CREF Policy Update: June 22, 2023

  1. House Ways and Means Committee Marks Up Tax Legislation

On June 9, House Ways and Means Committee Chairman Jason Smith (R-MO) unveiled a tax package known as the American Families and Jobs Act. The package includes three bills: the Tax Cuts for Working Families Act, the Small Business Jobs Act, and the Build It in America Act. This legislation was marked up in the Committee on Tuesday. MBA sent a letter outlining the real estate finance industry’s perspective on the legislation and reinforcing our support for enacting housing-related tax provisions – for both renters and homeowners alike – as part of any tax package that may emerge in House/Senate negotiations later this year.

• Why it matters: The Smith package focuses on business tax provisions that have expired or would be scaled down in coming years, e.g., the research & development (R&D) credit, bonus depreciation, and interest expensing. The package does not include any housing provisions but would temporarily increase the standard tax deduction for individuals and married couples. The package is silent with respect to the child tax credit, which Democrats believe to be a crucial element within any end-of-year deal.
• What’s Next: Chairman Smith’s goal was to produce an economic tax package that can garner the vote of every Republican in the House later this summer. This effort is the first step in staging negotiations for: 1) a potential end-of-year tax deal, and 2) the 2025 tax “showdown” when much of the 2017 Tax Cuts and Jobs Act expires and will need to be addressed in some form or fashion.

For more information, please contact Alden Knowlton at (202) 557-2741 or Borden Hoskins at (202) 557-2712.

  1. Secretary Yellen Testifies Before House Financial Services Committee

On Tuesday, Treasury Secretary Janet Yellen testified before the House Financial Services Committee. Her appearance fulfilled her statutory mandate to appear before the Committee to discuss the state of the international financial system. Naturally, several other topics were raised including environmental, social, and governance (ESG) disclosures, bank capital and BASEL III, community development financial institution (CDFI) regulations, treasury bond auctions, and the national debt. A complete summary of the hearing can be found here.

• Why it matters: The hearing is an opportunity for Congress to raise concerns and issues regarding the Treasury Department’s vast jurisdiction.
• What’s next: Secretary Yellen has yet to appear before the Senate Banking Committee to fulfill her full congressional reporting mandate. MBA will work with Congress to ensure relevant topics are potentially raised during her next appearance.

For more information, please contact Alden Knowlton at (202) 557-2741 or Borden Hoskins at (202) 557-2712.

  1. HUD Eliminates Cap for LIHTC Pilot

On Monday, the Department of Housing and Urban Development (HUD) issued a memorandum lifting the $25 million cap on loans in the new low-income housing tax credit (LIHTC) pilot program. The pilot, started in 2019, provides streamlined processing for LIHTC transactions under the new construction and substantial rehabilitation HUD Section 221(d)(4) and Section 220 programs.

• Why it matters: MBA had advocated for the removal of the cap to help incentivize more borrowers and lenders to use the program and produce more housing.
• What’s next: MBA will continue to advocate to ease administrative burdens in the program to make it easier for borrowers to apply and increase the supply of affordable housing.

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

  1. Biden Administration Publishes Spring 2023 Regulatory Agenda

On Tuesday, the Biden Administration published the Spring 2023 Unified Agenda of Regulatory and Deregulatory Actions (Agenda). This report outlines the regulatory actions federal administrative agencies plan to issue through the remainder of the year. The rules and proposals published by federal agencies can have significant impacts on lenders and borrowers.

• Why it matters: Topics of interest to MBA CREF members include:
• BASEL III revisions, Advanced Notice of Proposal Rule in June 2023;
• Risk-based Capital (RBC) rules from the Federal Reserve in June 2023;
• Final Community Reinvestment Act (CRA) rule in June 2023;
• Davis-Bacon updates in June 2023;
• FinCEN final rule on Beneficial Ownership in September 2023; and
• SEC climate related disclosures final rule in October 2023.
• What’s next: It is important to note that the dates listed above are their published expectation and federal agencies often miss these targets. MBA will work with members to monitor and respond to proposals put forth by government agencies that impact commercial lending practices.

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

  1. Federal Reserve Maintains Federal Funds Rate

The Federal Reserve, in its ongoing efforts to slow inflation decided to hold the federal funds rate to a target range of 5.00-5.25% on Wednesday.

• Why it matters: The FOMC emphasized that, “holding the target range steady at this meeting allows the Committee to assess additional information and its implications for monetary policy. 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.”
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “Inflation is coming down, but slowly. Multiple indicators suggest the economy here and abroad, will slow significantly in the near term, but the job market continues to appear resilient in the most recent data. With this muddled picture, it is not surprising that the FOMC held rates steady at its June meeting – but kept their options open for July and later this year. Nevertheless, we expect that the Fed is at the top of its rate hiking cycle.”

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

  1. [VIDEO]: mPower Moments: On the Importance of Collaboration with Citizens Bank’s Deb Jones

In this mPower Moments episode, mPower Founder Marcia M. Davies sits down with Deb Jones, CMB, SVP of Capital Markets at Citizens Bank. Jones talks about her career journey in capital markets and how she has seen a significant uptick in women joining and thriving in the sector. During the insightful interview, Jones also discusses the importance of engaging with industry peers to ensure you’re adapting to the latest developments and issues.

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

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

  1. 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.

  1. 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:

• MSR Transfers: Balancing Risk, Customer Experience and Efficiency – June 15
• Expanding Homeownership through a Commitment to DEI – June 21
• How to Leverage Document AI for Unparalleled Efficiency in Loan Production and Loan Servicing – June 27
• Mastering Revenue Metrics of Construction to Permanent Loans – July 18
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.