CREF Policy Update Sept. 30, 2021

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

House lawmakers passed a continuing resolution along party lines last week, sending the measure to the Senate for a vote ahead of next Thursday’s government funding deadline. MBA also led 13 trade associations in a coalition letter urging congressional leadership to work together to take action to raise the statutory debt limit as soon as possible. And MBA’s RIHA released a report that examines climate change’s growing impact on housing and housing finance last week.

1. U.S. House Passes Stopgap Government Funding Bill; Senate Prospects Dim

House lawmakers passed a continuing resolution (CR) along party lines last week, sending the measure to the Senate for a vote ahead of the September 30 government funding deadline. The stopgap funding bill, which includes a debt ceiling hike past next year’s midterm elections, is not expected to earn enough support in the 50-50 Senate in its current state amid GOP opposition to the debt limit provision, as well as other extraneous issues relating to foreign policy and immigration.

• Why it matters: The CR, which includes a short-term extension of the National Flood Insurance Program (NFIP) authorization, would extend government funding to December 3, 2021. Additionally, the bill suspends the debt ceiling through December 16, 2022, and provides $28.6 billion in funding for emergency disaster relief.
• What’s next: Following House passage, Senate Appropriations Committee Ranking Member Richard Shelby (R-AL) and Senate Minority Leader Mitch McConnell (R-KY) released a counterproposal that would keep the new funding deadline of December 3, 2021, but strip the debt ceiling language with hopes that Democrats utilize the budget reconciliation process to address this pressing issue. Both parties are entrenched in their respective positions on the debt ceiling, raising the possibility of a federal government shutdown next week.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

2. MBA Leads Joint Trade Letter Urging Action on the Debt Limit

MBA recently led 13 trade associations in a coalition letter urging congressional leadership to raise the statutory debt limit as soon as possible to avoid roiling the financial markets and other important sectors of the economy unnecessarily. On August 1, 2021, the United States reached its statutory debt limit, leading the U.S. Treasury Department to begin taking “extraordinary measures” to meet the country’s financial obligations. U.S. Treasury Secretary Janet Yellen has warned that the federal government will run out of the ability to obtain new loans at some point in late October.

• Why it matters: Given the more than $8.6 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae and other federal agencies, the housing and real estate markets are particularly susceptible to any instability stemming from concern about the United States meeting its financial obligations.
• What’s next: The House-passed CR is expected to fail in the Senate and force Democrats either to pass a “clean” CR that does not include the debt ceiling and find another vehicle through which to address the debt limit, or to create a separate reconciliation bill that is narrowly focused on lifting the debt limit. A separate reconciliation effort would take additional floor time and negotiations, which could further imperil or delay efforts to pass the ambitious White House infrastructure agenda.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

3. OMB Notifies Agencies to Prepare for a Government Shutdown 

Last Thursday, the U.S. Office of Management of the Budget (OMB) sent a notice to federal agencies to begin preparations for a shutdown of the federal government.

• Why it matters: In the event of a government shutdown, federal government activities are severely limited.
• What’s next: Government funding is set to expire on September 30, 2021. Various federal agencies are revising guidance regarding their operations should a shutdown occur, and MBA will provide members with relevant updates as necessary.

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

4. House Passes National Defense Authorization Act; Includes MBA-Supported RON Provisions 

The full House passed the National Defense Authorization Act (NDAA) last week, legislation that funds the Department of Defense and other military operations of the government. MBA worked with members of the House Armed Services Committee, as well as House leadership from both parties, to help ensure that language to create minimum federal standards for the use of remote online notarization (RON) (the bipartisan, bicameral SECURE Notarization Act of 2021) was included as part of this “must-pass” legislation. Additionally, Representative Ed Perlmutter (D-CO), a senior member of the House Financial Services Committee, successfully included his SAFE Banking Act of 2021 within the bill. Both provisions were incorporated through the amendment process and adopted by voice vote (unanimous consent).  

• Why it matters: The SECURE Notarization Act of 2021 creates a federal standard for the use of remote online notarization while complementing the various existing state laws. Industry advocates connected with hundreds of House and Senate offices about this issue at MBA’s virtual National Advocacy Conference and through the Mortgage Action Alliance (MAA) platform as the bill worked its way through the legislative process. The SAFE Banking Act of 2021 provides a safe harbor for financial institutions to bank and lend to legal cannabis and cannabis-related businesses.
• What’s next: The Senate is likely to consider its own version of the NDAA in the coming months. After Senate passage, the two chambers will conference on a final bill that ultimately will head to President Joe Biden’s desk for enactment. MBA will continue advocating for the inclusion of the RON provision in the Senate legislation. For the latest developments on MBA’s efforts to pursue RON laws in the states, please visit www.mba.org/RON.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

5. Treasury Releases August Report on Rental Assistance  

The U.S. Treasury Department released an August report on the Emergency Rental Assistance (ERA) Program. The report highlights that more than 420,000 households received emergency rental assistance last month, and that $2.3 billion in rental assistance was distributed, representing about three times the amount distributed in May. While it is an improvement, this represents less than 17% of the $46.5 billion in ERA funding provided by Congress.

