MBA CREF Policy Update Jan. 12, 2023

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

Biden Administration Updates Fall 2022 Regulatory Agenda 

Last Wednesday, the Office of information and Regulatory Affairs updated its Unified Agenda of Regulatory and Deregulatory Actions report on the regulatory actions agencies are taking in the near and long term. 

• Why it matters: Of note to members are the following:
• The Federal Housing Finance Agency plans to issue an “Enterprise Capital Regulatory Framework Amendments” Notice of Proposed Rulemaking in February and a “Prudential Management and Operations Standards” NPRM in December.
• The Department of Labor expects to finalize regulations overhauling Davis-Bacon in February.
• The banking agencies (Office of the Comptroller of the Currency, Federal Deposit Insurance Corporation and Federal Reserve System) expect to issue a final rule on the Community Reinvestment Act in March.
• The Securities and Exchange Commission expects to finalize its corporate climate risk disclosure rule in April, and also intends to issue an April NPRM on “modernizing beneficial ownership rules.”
• The Department of Housing and Urban Development plans to issue an NPRM on “promoting climate resilience, advancing equity, and streamlining environmental review procedures” in August. 
• What’s next: MBA will continue to follow agencies’ regulatory filings and rulemakings and share all relevant information with members. 

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

FHFA Releases Annual Scorecard for the GSEs and Common Securitization Solutions 

Also last Wednesday, FHFA released its 2023 Scorecard for Fannie Mae and Freddie Mac (the GSEs), as well as for Common Securitization Solutions. The 2023 Scorecard builds on progress made last year and focuses on two equally weighted areas: promoting sustainable and equitable access to affordable housing and operating in a safe and sound manner. The 2023 Scorecard highlights specific multifamily and single-family initiatives, including facilitating a greater supply of affordable housing, taking meaningful actions to achieve the goals and objectives of the GSEs’ Equitable Housing Finance Plans, updating the current pricing framework, effectively managing risks and maintaining required liquidity levels, ensuring a focus on the effects of climate change, and exploring the feasibility of expanding tenant protections in properties financed by the GSEs. 

• Why it matters: The Scorecard outlines FHFA’s expectations for the GSEs’ priorities in the coming year. In line with FHFA’s announcement made in November 2022, the Scorecard sets the 2023 multifamily loan purchase caps at $75 billion per GSE and maintains the requirement that 50 percent of the GSEs’ business be for mission-driven affordable housing. The Biden administration has been particularly focused on the enhancement of tenant protections and MBA has participated in multiple meetings at the White House to discuss the topic. The Administration is expected to expand upon its initiative to enhance tenant protections early in the new year. 
• What’s next: MBA will work with the GSEs as they implement the Scorecard initiatives and, over a longer term, pursue the necessary conditions to exit conservatorship. 

For more information, contact Stephanie Milner at (202) 557-2747 or Sasha Hewlett at (202) 557-2805.

CFPB Announces Opening of HMDA Data Filing Period 

The Consumer Financial Protection Bureau last week announced that the filing period for submitting 2022 data under the Home Mortgage Disclosure Act has opened, with data submissions due on or before March 1, 2023.

• Why it matters: As a result of the District Court for the District of Columbia ruling in September 2022, only institutions originating fewer than 25 closed-end mortgage loans in each of the two preceding calendar years are exempt from HMDA reporting. However, the CFPB, in a blog post released in December 2022, stated that it does not plan to “initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage data collected in 2022, 2021, and 2020” for covered institutions that originated at least 25 closed-end loans, but less than 100 closed-end loans in each of the previous two calendar years. A detailed MBA summary of that court ruling is here . 
• What’s next: MBA will keep members informed on all relevant updates pertaining to the CFPB. 

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

OCC Publishes 2022 Annual Report Reiterating Long-Term Goals 

Last Thursday, the OCC published its 2022 Annual Report highlighting its priorities and long-term goals. 

• Why it matters: OCC’s Annual Report provides Congress with an overview of the condition of the federal banking system and discusses the agencies’ financial condition and management.
• What’s next: The report highlighted guarding against complacency, addressing inequality, adapting to digitalization, and managing climate risk as the OCC’s long-term goals. 

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

GAO Publishes Report Examining Federal Emergency Rental Assistance 

The U.S. Government Accountability Office last month published a report that concluded the Emergency Rental Assistance program helped prevent evictions during the COVID-19 pandemic, but oversight of payments was limited. From 2020-2021 Congress authorized the U.S. Department of the Treasury to distribute a total of $46 billion in assistance to state and local governments to help tenants in need of assistance because of COVID-19-related financial distress. 

• Why it matters: The report found Treasury’s reallocation of excess funds did not consistently align with renters’ needs because the prioritization of transfers between grantees in the same state limited its ability to address large funding differences across states. In addition, the reports said oversight of the ERA program would benefit from improved data collection and assessment of improper payment risks. The report also recommends the Treasury Department to improve its data collection to better assess payment risks to recipients. 
• What’s next: The report also recommended that the Treasury Department issue guidance to more efficiently establish an emergency rental assistance program if one is authorized in the future. 

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

Total Commercial and Multifamily Borrowing and Lending Expected to Fall to $700 Billion in 2023

Total commercial and multifamily mortgage borrowing and lending is expected to fall to $700 billion this year, which is a 5 percent decline from an expected 2022 total of $740 billion. This is according to an updated baseline forecast released by MBA last Thursday. 

• Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “The typical FOMC member’s expectations for the federal funds rate at the end of 2023 increased throughout 2022, jumping from 1.6 percent to 5.1 percent as of December 2022. Those shifts in outlook from the Federal Reserve are both a response to changing economic conditions and a cause of change themselves. Commercial real estate markets are not immune to these shifts, and we expect borrowing and lending backed by commercial and multifamily properties to decline again this year. Uncertainty and volatility around the paths of the economy, interest rates, and property valuations will likely continue to cause instability for commercial real estate markets well into this year.”
• What’s next: To download the latest Commercial/Multifamily Real Estate Finance Forecast, click here.       

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

MBA CREF Outlook Survey: Unsettled Markets Dissipating in 2023

Commercial and multifamily mortgage originators are experiencing an unsettled market for borrowing and lending but anticipate those conditions will slowly stabilize over the course of 2023. That is according to MBA’s 2023 Commercial Real Estate Finance Outlook Survey released last Thursday. 

• Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “Commercial real estate markets are entering 2023 amid a great deal of uncertainty and, as a result, a significant slowdown in activity. Leaders of top commercial real estate finance firms believe that overall uncertainty will dissipate over the course of the year, but with a host of factors that will drag – rather than boost – the markets in 2023. Among the factors most viewed as negative by CRE leaders are office market fundamentals, short-term interest rates, inflation, long-term interest rates, the broader economy, and adjustable rate and short-term loans maturing in today’s market. Industrial and apartment market fundamentals and changes in the severity of the COVID-19 pandemic are the only factors seen by more leaders as positive than negative for the market.”
• What’s next: To learn more about the 2023 CREF Outlook Survey, click here.

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

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, please 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:

• Ten Things Your Company Must Do in 2023 – January 18
• Using the MISMO API Toolkit to Build Your Own FIPS Code Lending API – January 26
• Combating the Downturn: Strategies to Optimize Borrower Support in Recessionary Environments – January 31
• 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

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.