CREF Policy Update: July 14, 2022

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

MBA and ACLI submitted a proposal last week to the NAIC to harmonize the life risk-based capital treatment of non-performing mortgages with the 2021 changes to the treatment of real estate investments. Also last week, MBA issued a white paper examining how climate change is dramatically reshaping lenders’ and policymakers’ approaches to the U.S. residential and commercial real estate markets. 

MBA and ACLI Submit Proposed Changes to Life RBC Treatment of Non-Performing Mortgages

Last Friday, MBA and the American Council of Life Insurers joined forces to propose that the Life Risk-Based Capital Working Group of the NAIC revise the current life RBC treatment of non-performing mortgages (CM6 and CM7 mortgages). The proposal would reduce the RBC factor for CM6 mortgages from 18% to 11% and would reduce the RBC factor for CM7 mortgage from 23% to 13%. The proposal also would simplify the formula used to apply RBC factors to CM6 and CM7 mortgages.

• Why it matters: While the overall capital impact of the proposed change would be minimal, it would harmonize the RBC treatment of non-performing mortgages and 2021 reductions in the RBC factors for real estate investments.
• What’s next: MBA and ACLI are seeking to add the proposal to agenda for the NAIC Life RBC Working Group call scheduled for July 27.

For more information, please Bruce Oliver at (202) 557-2840 or Grant Carlson at (202) 557-2765.

MBA Releases New White Paper on Climate Risk 

Last week, MBA issued a white paper examining how climate change is dramatically reshaping lenders’ and policymakers’ approaches to the U.S. real estate market. The paper, Who Owns Climate Risk in the U.S. Real Estate Market?, was presented this week at the American Real Estate and Urban Economics Association’s International Conference in Dublin, Ireland, by MBA Chief Economist Mike Fratantoni, who co-authored the paper with MBA Vice President of Commercial Real Estate Research and Economics Jamie Woodwell and Edward Seiler, Executive Director of the MBA Research Institute for Housing America and MBA Associate Vice President, Housing Economics.

• What it says: The paper notes that the “physical, economic and social changes associated with a changing climate will directly affect the $50 trillion single-family residential real estate and $25 trillion commercial real estate markets in the United States.”
• Why it matters: Climate-related risk is a key priority for the administration and for many stakeholders in the U.S. and abroad. For example, MBA submitted a comment letter last month responding to a U.S Securities and Exchange Commission (SEC) notice of proposed rulemaking (NPR) on new mandatory disclosures related to climate-related risk and company greenhouse gas (HGH) emissions. The SEC will consider a large volume of comments before issuing a final rule. They have projected an aspirational target of issuing a final rule with an effective date in December 2022.

For more information on the white paper, please contact Mike Fratantoni at (202) 557-2935, Jamie Woodwell at (202) 557-2936 or Eddie Seiler at (202) 557-2739. For more information on MBA’s climate risk advocacy, please contact Bruce Oliver at (202) 557-2840.

State Trackers

• 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.

REGISTER: VOICES: Courageous Conversations with Men of Color

MBA is pleased to extend its award-winning webinar series, Voices: Courageous Conversations with Women of Color, to include a new conversation focusing on the male experience. Hear from a dynamic and diverse lineup of male industry leaders on their personal journeys throughout their careers. This timely conversation will inspire and inform while giving voice to the challenges and lessons learned.

• What’s next: The next installment of VOICES is July 19. Register here.

For more information, please contact the DEI team.

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:

• Effective Internal Audit Function: Beyond the Basics – July 11
• Latest on AML Regulations and Impact of Economic Sanctions – July 12
• Do Commercial Servicer Ratings Matter? – July 14
• Tech Stack Optimization: Analyzing Efficiencies in the Current Economic Landscape – July 19
• Mortgage Servicers: Take Back Control to Accelerate and Modernize Borrower Communications – July 21
• Special Purpose Credit Program Toolkit: Overview and Walkthrough – July 21

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