CREF Policy Update June 2, 2022

Mike Flood; Bill Killmer

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

Last Wednesday, the Senate voted 49-46 to confirm Sandra Thompson as the Director of FHFA. Also last week, the SEC announced it charged a bank for misstatements and omissions about ESG considerations it had made in making investment decisions for certain mutual funds that it managed; on Thursday the SEC issued two proposed rules affecting ESG funds. And recently, HUD issued civil rights marketing and application guidance that applies to more than 1.5 million HUD-subsidized multifamily units.

Sign MBA’s Home for All Pledge: Join the 260+ 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, Head of Lending, SVP) is encouraged to sign this online form on behalf of your organization.

Senate Confirms FHFA Director Sandra Thompson 

On Wednesday, the Senate voted 49-46 to confirm Sandra Thompson as the Director of the Federal Housing Finance Agency (FHFA). Senator Mike Rounds (R-SD) provided bipartisan support for her nomination. Thompson had been Acting Director since last summer and previously served as FHFA Deputy Director of the Division of Housing Mission and Goals.

  • Why it matters: In response to the Senate vote, MBA President and CEO Bob Broeksmit, CMB, stated: “MBA applauds the confirmation of Sandra Thompson to continue leading the Federal Housing Finance Agency. Since being appointed Acting Director in June 2021, she has repeatedly demonstrated leadership, expertise, and a strong commitment to sound risk management principles while safely expanding access to mortgage credit and creating equitable and sustainable housing solutions for homeowners and renters.” 
  • What’s next: During her confirmation process, Director Thompson pledged that her focus will be on the “the safety and soundness mission Congress gave to FHFA,” and ensuring that the GSEs are “providing liquidity across the nation and especially supporting underserved markets.”

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

SEC Issues Penalty for ESG-related Misstatements and Omissions

On Monday, the U.S. Securities and Exchange Commission (SEC) announced it charged a bank for misstatements and omissions about environmental, social, and governance (ESG) considerations it had made in making investment decisions for certain mutual funds that it managed. The SEC’s order alleged that the bank had represented or implied in various statements that all investments in the funds had undergone an ESG quality review where “numerous” investments held by certain funds did not have an ESG quality review score as of the time of investment. The bank settled the charges without admitting or denying the SEC’s findings by consenting to the order and paying a $1.5 million penalty.

  • Why it matters: In the words of the SEC’s announcement, “As this action illustrates, the Commission will hold investment advisers accountable when they do not accurately describe their incorporation of ESG factors into their investment selection process.”
  • What’s next: Comments on SEC’s proposed regulations for climate-related disclosures are due by June 17, 2022. MBA is working with members and other trades to develop comments on the proposal.

For more information, please contact Bruce Oliver at (202) 557-2840.

SEC Issues Two Rulemaking Proposals Affecting ESG Funds

On Thursday, the SEC issued two rulemaking proposals related to funds targeting ESG investing. In one rulemaking, the SEC proposes amendments to rules and reporting forms to promote consistent, comparable, and reliable information for investors concerning funds’ and advisers’ incorporation of ESG factors. The proposed changes would apply to certain registered investment advisers, advisers exempt from registration, registered investment companies, and business development companies. The other rulemaking proposes to amend the SEC’s “Names Rule” to ensure that fund names that suggest the fund is focused on a particular type of investment (e.g., ESG) adopts a policy to invest at least 80% of the value of the fund in those investments. 

  • Why it matters: The proposals are further evidence of SEC’s focus on ensuring that efforts to attract ESG investors are not misleading.
  • What’s next: MBA will analyze the proposals for possible impacts on members. The comment periods for both rules will be open for 60 days after the proposals are published in the Federal Register.

For more information, please contact Bruce Oliver at (202) 557-2840.

