CREF Policy Update June 24, 2021
Commercial and multifamily developments and activities from MBA relevant to your business and our industry.
1. MBA Comments on SEC Climate-Related Disclosures
Last Monday, MBA urged the U.S. Securities and Exchange Commission (SEC) to follow a set of guiding principles as the SEC considers issues related to climate disclosures. In its comments to the SEC, MBA outlined the work it is already doing with its members on climate and environmental, social, and corporate governance (ESG) issues and offered to serve as a resource to the SEC on climate-related and ESG matters. MBA provided these recommendations in a response to a March 15, 2021, SEC request for input (RFI) to inform its evaluation of disclosure rules and climate change.
- Why it matters: The SEC listed climate change disclosures as part of its spring 2021 agenda, and the RFI could be a part of the process to modify the existing disclosure requirements to account for climate and ESG issues.
- What’s next: The SEC will review the RFI responses to consider any additional action.
2. FDIC Proposes Rule Amending Community Bank Real Estate Lending Standards
Last week the Federal Deposit Insurance Corporation’s (FDIC) Board of Directors issued a Notice of Proposed Rulemaking (NPR) requesting comment on a rule that would amend real estate lending standards for certain community banks. The rule affects certain qualified community lending institutions that currently elect to adopt the community bank leverage ratio (CBLR) framework.
- Why it matters: As described by FDIC, the proposed amendment would conform “the method for calculating the ratio of loans in excess of the supervisory loan-to-value (LTV) limits with the capital framework established in the community bank leverage ratio (CBLR) rule. The proposed amendment would provide a consistent approach for calculating the ratio of loans in excess of the supervisory LTV limits at all FDIC-supervised institutions.”
- What’s next: Comments will be due 30 days after the NPR’s publication in the Federal Register.
For more information, please contact Grant Carlson at (202) 557-2765.
3. MBA Adds New Tax Policy Resources to Website
Last week MBA launched its new tax policy webpage to provide members with talking points on tax issues and up-to-date information on the Biden administration’s tax proposals. The webpage includes an overview of MBA’s positions and talking points on tax policy, as well as summaries of key tax and revenue proposals included in President Joe Biden’s FY 2022 Budget and “Greenbook.”
- Why it matters: Members are encouraged to use the resources and talking points on the tax policy page in their discussions with policymakers and elected officials.
- What’s next: MBA will continue to update the tax policy page with the most pressing tax issues for our members, as well as MBA’s positions on various tax policies.
4. House Advances Legislation for New ESG Reporting Requirements
Last Wednesday, on a party-line vote, the House Financial Services Committee considered and passed a package of bills that would establish a new series of ESG reporting requirements for publicly traded companies.
- Why It matters: Specifically, the Corporate Governance Improvement and Investor Protection Act would: (1) require public companies to disclose certain ESG matters in annual filings with the Securities and Exchange Commission ( H.R. 1187); (2) mandate the reporting of expenditures for certain political activities ( H.R. 1087); (3) compel issuers to disclose information on pay raises made to executives and non-executive employees ( H.R. 1188); (4) require certain disclosures relating to climate change ( H.R. 2570); and (5) force public corporations to disclose their financial reporting on a country-by-country basis ( H.R. 3007).
- What’s next: The sweeping ESG measure is unlikely to clear a filibuster in the 50-50 Senate, given GOP opposition to these new requirements. Absent legislation, a slew of regulatory actions is expected on the ESG front, with a major focus on the financial services industry.
5. House Committee Holds Hearing Focused on Evictions
Last week a House Judiciary Committee Subpanel held a hearing titled, “Potential Remedies for Unlawful Evictions in Federal Emergency Areas.” Members on both sides of the aisle discussed the best course of action on how to address the backlog of housing payments that resulted from the pandemic and the subsequent federal policies that are currently set to expire in the next week. Democrats often stressed the need for more robust housing protections, while Republicans argued for a targeted response that should be largely determined by individual states.
- Why it matters: Democrats and Republicans have introduced separate proposals as a potential path forward to address backdated rental and mortgage payments, but legislation is unlikely to advance through both chambers of Congress.
- What’s next: The Centers for Disease Control and Prevention (CDC) and additional agencies are currently weighing administrative actions to extend or reform current housing protections.
