MBA CREF Policy Update Sept. 29, 2022

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

Last Wednesday, MBA President and CEO Bob Broeksmit, CMB, joined a small group of industry and affordable housing leaders at the White House for a constructive meeting on ways to address housing supply and affordability challenges across the country. Also last week, MBA member David Battany, Executive Vice President of Capital Markets at Guild Mortgage, testified before a Senate subcommittee on rural housing lending programs – including multifamily rental housing options. CEOs from the nation’s largest banks testified before the House Financial Services Committee and the Senate Banking Committee on several topline topics, including real estate finance industry issues.

MBA recently released a new white paper titled, A Framework for Considering Office Demand in a Post-Pandemic World, which details the relative benefits and costs of remote and in-person work to employees and employers and analyzes the outlook for the office sector and potential impacts to commercial mortgage loan volume and property values.

Sign MBA’s Home for All Pledge: Join the 320+ 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. 

MBA Participates in White House Meeting on Housing Supply and Affordability 

On Wednesday, MBA President and CEO Bob Broeksmit, CMB, joined a small group of industry and affordable housing leaders at the White House for a constructive meeting with National Economic Council Director Brian Deese, U.S. Department of Housing and Urban Development (HUD) Secretary Marcia Fudge, and Federal Housing Finance Agency (FHFA) Director Sandra Thompson. The group discussed legislative, administrative, private sector, and state and local solutions to address housing supply and affordability challenges across the country. 

• Why it matters: Though not an exhaustive list of everything discussed, Broeksmit’s remarks focused on many of MBA’s top multifamily and single-family advocacy priorities, including: FHA multifamily loan limit and statutory loan changes; enhancements to environmental reviews; support for the GSEs’ proposed multifamily housing goals; support for state programs that have successfully produced affordable rental housing; supporting the reduction of  Federal Housing Administration (FHA) mortgage insurance premiums; a reconsideration of a risk-based capital requirement in Ginnie Mae’s recently finalized capital and liquidity standards; and, increasing Area Median Income (AMI) limits for the GSEs’ low downpayment programs.
• What’s next: MBA remains committed to working with our members, the administration, Congress, and industry stakeholders on safe and responsible policies that increase affordable rental housing and homeownership options for all households.

For more information, please contact Bill Killmer at (202) 557-2736 and Mike Flood at (202) 557-2745.

Senate Banking Subcommittee Committee Holds Hearing on Rural Housing Lending Programs 

On Tuesday, the U.S. Senate Committee on Banking, Housing, and Urban Affairs’ Subcommittee on Housing, Transportation, and Community Development held a hearing on stakeholder perspectives on rural lending. David Battany, Executive Vice President of Capital Markets at Guild Mortgage, testified on behalf of MBA. A summary of the hearing can be found here.

• Why it matters: Battany’s testimony (written and oral) highlighted the need for the Rural Housing Service (RHS) program to have better workflow, technology, and loan products to support lenders, mortgage servicers, and consumers. 
• What’s next: The Senate is working to develop a bipartisan package of reforms to RHS lending that could be considered after the November 2022 midterm election – including changes that could favorably impact rural multifamily rental housing.

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

Major Bank CEOs Testify Before Congress

This week, CEOs from U.S. Bancorp, PNC, JPMorgan Chase, Citigroup, Bank of America, Truist, and Wells Fargo testified before the House Financial Services Committee and the Senate Banking Committee. Many Democrats asked questions regarding company diversity, overdraft policies, mortgage rates, and ways to increase homeownership. Republicans focused on inflation and asked questions about the future of the economy and U.S. banks competing with China.  

• Why it matters: In addition to several single-family mortgage issues, lawmakers also pressed the witnesses on local solutions to tackling the affordable housing crisis, including supporting the expansion of the low-income housing tax credit (LIHTC) and financing the construction of affordable dwelling units (ADUs).
• What’s next: A summary of the hearings can be found here. MBA will continue working with key lawmakers on all issues impacting members.  

For more information, please 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.

