MBA CREF Policy Update Dec. 22, 2022

Bill Killmer bkillmer@mba.org; Mike Flood mflood@mba.org

FHFA Issues Final Rule on 2023-2024 Multifamily Housing Goals for the GSEs  

Last Wednesday, the Federal Housing Finance Agency issued its final rule for Fannie Mae and Freddie Mac that establishes the benchmark levels for their 2023 and 2024 multifamily housing goals.

FHFA’s final rule mostly mirrors its proposed rule issued in August 2022, with a new percentage-based methodology for the next two years based on the percentage of affordable units in multifamily properties financed by mortgages purchased by the GSEs each year. The existing housing goals regulation through the end of 2022 was based on the total number of affordable units in multifamily properties. Relying, in part, on the data and forecasts of MBA, FHFA took into consideration various economic factors to determine the housing goals for the next two years. 

• Why it matters: The change in methodology to a percentage-based approach is an important step towards overall simplification of the housing goals, an outcome for which MBA has advocated throughout 2022.
• What’s next: MBA’s analysis of the 2023-2024 Multifamily Housing Goals can be found here. 

For more information, contact Stephanie Milner at (202) 557-2747.

Congress Passes Stopgap Funding Bill to Avert Government Shutdown 

House and Senate lawmakers passed a Continuing Resolution last week ahead of the December 16, 2023, government funding deadline to avert a shutdown. The stopgap funding bill extends Fiscal Year 2022 funding until Friday, December 23, 2022, and gives House and Senate appropriations leaders more time to negotiate the FY 2023 omnibus funding bill. 

• Why it matters: The stopgap measure keeps federal agencies such as the Department of Housing and Urban Development funded at their current levels and extends several expiring authorizations that were addressed in the FY 2022 omnibus appropriations bill, including the National Flood Insurance Program.
• What’s next: Three of the “four corners” appropriations leaders in Congress announced on Tuesday that they reached an agreement on a “framework” to move forward on a year-end omnibus spending package. The group is working to finalize legislative text with the goal of clearing it ahead of the December 23 deadline. MBA will provide members with any relevant updates as those discussions continue.

For more information, contact Alden Knowlton at (202) 557-2741, Borden Hoskins at (202) 557-2712, Ethan Saxon at (202) 557 2913 or Tallman Johnson at (202) 557-2866.

CFPB Issues Technical Amendment to HMDA Reporting Rule 

Last Tuesday, the Consumer Financial Protection Bureau issued a technical amendment to the Home Mortgage Disclosure Act rule to address the September ruling by the federal District Court for the District of Columbia that lowered the reporting threshold from 100 closed-end loans to 25 closed-end loans. The technical amendment updates the Code of Federal Regulations to reflect the 25-loan reporting threshold. Because the CFPB is not interpreting or prescribing law or policy, a notice and comment period is not required. 

• Why it matters: As a result of the court’s ruling, only institutions originating fewer than 25 closed-end mortgage loans in each of the two preceding calendar years are exempt from HMDA reporting. The CFPB, in a blog post last week, stated that it does not plan to “initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage data collected in 2022, 2021, and 2020” for covered institutions that originated at least 25 closed-end loans, but less than 100 closed-end loans in each of the previous two calendar years. A detailed MBA summary of the court ruling is here .
• What’s next: MBA will keep members informed on all relevant CFPB updates pertaining to this issue and others. 

For more information, contact Stephanie Milner at (202) 557-2747.

CFPB Issues Notice of Intent to Make Preemption Determination Under Truth in Lending Act

The CFPB recently issued a notice of intent to make a determination as to whether the Truth in Lending Act preempts a New York State commercial financing law with respect to certain provisions. In the notice, the CFPB makes the preliminary determination that TILA does not preempt the New York law governing commercial financing with respect to certain provisions relating to the use of the terms “finance charge” and “annual percentage rate.”

• Why it matters: TILA is a federal law that governs certain disclosures in consumer credit transactions and can preempt State laws that contradict TILA provisions. In a positive outcome for commercial lenders, the CFPB made clear that TILA and the New York commercial law govern different types of transactions, and that TILA does not preempt or override the provisions of the New York commercial law. The CFPB also noted that it has reviewed similar commercial laws in California, Utah, and Virginia and made the same preliminary conclusion that TILA does not preempt these State laws.
• What’s next: Comments to the notice are due January 20, 2023. MBA will keep members informed on all relevant updates.

For more information, contact Stephanie Milner at (202) 557-2747.

CFPB Director Chopra Testifies Before Congress; Offers Areas of Focus to Strengthen Consumer Protections

Appearing before both the House Financial Services and Senate Banking Committees last week, CFPB Director Rohit Chopra fielded questions from lawmakers on various policy initiatives undertaken by the Bureau. Of particular interest to lawmakers was the recent ruling by the U.S. Court of Appeals for the Fifth Circuit on the constitutionality of the agency’s funding structure. In addition to CFPB governance and operations, lawmakers focused on fintech and digital assets, credit reporting, and the Bureau’s 1071 small business reporting rulemaking, among a host of other topics. A summary of both hearings can be found here.  

