MBA CREF Policy Update Feb. 2, 2023

Bill Killmer; Mike Flood

Biden-Harris Administration Announces New Actions to Enhance Tenant Protections

The Biden-Harris Administration last week announced a set of actions it will take in order to enhance tenant protections and further principles of fair housing. The announcement includes 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. In a press statement following the announcement, MBA President and CEO Bob Broeksmit, CMB, said that MBA “will examine the Administration’s actions in greater detail and participate in a constructive and collaborative approach to help tenants and increase safe and affordable multifamily housing.”

Why it matters: MBA and other industry stakeholders have met with the Administration numerous times over the last several months 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 monitor developments closely and continue to work with members, Congress, and the Administration to ensure a constructive approach is taken to address the needs of tenants and the supply of safe and affordable housing. 

The new actions by federal agencies include the following:

  • Federal Trade Commission (FTC) and Consumer Financial Protection Bureau (CFPB)
  • Will collect information to identify practices that will unfairly prevent applicants and tenants from accessing or staying in housing in order to inform enforcement policy actions under each Agency’s jurisdiction. 
  • CFPB will issue guidance and coordinate enforcement efforts with the FTC to ensure accurate information in the credit reporting system and to hold background check companies accountable for unreasonable procedures. 
  • Federal Housing Finance Agency (FHFA)
  • Will launch a new public process to examine proposed actions promoting renter protections and limits on egregious rent increases for future investments. FHFA will maintain transparency throughout the process and provide periodic updates, including one within six months, to interested stakeholders.
  • U.S. Department of Justice (DOJ)
  • Will launch a workshop to inform potential guidance updates around anti-competitive information sharing, including in rental markets.
  • The U.S. Department of Housing and Urban Development (HUD)
  • Will publish a notice of proposed rulemaking to require public housing authorities and owners of project-based rental assistance properties to provide at least 30 days of advanced notice before terminating a lease due to nonpayment of rent.
  • White House
  • Will hold quarterly meetings with industry stakeholders to solicit feedback and promote transparency in the process. 

The Renters Blueprint, a voluntary set of principles and best practices to help promote tenant protections and a well-functioning housing market, puts forth the following five principles that are meant to serve as a baseline for fairness in the rental housing market:

  • Safe, Quality, Accessible, and Affordable Housing: Renters should have access to housing that is safe, decent, and affordable. 
  • Clear and Fair Leases: Renters should have a clear and fair lease that has defined rental terms, rights, and responsibilities. 
  • Education, Enforcement, and Enhancement of Renter Rights: Federal, state, and local governments should do all they can to ensure renters know their rights and to protect renters from unlawful discrimination and exclusion. 
  • The Right to Organize: Renters should have the freedom to organize without obstruction or harassment from their housing provider or property manager. 
  • Eviction Prevention, Diversion, and Relief: Renters should be able to access resources that help them avoid eviction, ensure the legal process during an eviction proceeding is fair, and avoid future housing instability. 

Finally, the Administration is launching the Resident-Centered Housing Challenge, a call to action to housing providers and other stakeholders to strengthen practices and make their own independent commitments that improve the quality of life for renters. The Challenge, which will occur this spring, also encourages states, local, Tribal, and territorial governments to enhance existing policies and develop new ones that promote fairness and transparency in the rental market.

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

Life Risk-Based Capital (E) Working Group Advances MBA’s Proposed CM6 and CM7 Mortgage Revisions 

Last Thursday, the National Association of Insurance Commissioners (NAIC) Life Risk-Based Capital (E) Working Group agreed to “expose” (or open to comment) and review proposed revisions to RBC factors for CM6 and CM7 mortgages. MBA and American Council of Life Insurers (ACLI) presented the revisions jointly to the working group last year and provided economic analysis requested by the working group outlining the effects of the proposed changes.

  • Why it matters: The proposal would harmonize the RBC factors for CM6 and CM7 mortgages with the RBC factors for Schedule A and Schedule BA real estate investments, as recently adjusted. It would also harmonize the formulas used to apply RBC factors to performing and non-performing mortgages by eliminating the adjustments for write-downs currently included in the non-performing mortgages formula. 
  • What’s next: Comments are due 45 days after the date of publishing.

For more information, contact Grant Carlson at (202)-557-2765.

SEC Re-Proposes Conflicts of Interest for Asset-Backed Securities Rule

Last Wednesday, the Securities and Exchange Commission (SEC) voted 5-0 to re-propose a rule that would prohibit conflicts of interest by entities that create asset-backed securities (ABS), such as mortgage bonds.

  • Why it matters: Initially proposed in 2011, the proposed rule would implement a provision under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 prohibiting an underwriter, placement agent, initial purchaser, or sponsor of an asset-backed security from engaging in any transaction that would involve or result in certain material conflicts of interest.
  • What’s next: Comments are due 30 days after publication in the Federal Register or March 27, 2023, whichever period is longer. MBA is analyzing the rule and will provide relevant updates. 

For more information, contact Grant Carlson at (202) 557-2765.

Federal Reserve Sets Effective Date for LIBOR Termination 

On Thursday, the Federal Reserve Board published a final rule in the Federal Register implementing the Adjustable Interest Rate (LIBOR) Act.

  • Why it matters: The final rule seeks to settle many London Interbank Offered Rate (LIBOR) transition questions and sets a statutory benchmark for contracts without a clear LIBOR replacement.  
  • What’s next: The rule’s effective date is February 27, 2023. Contracts without a clear LIBOR replacement will adopt the Secured Overnight Financing Rate (SOFR) following the first London banking day after June 30, 2023.

For more information, contact Grant Carlson at (202) 557-2765.

Treasury Reallocates $690 Million in Rental Assistance

On Tuesday, the Treasury Department announced that 89 state and local governments will receive $690 million in reallocated emergency rental assistance funds to help prevent evictions. 

  • Why it matters: From 2020-2021, Congress authorized the U.S. Department of the Treasury to distribute a total of $46 billion in Emergency Rental Assistance to state and local governments to help tenants facing pandemic-related hardships.
  • What’s next: Treasury will continue to reallocate the remaining emergency rental assistance funds to assist tenants in jurisdictions most in need.  

For more information, contact 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

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.