SEC Investor Advisory Committee Submits Recommendations in Response to the SEC’s Series of Proposed Rule Changes Requiring Climate-Related Disclosures

On Wednesday, the U.S. Securities and Exchange Commission (SEC) Investor Advisory Committee (IAC) released its recommendation for the SEC’s series of proposed rule changes requiring registrants to include certain climate-related disclosures. The recommendation generally provides support for the SEC’s proposed rule changes, including support for disclosure of Scope 1 and Scope 2 Green House Gas (GHG) emissions for all registrants, and disclosure of Scope 3 GHG emissions for large companies if they are deemed material. The recommendation also includes several enhancements for the SEC to consider before final implementation, including adding a requirement that registrants disclose the location of all material facilities so that investors can determine if there are geographical concentrations that pose material risk of loss.

• Why it matters: The recommendation is further evidence of the investor community’s support for more transparency related to companies’ climate-related risks and the impact of their operations on the environment.
• What’s next: MBA will follow developments closely and report all relevant information to our members.

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

Commercial/Multifamily Mortgage Debt Outstanding Increased by $99.5 Billion in Second-Quarter 2022

The level of commercial/multifamily mortgage debt outstanding increased by $99.5 billion (2.3 percent) in the second quarter of 2022, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report released Tuesday. Total commercial/multifamily mortgage debt outstanding rose to $4.38 trillion at the end of the second quarter. Multifamily mortgage debt alone increased $35.7 billion (1.9 percent) to $1.9 trillion from the first quarter of 2022.

• Why it matters: Commercial banks continue to hold the largest share (38 percent) of commercial/multifamily mortgages at $1.7 trillion. Agency and GSE portfolios and MBS are the second-largest holders of commercial/multifamily mortgages (21 percent) at $919 billion. Life insurance companies hold $648 billion (15 percent), and CMBS, CDO and other ABS issues hold $613 billion (14 percent).
• Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research said, “The $99.5 billion increase in commercial and multifamily mortgage debt outstanding in the second quarter was the second largest quarterly rise since the inception of MBA’s data series in 2007. The increase in holdings by depositories was the largest on record. The data match the fact that the first half of 2022 saw more commercial and multifamily borrowing and lending than any previous January through June period. Given a variety of changes in space, equity, and debt markets since the start of the year, we expect the pace to slow considerably in coming quarters.”

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

Federal Reserve Raises Short-Term Rates Again; Indicates More to Come to Curb Inflation 

The Federal Reserve on Wednesday in its ongoing efforts to slow inflation raised the federal funds rate by another 75 basis points to a target range of 3.00-3.25%.

• Why it matters: This short-term rate hike marks the third consecutive increase of 75 basis points and the fifth overall increase since March. The FOMC also indicated that more rate hikes are to come until there are signs that inflation slows and moves closer to its target of 2%.
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “The FOMC members’ projections indicate slower growth, slowly decelerating inflation, and a fed funds rate that will likely top out well above 4%. The surprise for the market might be the median expectation that they could increase rates to 4.4% by the end of this year. Mortgage rates have jumped the past few weeks following the August inflation report, which indicated that the Fed will continue to be aggressive in combating stubbornly high inflation levels.”

For more information, please contact Mike Fratantoni at (202) 557-2935.

State Trackers

• 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.

[WATCH] mPower Moments: On the Power of Intelligence with Sue Gordon

In this mPower Moments episode, mPower Founder Marcia M. Davies sits down with Sue Gordon, a 30-year national intelligence leader and Former Principal Deputy Director of National Intelligence. During this inspiring discussion, Gordon discusses her career journey and how she was able to climb the ladder at the CIA.

• Why it matters: Gordon also provides helpful insight on how organizations can better help women excel in leadership roles and provide them with learning opportunities to help them succeed. She also offers great advice on how women can stay focused when navigating their career and discusses the importance of doing your job well in order to get to the next level. Furthermore, Gordon offers tips on how women can be more vigilant in combatting ongoing cybersecurity threats and how we can better protect ourselves within the digital space.
• What’s next: To watch more mPower Moments, click here.

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

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:

• Empowering Mortgage Servicers with Proactive KPIs – September 29
• Managing Liquidity and Operational Efficiency in a Fiercely Competitive Market – October 4
• Marijuana and Real Estate in 2022: What Every CRE Professional Should Know – October 19

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.