• Why it matters: State and local governments face a September 30 deadline (next Thursday) to disburse 65% of their ERA allocations or risk having Treasury redistribute the money. U.S. Treasury continues to try to increase the speed of ERA funding delivery to grantees.
• What’s next: MBA will continue to support efforts to increase the speed of ERA payment delivery to renters.

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

6. FHFA Extends Ability of GSEs to Offer COVID Forbearance for Multifamily Loans  

The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac (the GSEs) would continue to permit the GSEs to offer multifamily property owners the ability to enter into a new or, if qualified, modified COVID-19 forbearance. 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.

• Why it matters: The program was previously set to expire on September 30, 2021. The announcement did not identify an end date to this extension.
• 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 Bruce Oliver at (202) 557-2840.

7. President Biden Nominates Saule Omarova to Lead OCC 

Last Thursday, President Biden nominated Saule Omarova to become Comptroller of the Currency.

• Why it matters: The Office of the Comptroller of the Currency (OCC) supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The Comptroller position is currently occupied by Acting Comptroller Michael Hsu.
• What’s next: The nomination will be pending Senate consideration.

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

8. MAA Launches Call to Action Opposing Montgomery County, MD, Rent Control Legislation 

Last week MBA launched a Mortgage Action Alliance (MAA) Call to Action urging members of the Montgomery County, Maryland, Council to oppose Expedited Bill 30-21, which would extend a moratorium on rent increases in the county until August 12, 2022.

• Why it matters: The legislation would discourage investors from entering the Montgomery County affordable housing market, effectively capping capital flows into the county and resulting in higher rents.
• What’s next: The County Council is expected to convene shortly to consider the emergency legislation.

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

9. Climate/Environmental, Social and Governance (ESG) Resources

MBA RIHA Climate Change Report: Mortgage Industry Needs to Improve Risk Management Measurements

Climate change triggered by global warming will continue at an unpredictable pace and will add stress to the complex system of allocating risks across housing and housing finance stakeholders. That is according to a new research report released yesterday by MBA’s Research Institute for Housing America (RIHA).

• What it says: The Impact of Climate Change on Housing and Housing Finance, RIHA’s study, is divided into four sections: what is known so far about climate change; the likely impacts to housing and housing finance; strategies that can mitigate climate change or adapt to the part of climate change that cannot be averted; and the ways firms in housing and housing finance can articulate and measure their exposure to climate change.
• Sean Becketti, author of the report and an industry veteran with over four decades of mortgage finance experience, said, “The mortgage industry will not be spared by the growing impact climate change is having on the environment, governments, and individuals. The physical destruction caused by flooding and other extreme weather events will continue to influence the behavior of portfolio lenders, the GSEs, the federal government’s Federal Housing Administration/Department of Veterans Affairs (FHA/VA) programs, and mortgage investors. Climate mitigation efforts are necessary to slow the adverse effects of global warming, and better and more standardized predictors of environmental risks are needed to make housing and housing finance more resilient.”

For more information, please contact Eddie Seiler at (202) 557-2739.

SEC Releases Sample Letter on Climate Change Disclosures

Last week the U.S. Securities and Exchange Commission’s (SEC) Division of Corporate Finance released a sample letter of what the SEC may send to companies to clarify climate-related information in a company’s disclosures. The SEC’s 2010 Climate Change Guidance urges companies to disclose the impact of pending or existing climate-change legislation, regulation, and international accords; the indirect consequences of regulation or business trends; and the physical impact of climate change, on their companies and businesses under some circumstances. The SEC Division of Corporate Finance selectively reviews filings made by companies against that guidance, and the sample letter released earlier this week contains a list of possible clarifying questions and comments that the SEC may ask companies related to their disclosures on climate change.

• Why it matters: The questions and information included in the SEC’s sample letter could be important considerations for MBA members when filing disclosures with the SEC.
• What’s next: The SEC is expected to issue a Notice of Proposed Rulemaking (NPRM), and climate and ESG disclosures, sometime this fall or early next year. 

For more information or to get involved in climate and environmental, social, and governance (ESG) policy, please contact Adrian Ballinger at (202) 557-2774.

10. 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.

11. 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:

• Introduction and Walkthrough of MISMO’s Enhanced Logical Data Dictionary (LDD) – October 6
• Regulation F: Overview & Considerations – October 6
• Increasing Profitability: Transitioning to Delegated Underwriting and Improving Loss Mitigation – October 7
• ESG 101: How ESG Is Changing Commercial Real Estate – October 12
• Are We There Yet? CRE and LIBOR Transition Check-Up – November 4

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

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