CREF Policy Update Dec. 21: MBA Joins Letter in Support of the Workforce Housing Tax Credit Act

MBA Joins Letter in Support of the Workforce Housing Tax Credit Act

Recently, MBA joined a joint trades letter in support of the Workforce Housing Tax Credit Act, recently introduced by Senators Ron Wyden (D-OR) and Dan Sullivan (R-AK) and Reps. Jimmy Panetta (D-CA) and Mike Carey (R-OH).

Why it matters: The bipartisan and bicameral legislation, if enacted, would increase the supply of housing for middle-income families who earn too much to qualify for low-income housing and lack affordable housing near where they work. If enacted, the credit is projected to finance approximately 344,000 affordable rental homes nationwide.

What’s next: MBA will lobby for the new middle income housing tax credit as part of its comprehensive agenda on tax issues and housing affordability and supply.

For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelly at (202) 557-2816 or Bill Killmer at (202) 557-2736.

Federal Reserve Maintains Federal Funds Rate 

The Federal Reserve, recognizing the current slowdown in inflation, decided to hold the federal funds rate to a target range of 5.25-5.50% last Wednesday.

Why it matters: The FOMC emphasized that, “In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.”

What they are saying: MBA’s SVP and Chief Economist Mike Fratantoni noted, “Additional rate hikes no longer appear to be part of the conversation. It is all about the pace of cuts from here. This is good news for the housing and mortgage markets. We expect that this path for monetary policy should support further declines in mortgage rates, just in time for the spring housing market. We are forecasting modest growth in new and existing home sales in 2024, supporting growth in purchase originations, following an extraordinarily slow 2023.”

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

FSOC Releases 2023 Report

The Financial Stability Oversight Council (FSOC) released its 2023 Annual report. The report notes signs of stress for office markets due to vacancy rates, interest rates and inflation.

• The report also notes that this pressure can impact the financial sector more widely, based on level of exposure to commercial loans.

• FSOC recommends that financial institutions and investors “closely monitor CRE exposures and track market conditions.” They also supported their previous statement on loan workouts, stating that “accommodations and workouts are often in the best interest of borrowers and lenders.”

Why it matters: FSOC members include many federal agency leaders including the Federal Reserve, the Consumer Financial Protection Bureau (CFPB), Securities and Exchange Commission and Federal Housing Finance Agency. FSOC reports may lead to changes in policy by these agencies.

What’s next: MBA will continue to work with federal agencies to ensure flexible policies that allow commercial real estate entities to respond to today’s financial challenges.

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

FHFA Submits Annual Report to Congress on Collateral Pledged to the Federal Home Loan Banks

Last week, FHFA submitted an annual report to Congress on the collateral pledged to the Federal Home Loan Banks (FHLBanks), which includes analysis by district and collateral type. The report is required under the Housing and Economic Recovery Act (HERA) and shows that multifamily loan collateral accounted for approximately 9 percent of eligible collateral pledged at year-end 2022, largely unchanged from year-end 2021.

• The report also revealed that commercial real estate loans (excluding multifamily) remain the second largest collateral category system-wide as of year-end 2022.

Why it matters: Just last month, FHFA released the FHLBank System at 100: Focusing on the Future report, its comprehensive review of the FHLB System in anticipation of the System’s centennial in 2032. The report outlined four key themes on the FHLB System, including its mission, liquidity, housing and community development, and operational effectiveness and governance. FHFA also said it plans to update and clarify its regulatory statement on the FHLB System to reflect the FHLBanks’ two core objectives: 1) providing stable and reliable liquidity to their members, and 2) supporting housing and community development.

What’s next: MBA will remain engaged with FHFA, the FHLBs, and lawmakers on both sides and will continue to stress the importance of allowing a diverse set of eligible collateral types.

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

House Ways and Means Subcommittee Holds Tax Hearing

Last week, the House Ways and Means Tax Subcommittee held a hearing titled, Tax Policies to Expand Economic Growth and Increase Prosperity for American Families. A central focus was the 2017 Tax Cuts and Jobs Act (TCJA), including the potential renewal of business-related provisions within that law that have expired or are set to expire at the end of 2025.

Go deeper: Republicans touted the TCJA’s benefits to consumers and businesses, highlighting its small business deduction and creation of Opportunity Zones – and also called for restoring immediate R&D expensing. Another main focus of the discussion were proposals for the creation of a new consumption tax system, such as the value-added tax (VAT). 

• Democrats criticized Republican proposals such as the Fair Tax Act (H.R.25), which would replace income, capital gains, payroll, and estate taxes with a 23 percent national sales tax – and used the hearing to push for restoration of an expanded Child Tax Credit (CTC).

Why it matters: Republican and Democratic tax writers (in both the House and Senate) have been quietly negotiating to gauge the potential for some form of tax package, including a group of so-called tax “extenders,” at some point this Congress.

What’s next: MBA will continue to monitor any potential tax changes – including action on housing-related tax credits geared towards increasing housing supply – in 2024 and beyond.

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

Commercial and Multifamily Mortgage Debt Outstanding Increased by $37 Billion in Third-Quarter 2023 

The level of commercial/multifamily mortgage debt outstanding increased by $37.1 billion (0.8 percent) in the third quarter of 2023, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, released last Thursday.

Go deeper: Total commercial/multifamily mortgage debt outstanding rose to $4.63 trillion at the end of the third quarter. Multifamily mortgage debt alone increased $26.8 billion (1.3 percent) to $2.05 trillion from the second quarter of 2023.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “The level of commercial mortgage debt outstanding has continued to increase despite a continued pullback in borrowing. A decline in sales transaction and refinance volumes has meant less new debt being extended, but it also means that fewer loans are paying off than in many earlier periods. The result is that debt levels continue to rise, but at a pace that is roughly half of what was seen last year.”

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

[VIDEO]: mPower Moments: Hard Work and Limitless Opportunities with Fannie Mae’s Priscilla Almodovar

mPower Founder Marcia M. Davies sits down with Priscilla Almodovar, CEO at Fannie Mae, for an insightful interview on Priscilla’s career, including her “dream job” at Fannie Mae. She also shares the many lessons she has learned and emphasizes how hard work and effort have helped her thrive.

Go deeper: Almodovar also talks about the importance of affordable housing, and how it is her mission to ensure that her employees feel motivated and connected to Fannie Mae’s mission of creating affordable housing opportunities.

What’s next: To watch more mPower Moments, click here.

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

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:

• 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 contact David Upbin at (202) 557-2931.