy efforts with HUD leadership on behalf of multifamily members.

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

3. Financial Stability Board Urges Action to Complete the Transition Away from LIBOR by Year End-2021

Last Tuesday, the Financial Stability Board (FSB) published a progress report to the G20 on the London Interbank Offered Rate (LIBOR) transition and remaining issues.

• Why it matters: The LIBOR transition is entering its home stretch. The FSB encourages authorities to set globally consistent expectations and milestones so that firms will rapidly cease the new use of LIBOR, regardless of where those trades are booked or in which currency they are denominated. Market participants are urged to cease new use of LIBOR in all currencies as soon as practicable, respecting national working group timelines and supervisory guidance where applicable, and in any case no later than the end of 2021. Read more about the report here.
• What’s next: One of the most significant transitions occurring in financial markets is the move to phase out LIBOR as the predominant interest rate benchmark. This transition, which will have major impacts on the mortgage industry – including the market for adjustable-rate mortgages – is moving full steam ahead. Market participants of all types and sizes need to be prepared to handle changes that will be necessary for both new originations and legacy products.  

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

4. $99 Million in Florida Rental Assistance Funds Returned to State 

Last week the Florida Housing Finance Corporation announced it would return to the state $99 million in unspent rental assistance funds that the agency failed to disburse.

• Why it matters: The Florida Housing Finance Corporation received $120 million in federal funding for rental assistance last year as part of the CARES Act, but handed out only about $13.2 million to help tenants.
• What’s next: MBA will continue to advocate for states to distribute rental assistance more efficiently to ensure the quick and efficient distribution of rental assistance to assist tenants and landlords.

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

5. ESG WEEKLY UPDATES

SEC is Considering Disclosure on Criteria and Data Backing Fund Sustainability Claims

Last Wednesday, in prepared remarks before the Asset Management Advisory Committee (AMAC), U.S. Securities and Exchange Commissioner Gary Gensler said that the SEC is looking at requiring “sustainability” funds to disclose the underlying data supporting claims of “green” and “sustainable” investing. SEC staff is also looking at updating naming conventions and examining whether distinctions between investment strategy and type are still necessary. The existing Naming Rule says that if a fund’s name suggests a particular investment strategy, then the fund must invest at least 80% of its value in that investment type. Gensler mentioned that updating disclosure and naming conventions would bring much-needed transparency to the asset management industry, especially considering the growing investment in environmental, social, and corporate governance (ESG).

• Why it matters: The Chairman’s remarks are indicators of the SEC’s focus on future rulemaking on ESG, climate risk, and human capital disclosures.
• What’s next: MBA will continue to analyze ESG and climate-related action on the part of regulators and advocate on these issues on behalf of our members.

SEC Receives Advisory Committee Recommendations on ESG Disclosures

At the same event on Wednesday, AMAC provided recommendations to the SEC to improve ESG data, disclosure, and transparency. The ESG disclosure recommendations focus on disclosure of material ESG matters, ESG investment product disclosure, and observation on performance measurements. AMAC, which is composed of outside experts, including individuals representing institutional investors; retail, small, and large funds; and intermediaries, was formed to provide the Commission with perspectives on asset management and related advice.

• Why it matters: AMAC’s recommendations will be considered by the SEC as it works on possible future actions on ESG disclosures.
• What’s next: The SEC will consider the recommendations from AMAC, and MBA will continue to track and analyze any ESG-related action taken by the SEC.
  
  

FSB Publishes Roadmap for Addressing Climate-Related Financial Risks

Last Wednesday, FSB published a roadmap designed to coordinate at an international level the growing number of initiatives to address climate risk in the financial system. According to FSB, the roadmap supports international work in climate risk in several ways, including promoting existing climate initiatives at standard-setting bodies, helping to identify data gaps, limiting overlap, facilitating discussion on climate-related issues, and providing input into broader international policy considerations. The roadmap focuses on future work on financial risk of climate change in four areas: firm-level disclosures, data, vulnerabilities analysis, and regulatory and supervisory practices and tools. The FSB roadmap will be delivered to the G20 Finance Ministers and Central Bank Governors meeting on July 9 and 10, 2021.

• Why it matters: FSB Chair Randal Quarles is also Vice Chair of the Federal Reserve, so future U.S. climate-risk disclosures will likely be influenced by the FSB roadmap.
• What’s next: MBA will analyze the FSB roadmap for CREF impacts and its implications for future policy decisions regarding climate change and ESG disclosure.

For more information on ESG, or to get involved, please contact Adrian Ballinger at (202) 557-2774.

6. 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.

7. Commercial and Multifamily Mortgage Delinquencies Hold Steady in June    

Delinquency rates for mortgages backed by commercial and multifamily properties held steady in June, according to MBA’s latest monthly CREF Loan Performance Survey. The survey was developed to better understand the ways the COVID-19 pandemic is impacting commercial mortgage loan performance.

• What it says: Loans backed by lodging and retail properties continue to see the greatest stress, but lodging did see noticeable improvement in June.
• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “Commercial and multifamily mortgage delinquencies continue to be driven by loans backed by hotel and retail properties that ran into trouble during the pandemic and are now more than 90 days late. We expect these late-stage delinquencies to wane as the economy continues to open and there is less uncertainty surrounding the prospects of these and many other property types.”

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

8. Are You a Diversity Champion? Apply for MBA’s DEI Leadership Awards

MBA’s Diversity, Equity and Inclusion (DEI) Leadership Awards are back! Now in its sixth year of recognizing MBA member companies, this award program acknowledges the dedication and creativity that increase DEI efforts within a company’s leadership and employee base. If your organization is a champion of diversity, share how you are inspiring change and highlight your success by applying today.

• What’s next: Applications are due August 13, 2021. Prior to getting started, please review application tips to help you prepare your entry.

For more information, please contact MBA’s DEI Team.

9. 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:

• Planning for Community Reinvestment Act Modernization – July 15
• Preparing for the End of the Pandemic – What Should Servicers Do Now? – July 28
• Social Media and Digital Advertising 2021 Update – July 29
• C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 12

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

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