MBA Outlines Funding Priorities for FHA and HUD in Letter to House and Senate Appropriations Committees Leaders  

On Tuesday, MBA sent a letter to the relevant chairs and ranking members of the House and Senate Appropriations Committees highlighting MBA’s views on the real estate finance industry’s priorities within the Transportation, Housing and Urban Development (T-HUD) appropriations bills for Fiscal Year (FY) 2023. A copy of both letters can be found here

  • Why it matters: In the letters, MBA urged the committees to provide HUD with the funding and encouragement necessary to address the extended processing delays in the pipeline for multifamily and healthcare financing at the Federal Housing Administration (FHA). MBA also encouraged Congress to maintain its statutory prohibition on the use of Ginnie Mae securitizations by the state housing finance agencies in HUD’s risk sharing programs.
  • What’s next: Congressional negotiators late last month kicked off spending talks to fund the government for the upcoming fiscal year. With Congress unlikely to reach agreement to move all 12 appropriations bills prior to September 30, 2022, lawmakers must pass a stop-gap continuing resolution to keep the government operating beyond October 1, 2022.

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

House Financial Services Committee Holds Hearings and Weighs in on HUD Program Funding in President Biden’s FY23 Budget Request

This week, the House Financial Services Committee (HFSC) held hearings in the Diversity & Inclusion (D&I) and Housing, Community Development, and Insurance Subcommittees and sent a letter to the House Budget Committee advocating for increased funding for HUD’s Community Development Block Grant (CDBG), lead removal, and fair housing programs.

  • Why it matters: The D&I Subcommittee hearing focused on affordable housing, financial services, and access to capital for people with disabilities. The Housing & Insurance Subcommittee hearing focused on reauthorization and reform of the National Flood Insurance Program (NFIP). Hearing summaries are included here. Meanwhile in its letter, the HFSC Democratic majority endorsed the Biden administration’s $71.9 billion HUD discretionary budget request for FY 2023, but called for increased funding levels for several programs, including the CDBG, fair housing, and lead paint removal and other home hazard programs.
  • What’s next: President Joe Biden and congressional Democrats face several obstacles to securing HUD priorities funded at the levels, given the broad 14% increase proposed for all domestic programs by the administration. 

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

HUD Issues Civil Rights Guidance on Marketing and Application Requirements for Multifamily Properties

On April 21, 2022, HUD issued civil rights marketing and application guidance that applies to more than 1.5 million HUD-subsidized multifamily units. The guidance is intended to help property owners and managers implement more inclusive practices in advertising and renting Project-Based Rental Assistance, Section 202, and Section 811 subsidized units.

  • Why it matters: Certain marketing and rental application practices can discriminate against tenants in violation of Title VI of the Civil Rights Act. HUD-subsidized units provide critically needed affordable housing for low-income tenants and it is imperative that the properties employ inclusive practices that broaden access for all eligible individuals and families.   
  • What’s next: MBA will continue to share relevant information on HUD programs with its members.

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

MBA’s CREF Market Intelligence Symposium 

MBA’s popular CREF Market Intelligence Symposium is back – in person – at the NYU Stern Center for Real Estate Finance Research on June 15-16. Cut through the clutter to get the hard facts about the state of commercial real estate markets from the nation’s leading CRE analysts, including representatives from U.S. Bank, JLL, CBRE, Institutional Property Advisors, CoStar, Moody’s, JP Morgan, and more.

  • Why it matters: The symposium goes beyond talking heads, featuring data, analysis, and insights from leaders in CRE research – as well as a networking reception on Wednesday evening. Presented in partnership with the NYU Stern Center for Real Estate Finance Research, this is an event you won’t want to miss. Learn more and register today.

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

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.

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:

  • What Trends will Shape the Lending Space in the Second Half of 2022 – June 2
  • Effective Internal Audit Function: The Fundamentals – June 8
  • CFPB, UDAAP and the Focus on Junk Fees – June 9
  • Serving Loan Applicants with Limited English Proficiency – June 14
  • Leveling Up Your Social Media Strategy with Paid Advertising – June 28
  • How to Navigate Lower Margins and a Tighter Market Through Effective Leadership and Embracing Technology – June 28

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.