6. Treasury Secretary Testifies on Capitol Hill; Discusses Retroactive Capital Gains Proposal
Last Wednesday, Treasury Secretary Janet Yellen suggested in remarks before a Senate panel that if Congress were to pass a capital-gains tax hike starting in April 2021, that would not count as a retroactive increase. “I don’t see a prospective change in rules pertaining to the taxation of future realization of capital gains as being a retroactive feature,” Secretary Yellen told the Senate Finance Committee, when asked about the Biden administration’s tax proposal. A summary of the full hearing can be found here.
- Why it matters: President Biden’s proposal to raise the capital-gains tax rate to 39.6% from 20% for those earning $1 million or more was first announced April 28, 2021, as part of the administration’s American Families Plan. Secretary Yellen’s comment suggests that the White House continues to push for capital-gains increases to be effective before the date Congress passes any potential law.
- What’s next: President Biden’s proposal to tax capital-gains income at the same rates as wages and salaries for high earners would be one of the biggest changes to investment taxation in roughly a century. Debate over the start date of any capital-gains tax changes is likely to be a source of tension as the issue is debated in Congress during the coming months.
7. Commercial/Multifamily Mortgage Debt Increased 1.1% in the First Quarter of 2021
MBA recently released its latest quarterly Commercial/Multifamily Mortgage Debt Outstanding report. Commercial/multifamily mortgage debt outstanding rose by $44.6 billion (1.1%) to a total of $3.93 trillion at the end of the first quarter of 2021. Multifamily mortgage debt alone increased $28.8 billion (1.7%) to $1.7 trillion from the fourth quarter of 2020.
- MBA’s Jamie Woodwell, Vice President of Commercial Real Estate Research, said, “The pandemic-era growth in the amount of commercial and multifamily mortgage debt outstanding continued during the first quarter, but the growth was not evenly distributed. All of the major capital sources increased their holdings of commercial and multifamily mortgages during the quarter, but almost two-thirds of the overall growth came from multifamily properties, with 80 percent of that multifamily growth coming from federally backed Agency and GSE mortgage-backed securities and portfolios.”
- Added Woodwell, “As the uncertainty from the COVID-19 pandemic wanes, lenders will have greater clarity into the different properties and property types and be in stronger positions to make new loans.”
For more information, please contact Jamie Woodwell at (202) 557-2936.
8. State Trackers
- State eviction moratorium and legislative activity tracker available here.
9. Webinar: Tax Advocacy Tuesdays at 2:30
As the Biden administration and Congress negotiate on disclosed plans for trillions of dollars in new taxes and government spending, MBA is actively engaging policymakers on the proposals under consideration that would impact real estate finance. Get real-time insights and analysis in our new, biweekly webinar series on pending policy developments that significantly impact the commercial/multifamily finance ecosystem. Rotating MBA staff, members, and invited guests will share information, answer questions, and ensure you are well-informed and active participants in helping achieve the industry’s advocacy objectives.
This biweekly series will be offered through fall 2021 as developments dictate. It is closed to press. You must register for each event individually. Register here.
For more information, please contact Andrew Foster at (202) 557-2740.
10. mPact Servicing Career Conversations with Wally Reid and Adriana Shannon on June 24 at 5:30 PM ET
On June 24, join the mPact Servicing Advisory Committee for an insightful conversation and virtual networking opportunity with MBA Commercial/Multifamily Board of Governors (COMBOG) member Wally Reid, Debt & Loan Sales Leader and Senior Managing Director at JLL Capital Markets, and DEI Council member Adriana Shannon, Managing Director at CTF Asset Management. Both are passionate about helping young professionals navigate successful careers in the commercial real estate finance servicing industry.
- Why it matters: Learning about the experiences and perspectives of others, as well as how the MBA is a resource for industry information and education, will assist you in your current and future goals. You will have the opportunity to ask questions and get advice on best practices for career growth.
- What’s next: Register for this complimentary webinar here.
For more information, please contact Jacky Salazar at (202) 557-2746.
11. 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 awards program acknowledges the dedication and creativity that increase DEI efforts within a company’s leadership and employee base. If your organization is a champion for 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 helpful application tips to help you prepare your entry.
For more information, please contact MBA’s DEI Team.
12. 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:
- Fair Lending: Things You Might Not Be Thinking Of – June 22
- Lending to the LGBTQ Community: Opportunities and Considerations – June 28
- Benchmarking for Performance and the Performance Ratios Every Mortgage Banker Must Know – June 29
- Transformation Impact of Blockchain in Mortgage Industry and Realized Economic Benefits – June 29
- Today’s Cybersecurity Issues and How to Plan Your Response – June 30
For more information, please contact David Upbin at (202) 557-2890.