CREF Policy Update: July 20, 2023

1. MBA Vice Chair Laura Escobar Participates in White House Summit on Climate Resiliency and Affordable Housing

Last Tuesday, Laura Escobar, 2023 MBA Vice Chair and President of Lennar Mortgage, joined a plethora of industry and affordable housing leaders for a constructive meeting with key White House and agency staff to discuss best practices for incorporating physical climate risk reduction, resilience, and sustainability into affordable housing initiatives. The discussion focused on ways the Biden-Harris Administration can work with the private and public sector to better understand opportunities and promote work to advance climate resilience and sustainability in affordable housing throughout the nation.

-Why it matters: Escobar’s remarks focused on her experiences at Lennar Mortgage as a leading provider of new construction financing. She also highlighted impactful ways to enable more private sector investment into climate resilience and sustainability with respect to affordable housing, including the need for federal actions to help address upfront implementation costs, the use of Inflation Reduction Act funds to help the Environmental Protection Agency (EPA) maintain an online catalogue of state and local building performance standards, and the need to avoid adding unnecessary and costly regulations that impede construction. She also highlighted the need for coordinated efforts between state and federal government to address the declining availability of property and casualty insurance and stressed the limited role commercial/multifamily lenders can realistically assume in any resiliency efforts as it pertains to tenant protections.
-What’s next: MBA will continue to work with members, the Biden Administration, Congress, and industry stakeholders on safe and responsible policies that increase affordable housing and homeownership options for all households. MBA and other industry stakeholders have met with the Biden Administration numerous times over the last several months on the topic of affordable housing – both single- and multifamily – and will keep members updated on any new developments.

For more information, please contact Bill Killmer at (202) 557-2736 or Mike Flood at (202) 557-2745.

2. MBA Highlights Concerns in Comment Letter to S&P on Proposed Revisions to Insurer Capital Adequacy Methodology

On Friday, MBA submitted a letter on S&P’s Request for Comment on its proposed revisions to Insurer Risk-Based Capital (RBC) Adequacy – Methodology and Assumptions (the “Proposal”). The Proposal contains changes that will supersede 10 different criteria articles that S&P uses to assess insurers’ capital adequacy, including the methodology for assessing capital charges on commercial loans held by insurance companies.

-Why it matters: The Proposal significantly increases the capital charges for commercial mortgage loans used in S&P rating criteria and could decrease or eliminate life insurance company commercial lending activity at a time when other lending sources have pulled out of the market.
-What’s next: MBA will monitor developments closely and communicate any relevant updates to members.

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

3. MBA Provides List of Tax Abatement Programs for Multifamily Housing

MBA last week published a list of state and local tax abatement programs that can benefit developers of multifamily housing.

-Why it matters: Tax abatement programs can be used by state or local governments to provide a financial incentive for developers of multifamily rental housing. These often only apply to rents affordable to certain income levels or are developed or rehabilitated in certain areas.
-What’s next: MBA will continue to update this resource as additional programs are identified and is working on a mapping tool to provide additional access to this resource.

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

4. Fed Vice Chair Barr Calls for Tougher Capital Rules

On Monday, Federal Reserve Vice Chair for Supervision Michael Barr gave a speech at the Bipartisan Policy Center on the forthcoming interagency proposed changes to bank capital requirements for banks with assets of $100 billion or more. Barr gave an update of his “holistic review” of the impending new proposal for capital standards for large banks and the next steps for updating those standards. Barr said that the proposed changes to increase capital requirements overall for the largest banks will be open to the public and take several years to implement. However, no details were shared on the exact timing of a rulemaking process.

-Why it matters: Barr said that the proposal will adopt the “Basel III Endgame” and that all banks with at least $100 billion in assets will have to account for unrealized gains and losses in available-for-sale securities. He also noted that the existing regime for stress testing is sound but needs some improvement to include a review of global market shock and operational risk.
-What’s next: MBA will follow the rulemaking process closely and report all relevant information to members.

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

5. 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.

For more information, please contact William Kooper at (202) 557-2737.

6. 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 webinars – which are complimentary to MBA members:

-Office Doldrums: Challenges, Opportunities, and Nuances – July 24
-How to Leverage ChatGPT and Other Generative AI Platforms to Safely Improve Borrower Experiences – July 27
-Budgeting and Financial Planning for Non-Believers – August 22
-C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 23

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

For more information, please contact David Upbin at (202) 557-2931.