MBA CREF Policy Update Jan. 5, 2023

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

Congress Advances Omnibus Spending Package for FY 2023 

The House of Representatives passed the $1.7 trillion omnibus spending bill that funds the federal government through Fiscal Year 2023; the Senate passed the bill on Thursday. The legislation boosts agency budgets across the board and includes $858 billion for the military, more than $772 billion for domestic programs, approximately $45 billion in Ukraine aid, and nearly $40 billion in disaster relief. Read a summary of provisions pertinent to MBA members here.  

• Why it matters: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said that the spending package includes important housing provisions for which MBA has advocated. “We are especially pleased to see language that supports FHA IT modernization, manufactured housing construction, homeownership counseling, efforts to resolve delays in FHA multifamily pipeline funding, grants that encourage localities to remove legal and regulatory barriers that impede new construction, and the extension of the National Flood Insurance Program.”
• What’s next: The package now awaits President Joe Biden’s signature. The new law, once enacted, will fully fund the federal government through September 30, 2023.

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.

FHFA Publishes Final Rule for New Enterprise Products and Activities

This week, the Federal Housing Finance Agency published its final rule for new Fannie Mae and Freddie Mac products and activities, which will require them to provide advance notice to FHFA of new activities and obtain prior approval before launching new products. The final rule, which is largely similar to the proposed rule, should enable the GSEs to serve their mission while maintaining safety and soundness, including through stakeholder input. Notable key changes include enhanced reviews of pilots, clarifications of what constitutes a substantially similar activity, and public disclosure requirements for FHFA. This final rule will replace the interim final rule that has been in place since July 2, 2009. Additional details can be found in FHFA’s fact sheet. Read MBA’s summary here. 

• Why it matters: MBA has consistently advocated for a more transparent process by which the GSEs develop new activities and products or undertake pilots; these views were previously expressed in written comments submitted to FHFA in response to their Notice of Proposed Rulemaking in November 2020. MBA offered technical recommendations and emphasized the importance of innovation along with the need for transparency, efficiency and the protection of proprietary information. FHFA addressed some of those topics in the final rule.  
• What’s next: The final rule will be effective 60 days from the date it is published in the Federal Register. MBA will continue to engage with FHFA on this and other critically important housing issues. 

For more information, contact Stephanie Milner at (202) 557-2747 or Sasha Hewlett at (202) 557-2805.

Senate Votes on Key Housing Nominations

The Senate confirmed Martin Gruenberg to be Chairman and Board Member of the Federal Deposit Insurance Corp. by a vote of 45-39. Through unanimous consent, the Senate then confirmed the FDIC nominations of Travis Hill to be a Board Member and Vice Chairman, and Jonathan McKernan to be a Board Member. The Senate also voted by unanimous consent to confirm Kimberly Ann McClain as Assistant Secretary for Congressional and Intergovernmental Relations at the Department of Housing and Urban Development. 

• Why it matters: The FDIC will have a full board for the first time since 2015, and is poised to focus on five top priorities, including reforms to the Community Reinvestment Act (CRA), climate change, the Bank Merger Act, crypto-asset, and the Basel III capital rule.
• What’s next: MBA is following these developments and will utilize its CRA working group, Green Lending Roundtable, and other outreach mechanisms to develop policy positions and responses to any pertinent regulatory proposals.

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

Federal Reserve Board Adopts Final Rule Replacing LIBOR with SOFR; GSEs Follow Announcement with Guidance

The Federal Reserve Board recently published its final rule that implements the Adjustable Interest Rate (LIBOR) Act by identifying benchmark rates based on the Secured Overnight Financing Rate, which will replace the London Interbank Offered Rate in certain financial contracts after June 30, 2023. The final rule is largely similar to the proposal and identifies replacement benchmark rates based on SOFR to replace overnight, one-month, three-month, six-month, and 12-month LIBOR in contracts, including U.S. contracts that do not mature before LIBOR ends and that lack adequate “fallback” language. The final rule also: reaffirms safe harbor protections contained in the LIBOR Act for selection or use of the replacement benchmark rate selected by the Board; clarifies who would be considered a “determining person” able to choose to use the replacement benchmark rate selected by the Board for use for certain LIBOR contracts; and ensures that LIBOR contracts adopting a benchmark rate selected by the Board will not be interrupted or terminated following LIBOR’s replacement.

Following the announcement of the final rule, Fannie Mae and Freddie Mac both issued additional guidance on replacement rates for their legacy LIBOR products. 

• Why it matters: MBA has advocated for clear guidance for industry participants to facilitate a smooth LIBOR transition. The final rule is a key step necessary for the mortgage market to prepare for the cessation of LIBOR.
• What’s next: The final rule will be effective 30 days from the date it is published in the Federal Register. MBA will continue to engage with its members and other industry stakeholders to ensure a smooth transition as the industry moves toward the LIBOR cessation date. 

For more information, contact Stephanie Milner at (202) 557-2747 or Sasha Hewlett at (202) 557-2805.

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, please 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
• Home Equity Lending: An Assessment of Today’s Market Landscape & Cashout Opportunities – February 9
• Five Steps to Improve Efficiency, Compliance and Automation in Your Mortgage Operations – February 16

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.