CREF Policy Update March 11, 2021

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

1. FHFA Extends COVID-19 Forbearance for GSE Multifamily Loans to June 30, 2021 

On Thursday, the Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the GSEs) would continue to offer multifamily property owners the ability to enter into a new or, if qualified, modified COVID-19 forbearance through June 30, 2021. The program was previously set to expire on March 31, 2021.

• Why it matters: Multifamily property owners who enter into a forbearance agreement must comply with certain tenant protections that apply during the period of forbearance and repayment period. These actions are just the latest steps FHFA has taken to direct the GSEs to benefit renters, property owners, and the mortgage market during the pandemic.
• What’s next: MBA will continue to work with FHFA to provide timely guidance to members in response to the ongoing COVID-19 pandemic.  

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

2. GSEs Release Over $1 Billion to Affordable Housing Funds

On Monday, the Federal Housing Finance Agency announced that it authorized the GSEs to release $1.09 billion in affordable housing allocations, more than double last year’s disbursement. By law, 65% of the funds will be allocated to the Housing Trust Fund operated by the Department of Housing and Urban Development (HUD), with the remaining 35% allocated to the Capital Magnet Fund operated by the Treasury Department.

• Why it matters: These funds are used for a variety of affordable housing activities – most notably property acquisition and improvement, as well as new construction. Legislation passed in 2008 requires the GSEs to set aside an amount equal to 4.2 basis points of the unpaid principal balance of their new business for these affordable housing funds. FHFA suspended these payments shortly thereafter due to the poor financial condition of the GSEs; it lifted this suspension in 2014.
• What’s next: MBA has long advocated for continued funding of these initiatives as a critical step toward improving housing affordability throughout the nation.

For more information, please contact Hanna Pitz at (202) 557-2796.

3. CFPB Report, Senators Highlight Concerns Regarding Renters

On Monday, the Consumer Financial Protection Bureau (CFPB) released a report on housing insecurity and the COVID-19 pandemic. The report summarizes some of the relevant data and research on the impact of the pandemic on the rental and mortgage market, particularly its impact on low-income and minority households.

• Why it matters: While CFPB jurisdiction over tenant-landlord relations is extremely limited, a blog accompanying the report states that “the CFPB is planting itself firmly on the side of homeowners and renters, as our statutory mandate requires,” which suggests a CFPB appetite for extending its activity in that direction. On Thursday, in a letter to the CFPB from Senators Elizabeth Warren (D-MA) and Cory Booker (D-NJ), the senators urged the CFPB to take actions on specialty credit reporting bureaus that landlords rely on to screen prospective tenants.
• What’s next: MBA will continue to monitor for possible CFPB activity in the area of landlord-tenant relations.

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

4. SEC Announces 2021 Examination Priorities and Enforcement Taskforce Focused on Climate and Environmental, Social, and Governance (ESG)  

On Wednesday, the Securities and Exchange Commission (SEC) releases its 2021 enforcement priorities; on Thursday, the SEC announced the creation of an enforcement task force focused on climate and ESG in the enforcement division.

• Why it matters: The SEC Division of Examinations (EXAMS) will focus on the London Interbank Offered Rate (LIBOR) transition; retail investor protection; information security; and operational resiliency fintech and innovation, including digital assets and antimoney-laundering (AML) laws. The Climate and ESG Task Force “will develop initiatives to proactively identify ESG-related misconduct. The task force will also coordinate the effective use of Division resources, including through the use of sophisticated data analysis to mine and assess information across registrants, to identify potential violations. Later that day, Republican SEC Commissioners Hester Peirce and Elad Roisman clarified that the exams would be focused on current standards for ESG, in order to understand what may need to be clarified, updated, or enhanced for the Commission’s environmental disclosure regime. It will be important to understand how this process will play out once an SEC Chair – potentially Gary Gensler, who has been nominated by President Joe Biden – is confirmed by the Senate.
• What’s next: MBA is working with members to engage with regulators on climate and ESG-related regulation and supervision affecting commercial real estate finance.

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

5. U.K. Regulator Confirms LIBOR Termination Dates

Earlier today, the Financial Conduct Authority (FCA) – the British regulator of LIBOR – announced the dates on which LIBOR no longer will be published or deemed representative for use. As expected, for most tenors of U.S. Dollar LIBOR, this termination date will be June 30, 2023. For one-week and two-month U.S. Dollar LIBOR tenors, this termination date will be December 31, 2021. The FCA also clarified that it does not expect any LIBOR settings to be deemed unrepresentative prior to these dates.

