CREF Policy Update March 3, 2022

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

Last Monday MBA joined nine other real estate trade associations in a response to a FinCEN ANPR on possible beneficial ownership reporting rules for commercial real estate. Then on Tuesday, the OCC published FAQs in response to its rescission of a final rule issued in June 2020 to make changes to the CRA. And on Thursday, Treasury announced in a report that 80 percent of Emergency Rental Assistance was awarded to low-income renters

Sign MBA’s Home for All Pledge: Join the 180+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting affordable rental housing; minority homeownership; and company diversity, equity, and inclusion. One senior executive (e.g., CEO, COO, President) is encouraged to sign this online form on behalf of your organization.  

View Any Session You Missed from MBA CREF22: Were you one of the over 2,400 registrants that attended MBA’s Commercial/Multifamily Finance Convention & Expo? If you weren’t able to attend every session, they are available to you online for the next month. Simply access the program videos by clicking here

1. MBA Joins Industry Response to FinCEN on Possible Beneficial Ownership Reporting Rules for Commercial Real Estate

On Monday, MBA joined nine other real estate trade associations in a response to a Financial Crimes Enforcement Network (FinCEN) Advance Notice of Proposed Rulemaking (ANPR) on possible beneficial ownership reporting rules for commercial real estate. The goal of the ANPR is to collect information concerning potential money laundering associated with transactions, including commercial real estate transactions, that are not financed by banks, nonbank single-family originators, or the GSEs. The industry letter urged FinCEN to study and understand commercial real estate before proposing any CRE-specific reporting rules; not to require the reporting of information already reported under other regulations; and to bear in mind that non-depository commercial real estate lending does not pose the same money laundering risks as all-cash transactions.

  • Why it matters: In the ANPR, FinCEN expressed the view that “broadly speaking, FinCEN has serious concerns with the money laundering risks associated with the commercial real estate sector.” Among other issues, FinCEN is considering which categories of CRE transactions and which sets of actors in CRE transactions should be subject to reporting requirements.
  • What’s next: FinCEN will consider the ANPR comments before proposing any specific beneficial ownership reporting rules for CRE transactions.                                               

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

2. FHFA Issues Final Rule Revising Enterprise Capital Framework

On Friday, the Federal Housing Finance Agency (FHFA) issued a final rule establishing a revised capital framework for Fannie Mae and Freddie Mac (the GSEs). The final capital framework substantially preserves the elements contained in the proposed rule but incorporates changes FHFA proposed last year. The final changes include replacing the fixed leverage buffer equal to 1.5% of a GSE’s adjusted total assets with a dynamic leverage buffer equal to 50% of the GSE’s stability capital buffer, replacing the prudential floor of 10% on the risk weight assigned to any retained credit-risk transfer (CRT) exposure with a prudential floor of 5% on the risk weight assigned to any retained CRT exposure, and removing the requirement that an enterprise must apply an overall effectiveness adjustment to its retained CRT exposures. The notice acknowledges that some commenters (including MBA) responded to an FHFA request for suggestions to incorporate a multifamily countercyclical adjustment, but the final rule took no action to address that issue.

  • Why it matters: The GSE capital framework plays an important role in shaping the GSEs’ business activities and operations, as well as in determining the cost and availability of conventional mortgage credit. MBA largely supported the proposed amendments and recommended various adjustments to the framework that would bolster the GSEs’ ability to broaden access to credit without sacrificing safety and soundness.
  • What’s next: The effective date for the changes to the final rule will be 60 days after the day of publication in the Federal Register. MBA plans to further analyze the final rule over the coming weeks and will continue to advocate that FHFA and the U.S. Department of the Treasury remove a problematic provision from the Senior Preferred Stock Purchase Agreements (PSPAs) that requires the GSEs to adhere to an older version of the capital framework – even if revised – thereby negating the positive effects of this revised framework.

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

3. Treasury Releases Report of Emergency Rental Assistance 

On Thursday, the U.S. Department of Treasury announced in a report that 80% of Emergency Rental Assistance (ERA) was awarded to low-income renters.

  • Why it matters: $25 billion of ERA has been obligated to tenants, representing 3.8 million ERA payments.
  • What’s next: Treasury made recommendations to state and local governments to make ERA applications available in multiple languages and to advertise ERA in multiple languages. 

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

4. Federal Judge Halts Carbon ‘Social Costs’ Metric Imperiling Other Regulatory Actions   

On Wednesday, the Biden administration appealed a decision by U.S. District Judge James D. Cain Jr., who granted a preliminary injunction blocking the use of a metric of the social cost of greenhouse-gas emissions. “Pending rulemakings in separate agencies throughout the government – none of which were actually challenged here – will now be delayed,” the Justice Department wrote in its appeal. 

  • Why it matters: The injunction may stop work on numerous regulatory actions by multiple agencies including programs like energy-conservation standards for buildings.
  • What’s next: The Department of Justice has filed an appeal. 

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

5. OCC Publishes FAQs on Rescission of its June 2020 CRA Rule 

On Tuesday, the Office of the Comptroller of the Currency (OCC) published Frequently Asked Questions (FAQs) in response to its rescission of a final rule issued in June 2020 to make changes to the Community Reinvestment Act (CRA).

  • Why it matters: The FAQs provide guidance to covered institutions on how to apply OCC CRA regulations post-rescission.
  • What’s next: The OCC, Federal Deposit Insurance Corporation (FDIC), and Federal Reserve are expected to issue a joint proposal in the coming months to make regulatory changes to CRA. MBA is following these developments and will utilize our CRA working group to develop comments.

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

6. HUD Issues REAC Q&A on Inspections and the COVID-19 Pandemic 

On Tuesday, the U.S Department of Housing and Urban Development (HUD) Office of Multifamily Housing Programs published a flyer that outlines tenant rights during Real Estate Assessment Center (REAC) inspections.

  • Why it matters: Additionally, the notice said, “HUD is providing clarification on some frequently asked questions regarding how to inform HUD of COVID-19 cases at properties, how to request a deferral, and what criteria HUD uses in determining whether to grant a deferral.”
  • What’s next: MBA will follow developments and their effect on MAP lenders.

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

7. 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.

8. [WATCH]: mPower Moments: Trusting Your Instincts and Promoting Wellness with FHFA Acting Director Sandra L. Thompson

In this episode of mPower Moments, mPower Founder Marcia M. Davies chats with FHFA Acting Director Sandra L. Thompson on her illustrious career in the financial services industry and the path that led her to currently being one of the most powerful and influential women in real estate finance.

  • Why it matters: During this insightful interview, Director Thompson explains the importance of promoting employee wellness at FHFA and why “trusting your gut” is so important when making decisions as a leader. Additionally, Thompson provides advice on what the industry can do to get more women of color into the C-suite.
  • What’s next: For more mPower Moments, please click here.

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

9. 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:

  • Driving Engagement and Purchase Volumes in Today’s Market – March 3
  • COVID’s Continued Impact on CECL and Lending – March 8
  • The Future of Remote Work for MLOs and Licensees – March 9
  • Combating Multifamily Real Estate Financial Crimes and Fraud – March 10
  • CRE Investor Themes & Perspectives – March 16

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

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