• Why it matters: On an issue critical to MBA’s direct advocacy, Rep. John Rose (R-TN) inquired about the CFPB’s authority to demand that non-bank firms turn over information protected by attorney-client privilege.
• What’s next: With the CFPB’s actions being a particular focus of GOP criticism, House Republicans signaled their intent to use their oversight authority to scrutinize the agency during the 118th Congress.

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

Florida Legislature Passes Property Insurance Reform Legislation  

Last Wednesday, Florida lawmakers passed legislation (HB 1A and SB 2A) making changes to the state’s property insurance and reinsurance markets. The legislation is intended to ease costs and improve availability of property insurance and reinsurance for Florida homeowners and commercial/multifamily borrowers.  

• Why it matters: Property insurance and reinsurance have become increasingly difficult to obtain in Florida due to its costs and the dwindling number of insurance companies operating in the state, in addition to further straining due to major storms during this year’s hurricane season. The legislation addresses liability and tort issues that lawmakers contend increase the price of property insurance and creates the Florida Optional Reinsurance Assistance program (FORA), which would make $1 billion available in 2023 to address a shortage of private sector reinsurance coverage.
• What’s next: Governor Ron DeSantis has pledged to sign the legislation into law. The Florida Office of Insurance Regulation will then establish regulations governing the FORA program.

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

Federal Reserve Announces Seventh Short-Term Rate Hike of 2022

The Federal Reserve in its ongoing efforts to slow inflation raised the federal funds rate by another 50 basis points to a target range of 4.25-4.50% last week.

• Why it matters: This short-term rate hike marks the seventh since March. The FOMC also indicated that more rate hikes are to come until there are signs that inflation slows and moves closer to the 2% target range.
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “As expected, the FOMC raised the federal funds target by 50 basis points at its December meeting. Perhaps more importantly for the mortgage market, they also signaled that they anticipate slower growth, higher unemployment, and higher inflation in 2023 than they had indicated at the September meeting. If recent trends continue with respect to consistent declines in inflation amidst an increasing risk of recession, we may be near the peak rate for this cycle, now expected to be just over 5%. MBA is forecasting a recession for the first half of 2023, as the full impact of these rate hikes is absorbed throughout the economy.” 

For more information, contact Mike Fratantoni at (202) 557-2935.

Commercial and Multifamily Mortgage Debt Outstanding Increased by $70 Billion in Third-Quarter 2022

The level of commercial/multifamily mortgage debt outstanding increased by $70.0 billion (1.6 percent) in the third quarter of 2022, according to the Mortgage Bankers Association’s latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report. 

• MBA’s Jamie Woodwell, Head of Commercial Real Estate Research, said, “The amount of commercial and multifamily mortgage debt outstanding increased during the third quarter, driven almost entirely by a large increase in the portfolio holdings of banks and other depositories. The increase in bank holdings was the largest quarterly increase of any individual capital source in the history of MBA’s series. For most other capital sources, their holdings of commercial and multifamily mortgages grew at a slower rate than during the second quarter of 2022. The results generally match those of MBA’s Quarterly Originations Index, which showed third-quarter 2022 originations down 13 percent on a quarterly basis, with depositories the sole major capital source to see an increase.”
• To see the latest report, click here.

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

Rent Control Map and State Trackers

• Given the ongoing proposals and ballot initiatives across the country, MBA has published an online map that provides an overview of state and local rent control laws. MBA will follow ongoing developments on this issue and will update the map accordingly.  
• State eviction moratorium and legislative activity tracker available here and here.

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

[WATCH]: mPower Moments: On the Importance of Advocating for Yourself with FHA’s Julia Gordon 

In this mPower Moments episode, mPower Founder Marcia M. Davies sits down with Julia Gordon, FHA Commissioner and Assistant Secretary for Housing at HUD. 

• Why it matters: Commissioner Gordon discusses her career journey and how she was able to bring together industry participants and stakeholders to determine equitable housing solutions. During their chat, Commissioner Gordon also talks about the internal and external obstacles faced by women in the real estate finance industry and how stepping outside of one’s comfort zone will help with career advancement. 
• What’s next: To watch more mPower Moments, click here. 

For more information, contact Marcia Davies at (202) 557-2707.

Upcoming 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 webinars – which are complimentary to MBA members:

• Ten Things Your Company Must Do in 2023 – January 18
• Using the MISMO API Toolkit to Build Your Own FIPS Code Lending API – January 26
• Combating the Downturn: Strategies to Optimize Borrower Support in Recessionary Environments – January 31
• Home Equity Lending: An Assessment of Today’s Market Landscape & Cashout Opportunities – February 9

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

For more information, contact David Upbin at (202) 557-2931.