• Why it matters: This announcement provides the clearest indication yet of the timeline by which various tenors of U.S. Dollar LIBOR will become unavailable. The extended timeline should help market participants develop processes to transition the servicing of existing LIBOR-indexed loans to new benchmarks. As U.S. regulators have made clear, however, financial institutions are expected to shift their new adjustable-rate loan production away from LIBOR as soon as possible.
• What’s next: MBA will continue to work with regulators and market participants to ensure the transition away from LIBOR in the mortgage market is as smooth as possible.

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

6. State Updates

New York Legislature Will Limit Governor’s Emergency Powers

On Wednesday, Senate Majority Leader Andrea Stewart-Cousins and Assembly Speaker Carl Heastie announced the Legislature will pass legislation repealing the temporary emergency powers that were granted to New York Governor Andrew Cuomo last year at the start of the COVID-19 pandemic. The draft legislation will allow current directives pertaining to preserving the public health to continue.

• Why it matters: At the start of the pandemic, the legislature granted the governor temporary emergency powers giving him broader powers to issue executive orders. These executive orders limited evictions, foreclosures, business capacity, dining, and other activities.
• What’s next: The legislation is expected to allow current directives pertaining to preserving the public health to continue. Final legislation is expected to be passed as soon as this weekend.

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

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 Delinquency Rates Affected by the Pandemic, but Impact Differs by Property Types 

According to two reports released yesterday by MBA, delinquency rates for mortgages backed by commercial and multifamily properties for the most part continue to decrease, as the COVID-19 pandemic’s impact on commercial and multifamily mortgage performance continues to vary by the different types of commercial real estate. The findings come from MBA’s Commercial Real Estate Finance (CREF) Loan Performance Survey for February, and the latest quarterly Commercial/Multifamily Delinquency Report for the fourth quarter of 2020.

• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research, said, “After a slight deterioration at the end of 2020, commercial and multifamily mortgage performance improved for the second straight month in February, bringing delinquency rates down to the lowest level since April 2020. Lodging and retail property loans continue to show the greatest stress, but the shares of outstanding loan balances that are delinquent have fallen from their peak levels by 25 percent and 28 percent, respectively. Across all property types, the share of outstanding balances becoming newly delinquent is also the lowest since the onset of the pandemic, and less than one-quarter of the level from April 2020.”

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

8. REGISTER: MBA’s CMBS Report: Coming Out of COVID

On Wednesday, March 10th at 1:30 p.m. ET, MBA will host an event highlighting challenges and opportunities in the CMBS and bridge lending markets. You can register here.

• Why it matters: This programming will highlight a diverse set of perspectives in the CMBS and bridge lending market for the benefit of mortgage bankers and brokers. Sponsors include: Dechert, CRED IQ, AmTrust Title, Trigild, Prism, and Commercial Mortgage Alert.
• What’s next: The CMBS market and bridge lending markets are important capital sources alongside core lender member constituencies of insurance companies, agency lenders, banks and non-banks. MBA will continue to keep our members informed about developments across the ecosystem as the industry recovers from the pandemic.   

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

9. Join MBA and ACLI March 16: NAIC Life RBC in Motion: COVID, TDR, Real Estate, and CMBS

On Tuesday, March 16, from 3:00-4:00 p.m. ET, MBA and the American Council of Life Insurers (ACLI) will jointly host a member call to provide updates on recent and ongoing changes to National Association of Insurance Commissioners (NAIC) life company risk-based capital (RBC) rules.

• Why it matters: Industry and trade association experts will provide updates on COVID-19 relief, including troubled debt restructuring (TDR) relief, as well as on proposed changes to RBC treatment of equity investments in real estate and CMBS.
• What’s next: To register for this event, click here.

For more information, please contact Bruce Oliver at (202) 557-2840 or Andrew Foster at (202) 557-2740.

10. Register Today: MBA’s Spring Conference & Expo 2021 – April 20-22. 

MBA’s Spring Conference & Expo 2021, taking place via MBA Live, will feature several must-see sessions, including remarks from FHFA Director Mark Calabria and other prominent Washington stakeholders. 

• Why it matters: Calabria will discuss the various policy issues at FHFA, while MBA leadership and others will examine the latest updates on Capitol Hill and within the Biden administration.
• What’s next: To register for the conference, click here. 

For more information, please contact Dawn Williams at (202) 557-2877.

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:

• Commercial Real Estate Market Fundamentals – March 12
• CCPA Review and What Lies Ahead – March 23
• Receivership 101 and Exploring Financing Opportunities – March 24
• Renter Counseling to Mitigate Evictions and Reduce Operational Costs – March 31

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.