CREF Policy Update: Aug. 17, 2023
- MBA Releases Summary on Banking Agencies’ Proposed Changes to Bank Capital Requirements
Last month, the Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) issued interagency proposed changes to capital requirements for banks with assets of $100 billion or more. The so-called “end game” proposed rules complete U.S. regulators’ implementation of the Basel III standards and make changes in response to the recent large bank failures. The proposed changes effectively increase capital requirements at larger banks by an estimated 15 to 20 percent – large enough to impact which lines of business banks choose to support or withdraw from, and with potential implications for the entire mortgage market. MBA strongly opposes certain provisions of the proposal that undermine the mortgage market and takes exception to the extremely scant economic analysis regarding how the changes will affect the economy, single-family housing market, and commercial real estate finance markets. An MBA-created summary of the proposal can be found here.
• Why it matters: The agencies’ proposal makes significant changes to how larger banks calculate their risk-weighted assets and imposes several additional requirements on banks with total assets of $100B or more. The proposal increases the risk weighting on certain mortgage loans held by the covered banks – a provision that goes beyond the Basel III Accord – that in turn could make homeownership less attainable to first-time homebuyers and low- and -moderate-income borrowers with smaller down payments. The rule also proposes even more of a punitive treatment of MSRs and a requirement to include net unrealized losses on available-for-sale securities in the calculation of regulatory capital.
These changes could impact banks as lenders, servicers, and providers of warehouse lines and MSR financing. MBA is also concerned that the Federal Housing Finance Agency (FHFA) and Ginnie Mae – under pressure from the bank regulators on the Financial Stability Oversight Council (FSOC) – could seek to extend these poorly conceived capital standards to nonbanks.
• What’s next: Comments on the proposal are due by November 30, 2023, with July 1, 2025, as the start of a three-year transition period provided for the final rule. MBA will work with members and other industry stakeholders to formulate our response, focusing on the numerous negative impacts these proposed rules would have on the housing finance ecosystem.
For more information, please contact Pete Mills at (202) 557-2878, Mike Flood at (202) 557-2745, Fran Mordi at (202) 557-2860 or Stephanie Milner at (202) 557-2747.
- MBA, Housing Coalition Warn FHFA from Implementing Rent Control Policies
MBA and 17 national real estate associations representing a broad coalition of housing providers and lenders sent a letter to FHFA Director Sandra Thompson that urged FHFA to reject imposing rent regulation as a condition of Enterprise-backed financing and instead create additional voluntary incentives within existing programs to expand the supply of affordable housing. The coalition letter comes on the heels of MBA’s submitted comments last week on FHFA’s Request for Input (RFI) on multifamily tenant protections. MBA’s letter highlighted significant concerns about including additional enhancements for tenants and – as highlighted in the coalition letter – urged FHFA to refrain from enacting new or expanded obligations, like rent control, that would disincentivize participation in the Enterprises’ multifamily programs.
• Why it matters: FHFA’s RFI is part of the Biden Administration’s January 2023 announcement of a set of actions it will take in order to enhance tenant protections and further principles of fair housing. The announcement included new actions by several federal agencies, a ” Blueprint for a Renters Bill of Rights,” and a voluntary challenge to the industry to adopt stronger policies and practices that better serve tenants. MBA and other industry stakeholders have met with the Biden Administration numerous times this year on the topic of tenant protections and have stressed the importance of increasing affordable housing supply and avoiding unnecessary regulations such as rent control.
• What’s next: MBA will update members on any further developments related to this issue.
For more information, please contact Stephanie Milner at (202) 557-2747.
- MBA Opposes HUD-USDA Proposal to Increase Costs and Burdens on Multifamily Development
Last Monday, MBA submitted a comment letter regarding the Department of Housing and Urban Development (HUD) and Department of Agriculture (USDA) proposal to increase energy efficiency standards significantly for USDA and FHA-insured and financed loans for multifamily construction or substantial rehabilitation. The notice of preliminary determination proposed by HUD and USDA would require building codes that are not currently supported in the vast majority of states.
• Why it matters: MBA and its members support energy efficiency measures, but the proposal would place significantly higher costs and burdens on the construction of multifamily properties, in turn leading to a decrease in housing affordability and availability.
• What’s next: MBA will continue its advocacy with HUD and USDA on this issue and others to instead promote and incentivize an increase in housing supply.
For more information, please contact Megan Booth at (202) 557-2740.
- Department of Labor Fails to Improve Wage Rates for Multifamily Housing
Last week the Department of Labor (DOL) released its final rule updating the Davis-Bacon and Related Acts Regulations. The final rule fails to create a single residential wage decision for Federal Housing Administration (FHA)-insured projects, as promoted by MBA and our coalition partners. It also fails to fix the wage rates to the date of application for firm commitment. The final rule will go into effect 60 days after publication in the Federal Register.
• Why it matters: Davis-Bacon wage rates apply to FHA-insured new construction and substantial rehabilitation projects. Current WHD policies and practices result in unwarranted and disruptive split wage decisions and other impediments to increasing the supply of workforce and affordable housing.
• What’s next: MBA’s analysis can be found here. MBA will continue working with HUD and DOL to address both the split wage and timing concerns.
For more information, please contact Megan Booth at (202) 557-2740.
- Get Involved – MBA Advocacy Month Kicks Off in September
Join MBA’s Legislative and Political Affairs (LPA) team in September for MBA Advocacy Month, an all-member campaign focused on raising awareness on the top single-family and commercial/multifamily issues that can help produce positive policy changes at the national level.
• Why it matters: Throughout September, MBA will work with members to engage with their employees and help run impactful Mortgage Action Alliance (MAA) and MORPAC campaigns. In addition, MBA staff will host (virtual) events, including legislative townhall(s) and webinars with a focus on how members can make their voices more effectively and better heard.
• What’s next: If interested in learning more and how to get involved, visit mba.org/advocacymonth.
For more information, please contact Jamey Lynch, AMP at (202) 557-2818.
- Get Involved – MBA Advocacy Month Kicks Off in September
Join MBA’s Legislative and Political Affairs (LPA) team in September for MBA Advocacy Month, an all-member, national campaign focused on raising awareness regarding the top single-family and commercial/multifamily issues impacting members during these challenging, current market conditions.
• Why it matters: Throughout the month, MBA will work with members to engage with their employees and help run impactful Mortgage Action Alliance (MAA) and MORPAC campaigns. In addition, MBA staff will host (virtual) events, including legislative townhall(s) and webinars designed to discuss how members can more effectively make their voices heard with their elected officials.
• What’s next: If you are interested in learning more about how to get involved, visit mba.org/advocacymonth.
For more information, please contact Jamey Lynch, AMP at (202) 557-2818.
- Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, a list of upcoming webinars – which are complimentary to MBA members:
• Budgeting and Financial Planning for Non-Believers – August 22
• C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 23
• Current Expected Credit Losses (CECL) Updates – August 24
• Navigating the Obstacles in Multifamily Housing: Perspectives from the Affordable Rental Housing Advisory Council – August 29
• Succeeding Today and Tomorrow: Tech Tools That Can Drive More Market Share – September 7
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
