CREF Policy Update Dec. 14: House Financial Services Subcommittee Holds Hearing on Housing Affordability

House Joins Senate to Block the CFPB’s Small Business Lending Reporting Rule; Biden to Veto

By a vote of 221-202, the House passed a resolution (S.J.Resolution 32) of disapproval under the Congressional Review Act for the Consumer Financial Protection Bureau’s (CFPB) 1071 Small Business Reporting Rule.

Why it matters: In August, MBA sent a joint letter to the CFPB requesting it to pause the 1071 Small Business Reporting Rule’s effective date and tiered implementation dates until all legal challenges against the CFPB are resolved.

Go deeper: The final rule requires some MBA members to collect and report data on commercial real estate loans. MBA’s comments in response to the CFPB’s proposed rule argued that the rule should only apply to small business lending and exempt most commercial and multifamily real estate loans. Lenders that originate at least 2,500 small business loans annually must collect data starting Oct. 1, 2024. Lenders that originate at least 500 loans annually must collect data starting April 1, 2025.

• Lenders that originate at least 100 loans annually must collect data starting Jan. 1, 2026. The latest filing instructions for 1071 reporting can be found here.

What’s next: The resolution of disapproval had previously passed the Senate in October by a vote of 53-44 and now goes to President Biden’s desk, where he has threatened to veto it. The vote tallies in both chambers suggest that President Biden’s veto would be upheld and the final 1071 rule will be implemented.  

For more information, please contact Rachel Kelley at (202) 302-1185 or Bill Killmer at (202) 557-2936.

House Financial Services Subcommittee Holds Hearing on Housing Affordability

Last Wednesday, the House Financial Services Subcommittee on Housing and Insurance held a hearing titled, “Housing Affordability: Governmental Barriers and Market-Based Solutions.” Ahead of the hearing, MBA submitted a Statement for the Record that outlined policy concerns and steps policymakers can undertake to reduce regulatory impediments, increase affordable housing stock, and benefit renters and housing consumers.

Go deeper: Subcommittee Republicans suggested that burdensome regulations, inflationary pressures, and government involvement in the U.S. housing sector are contributing factors to housing affordability challenges, underscoring a need for more private sector solutions. Democrats on the panel countered that private market solutions are insufficient to address housing needs, arguing that federal assistance programs should continue to be funded and expanded as appropriate.

• There was some bipartisan agreement that state and local zoning laws, as well as land use restrictions, are contributing to housing scarcity and warrant reform. Find a full summary of the hearing here.

Why it matters: Several pieces of legislation were discussed at the hearing, including the bipartisan, bicameral Yes in My Backyard (YIMBY) Act (H.R. 3507 and S. 1688). This proposal would provide the federal government with new tools to encourage localities to remove legal and regulatory barriers that impede new construction and housing development. MBA joined a broad coalition in expressing support for the bill.

What’s next: MBA will work with the Administration and members of Congress on both sides of the aisle to advocate for policies that improve housing affordability – for both prospective homeowners and renters.

For more information, please contact Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2936.

Senate Banking Committee Holds Oversight Hearing on Major Financial Institutions

Last Tuesday, the Senate Banking Committee held a hearing with testimony from the chief executives of eight of the nation’s largest financial institutions, including MBA members. A summary of the hearing can be found here.

Why it matters: The executives expressed strong opposition to regulators’ Basel III Endgame capital proposal, arguing that it will restrict mortgage lending, and also addressed Senators’ questions pertaining to the CFPB, the Community Reinvestment Act, investor ownership of single-family housing, and the ongoing role of the Federal Home Loan Bank System.

What’s next: MBA will continue to engage Congress on the real estate-finance issues raised at the hearing.

For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.

HUD Provides Flexibility for LIHTC Properties

Last Monday, the Department of Housing and Urban Development (HUD) published a Mortgagee Letter to eliminate the requirement of a 10% assurance of completion escrow for certain Low-Income Housing Tax Credit (LIHTC) properties.

• This exemption applies to 223(f) transactions with new LIHTC proceeds for project loans that include a payment and performance bond, or letter of credit, and a reasonable contingency escrow as required by the LIHTC investor/syndicator and accepted by HUD. The change is effective immediately.

Why it matters: Eliminating this requirement will help incentivize borrowers and lenders to use HUD’s 223(f) financing authority to promote the availability of affordable housing.

What’s next: MBA will continue to advocate for tweaking HUD policies and removing fees that are creating barriers to increasing the supply of quality housing.

For more information, please contact Megan Booth at (202) 557-2740.

Biden Administration Publishes Fall 2023 Regulatory Agenda

Last Wednesday, the Biden administration published the Fall 2023 Regulatory and Deregulatory Actions (Agenda), outlining the regulatory actions federal administrative agencies plan to issue over the next six months. The rules and proposals published by federal agencies can have significant impacts on lenders and borrowers.

Why it matters: Topics of interest to members include:

• FHA Proposed Rule on Multifamily Loan Disbursements (January 2024)

• HUD’s Multifamily Risk-Sharing Program (January 2024)

• HUD/USDA Final Rule on Energy Efficiency Building Codes (February 2024)

• HUD Final Rule on Floodplain Management (February 2024)

• SEC Final Climate Change Disclosure Rules (April 2024)

• Basel III Revisions: Amendments to the Capital Rule for Large Banking Organizations (June 2024)

What’s next: The dates listed above are their expected published dates, but federal agencies regularly miss these targets. MBA will work with members to monitor and respond to proposals put forth by government agencies that impact multifamily and commercial lending activities.

For more information, please contact Megan Booth at (202) 557-2740.

Commercial Mortgage Delinquency Rates Increased in Third-Quarter 2023

Commercial mortgage delinquencies increased in the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest Commercial Delinquency Report, released last Tuesday.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research said, “Every major capital source saw delinquency rates rise, driven by higher interest rates, changes in some property market fundamentals, and uncertainty about property values. CRE market activity remains muted, further complicating the situation.”

Go deeper: “CRE markets are large and heterogeneous. Data from MBA’s own survey released earlier in the quarter show wide differences in mortgage performance by property type,” Woodwell noted. “Deal vintage, term, market, and a host of other factors also play into which loans are facing pressure. These differences are likely to remain important in the year ahead.”

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

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, please see a list of upcoming and recent webinars – which are complimentary to MBA members:

• Ten Things Your Company Must Do in 2024 – Dec. 12

• California’s Corporate Climate Data Accountability Act – Dec. 14

• C-PACE for New Development, Refinance, Renovation, and Rescue – Jan. 30

• Transforming Lending Operations: How to Leverage Intelligent Automation – Jan. 30

• Builder’s Risk Insurance: Analysis & Perspectives – March 20

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

For any questions, please contacDavid Upbin at (202) 557-2931.