MBA CREF Policy Update Dec. 15, 2022

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

CFPB Provides Guidance on HMDA Loan Reporting Threshold   

The U.S. District Court for the District of Columbia ruled in late September that the Home Mortgage Disclosure Act (HMDA) reporting threshold is now 25-closed end loans in each of the preceding two years, rather than the 100-closed end loan threshold set by the 2020 HMDA Final Rule. In a blog post on Tuesday, the Bureau provided guidance, stating 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 that court ruling is here.

• Why it matters: The Bureau in its blog post said that it would not view action regarding affected financial institutions’ HMDA data as a priority, recognizing that they “may need time to implement or adjust policies, procedures, systems, and operations to come into compliance with their reporting obligations.” 
• What’s next: MBA will continue to engage with the CFPB on the impact of the ruling and steps to help the industry comply. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Stephanie Milner at (202) 557-2747.

MBA Joins California MBA and Others in Amicus Brief on California Default Interest Case  

On Wednesday, MBA joined the California Mortgage Bankers Association and several other associations in an amicus brief that supports a California Supreme Court review of a case involving default interest. In that case, the California Court of Appeals recently issued an opinion that prohibits the charging of default interest on the entire unpaid principal balance of a loan following a monthly payment default. This outcome is particularly undesirable for commercial lenders in California, as default interest is often used as a method of incentivizing commercial borrowers to stay current on their loans. 

• Why it matters: If a review is granted by the court, MBA will likely join another amicus brief covering the substantive issues and the importance of default interest in commercial contracts. 
• What’s next: MBA will monitor the progress of the case and report any developments to members.   

For more information, please contactJustin Wiseman at (202) 557-2854 or Stephanie Milner at (202) 557-2747.

Federal Reserve Board Seeks Comment on Proposed Principles for Climate-Related Financial Risk Management for Large Financial Institutions

Last Friday, the Federal Reserve Board invited public comment on proposed draft principles related to the safe and sound management of climate-related financial risk for large financial institutions with more than $100 billion in total consolidated assets. According to the Fed, the draft principles “would provide a high-level framework for the safe and sound management of exposures to climate-related financial risks.” The Fed framework appears similar to the draft principles released by the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC). MBA provided comments to each of those letters (read: OCC and FDIC).

• Why it matters: The Fed stated that they intend to work with the OCC and FDIC on final interagency guidance related to this matter. The draft principles may affect supervisory expectations and add additional compliance costs for CREF members.
• What’s next: The comment period will run for 60 days after the proposal is published in the Federal Register. MBA will analyze the proposal and coordinate with members to develop a response.

For more information, please contactStephanie Milner at (202) 557-2747.

OCC Releases Semi-Annual Risk Assessment Report; Cites Office Property Lending as a Risk 

On Thursday, the OCC released its Semi-Annual Risk Perspective Report assessing potential future risks facing banks.

• Why it matters: The report highlighted office lending and the office market as a risk to monitor, but noted it is less worried about multifamily lending. In addition, the report cited cryptocurrencies and cybersecurity as risks.  
• What’s next: MBA will follow developments on this and other risk assessments from regulators. 

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

Commercial and Multifamily Mortgage Delinquency Rates Remain Low in Third Quarter 2022

Commercial and multifamily mortgage delinquencies remained low in the third quarter of 2022, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Delinquency Report, released Tuesday.

• MBA’s Jamie Woodwell, Head of Commercial Real Estate Research, said, “The delinquency rate for mortgages backed by commercial and multifamily properties remained low at the end of the third quarter. For example, the share of bank-held CRE loan balances that were delinquent has only been lower once – just before the onset of the COVID-19 pandemic – in the series’ 30-year history. The conditions that pushed delinquency rates to these near-record lows have been shifting and we expect to see some stress work its way back into some loans. Very slight increases during the third quarter in the delinquency rates of life company and Freddie Mac loans may signal the beginning of these trends.”
• To see the latest report, click here.

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

WATCH]: Inflation, Interest Rate, Cap Rates & Values: What Do We Really Know?

Last week, MBA hosted a webinar on current market conditions, with a focus on how interest rate hikes affect CRE property types and investors, whether cap rates are affected by higher interest rates, and how the higher rate environment is impacting the current financing structure.

• Why it matters: Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, moderated a panel that included Suzanne Mulvee, Chief Strategy Officer at GID, William Pattison, Head of Real Estate & Strategy at MetLife Investment Management, and Paula Campbell Roberts, Head of Global Consumer & Real Estate Macro & Thematic Investing at KKR.
• What’s next: To watch the webinar, 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.

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

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.