MBA CREF Policy Update Feb. 9, 2023

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

Sandra Thompson, Julia Gordon, and Roger Ferguson headline the speakers at MBA’s Commercial/Multifamily Finance Convention & Expo, taking place in San Diego on February 12-15. Register today!

Sign MBA’s Home for All Pledge: Join the 380+ 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.

Federal Reserve Announces Eighth Consecutive Rate Hike

The Federal Reserve in its ongoing efforts to slow inflation raised the federal funds rate by another 25 basis points to a target range of 4.50-4.75% last Wednesday.

• Why it matters: The short-term rate hike marks the eighth consecutive increase since March 2022. The FOMC also indicated that more rate hikes are to come until there are signs that inflation slows and moves closer to the 2% target range.
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “While the FOMC statement noted that inflation has ‘eased somewhat,’ the unanimous vote of monetary policymakers to raise rates another 25 basis points – and signal that further increases are likely – indicates that markets should anticipate that the Federal Reserve will keep short-term rates higher for longer. This means rates will probably peak at about 5% in March, in the Fed’s efforts to force inflation down through a marked slowdown of the economy.”

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

President Biden and House Speaker McCarthy Meet to Begin Debt Ceiling Conversation 

Last Wednesday, President Joe Biden and House Speaker Kevin McCarthy (R-CA) began face-to-face debt ceiling discussions, with the latter expressing cautious optimism that the two sides can come to a deal to avoid the first-ever default on the nation’s debt obligations. The meeting at the White House came as House Republicans have said they want a two-year budget agreement to cut government spending in exchange for voting to increase the borrowing limit (no specific cuts have been outlined yet). The White House has insisted there will be no negotiating on the debt limit and that Congress should raise it without conditions.  

• Why it matters: Last month, the U.S. reached its statutory debt limit of roughly $31 trillion. Should the debt limit not be increased, the government could begin to miss payments to bondholders, Social Security recipients, veterans and others, and default on its obligations (though opinions vary on alternative policy options that could be taken should that occur). Such an event could send financial markets into a tailspin and produce higher borrowing costs. Given the more than $10.3 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae, and other federal agencies, the housing and real estate markets are particularly susceptible to any resulting instability. 
• What’s next: MBA and our real estate coalition partners will undoubtedly be asked – by both the White House and key lawmakers – to engage on this highly-charged topic. The Treasury Department has indicated it can continue taking “extraordinary measures” to meet U.S. obligations up until early June.  

For more information, contact Bill Killmer at (202) 557-2736.

Several Key House Committees Officially Organize for the 118th Congress; Senate Banking Committee Adds New Members

This week the House Financial Services and Ways and Means Committees completed organizational markups that adopted rules and oversight plans for both panels, as well as formally adopting the roster for both full committees and all subcommittees. The roster for Republican and Democratic subcommittee assignments can be found here. Although the Senate committees have not yet been formally organized, announcements were made regarding changes to the Banking Committee roster, including the departure of Sen. Jerry Moran (R-KS) and the addition of Sens. J.D. Vance (R-OH), Katie Britt (R-AL), and John Fetterman (D-PA). At the time of this writing, the full Senate had begun the process of debating approval of its organizing resolution.  

• Why it matters: Organizational markups are required to officially set rosters before committees can commence with other business – including legislative markups and oversight/topical hearings.  
• What’s next: The House committees have already announced a slew of hearings in the coming weeks, and the timing of the Senate organizational markups is expected to occur next week.  

For more information, contact Alden Knowlton at (202) 557-2741, Borden Hoskins at (202) 557-2712, Tallman Johnson at (202) 557-2866 or Ethan Saxon at (202) 557-2913.

New York Governor’s Annual State Budget Proposal Excludes Proposed Tax on Mezz Debt and Preferred Equity; Includes 421-a Program Extension 

Last week, New York Governor Kathy Hochul delivered her proposed 2024 state budget to the State Legislature. Importantly, the fiscal plan excludes a proposed tax on mezzanine debt and preferred equity, along with “good cause eviction” legislation, and it provides a four-year extension for the popular 421-a affordable housing development tax incentive. 

• Why it matters: While Governor Hochul did not include provisions on mezzanine debt and preferred equity, separate bills have been introduced in the Assembly and the State Senate and could become part of the budget discussion. The four-year extension for owners to complete construction on their buildings and still qualify for 421-a property tax breaks is supported by MBA and the industry. The law, which expired in June 2022, currently requires developers to complete their projects by June 2026. The extension would now give them until 2030 to remain eligible for an abatement. Notably, Governor Hochul in last year’s budget supported an extension of the tax abatement and is now apparently supporting its wind down.
• What’s next: The State Assembly and Senate will now hold hearings on the budget and work with the Governor’s office to pass appropriation bills ahead of the state’s fiscal year starting on April 1, 2023. MBA is working with the New York MBA and other coalition partners to follow developments and will provide updates as the budget process advances. 

For more information, contact William Kooper at (202) 557-2737 or Grant Carlson at (202)-557-2765.

Register Today for MBA’s mPact Summit on March 7 

On March 7, mPact, MBA’s network for young professionals, will host its first mPact Summit in Plano, Texas. Join an exclusive group of young professionals for a day of career development and industry programming. Young professionals have selected the sessions and developed networking opportunities with senior leaders for this inaugural event. 

• Why it matters: Event topics include developing leadership skills, learning how to navigate your career, and building and practicing networking skills. You won’t want to miss this opportunity. 
• What’s next: Registration is capped at 100 participants and closes on February 27. Register now.

For more information, contact Jacky Salazar at (202) 557-2746.

Rent Control Map and State Trackers

• Given the ongoing proposals and ballot initiatives across the country, MBA has published an online map that provides an overview of state and local rent control laws. MBA will follow ongoing developments on this issue and will update the map accordingly.  
• 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.

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:

• Home Equity Lending: An Assessment of Today’s Market Landscape & Cashout Opportunities – February 9
• Five Steps to Improve Efficiency, Compliance and Automation in Your Mortgage Operations – February 16
• Single-Family Rental Remains Resilient – February 23
• Market Recommendations and Profitability Insights for 2023 – February 28

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.