MBA CREF Policy Update April 6, 2023

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

Registration remains open for MBA’s National Advocacy Conference (NAC) to be held on April 18 and 19 in Washington, D.C. Attending this critical event allows you to connect directly with elected officials in our nation’s capital. Register today. 

Join the 380+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting minority homeownership; affordable rental housing; and company diversity, equity, and inclusion.   

CFPB Releases Final Rule on Small Business Loan Reporting

The Consumer Financial Protection Bureau (CFPB) today released its small business loan reporting final rule that implements Section 1071 of the Dodd-Frank Act. The final rule will require some MBA members to collect and report data on commercial real estate loans. MBA’s comments in response to CFPB’s proposed rule argued that the rule should only apply to small business lending and exempt most commercial and multifamily real estate loans. In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “While we are pleased that loans reportable under the Home Mortgage Disclosure Act will not need to be reported under the Bureau’s final rule, it is disappointing that this exclusion is not applied to all investment property lending. MBA agrees with federal regulatory agencies’ long-held view that lending to finance income-producing properties is not small business lending.”

• Lenders that originate at least 2,500 small business loans annually must collect data starting October 1, 2024. Lenders that originate at least 500 loans annually must collect data starting April 1, 2025. Lenders that originate at least 100 loans annually must collect data starting January 1, 2026.

• MBA analyzing the final rule and its implications on some MBA members and will release a more detailed summary and analysis shortly.

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

MBA Letter Highlights Concerns Regarding Proposed SEC Conflicts Of Interest Rule

MBA recently submitted a letter to the Securities and Exchange Commission (SEC or The Commission) in response to their Proposed Rule to Prohibit Conflicts of Interest in Certain Securitizations. The Proposed Rule would implement Section 27B the Securities Act and generally provides, with some exceptions, that a securitization participant of an asset-backed security cannot engage in any transaction that would result in a material conflict of interest with respect to any investor in such transaction. The Proposed Rule, as written, is overly broad and could inadvertently prevent normal course of business transactions for both commercial and residential members. The letter highlights concerns such as ensuring that servicers, special servicers, and B piece buyers are not considered “sponsors”, that Mortgage Insurance-linked Notes (MILNs) and Credit Risk Transfer (CRT) transactions are not considered conflicted transactions, and that MILNs are not considered synthetic asset-backed securities under the rule.

• While MBA appreciates the need for the Commission to prevent transactions that present material conflicts of interest between certain securitization participants and investors, it is important that a final rule does not stifle the efficiency of our securitization market and the crucial role it serves in providing liquidity or prevent various market participants from effectively managing risk.
• MBA will continue its engagement with the SEC and monitor developments as the rule moves towards finalization. MBA may also connect with other trades to submit subsequent follow up letters to further stress concerns.

For more information, please contact Sasha Hewlett at (202) 557-2805.

MBA, Industry Trades Form Housing Solutions Coalition to Provide Alternatives to Rent Control

Last Wednesday, MBA, the National Apartment Association (NAA), the National Association of Home Builders (NAHB), the National Association of Realtors (NAR), and the National Multifamily Housing Council (NMHC) established the Housing Solutions Coalition to address the increased occurrence of rent control initiatives that are sweeping across the country. The Coalition will work together to fight rent control initiatives through coordination with local affiliates and state associations.

• Rent control is a failed housing policy that limits housing supply and harms both the large-scale and small-scale housing market broadly.The Coalition will provide tools, infrastructure and leverage resources to develop campaigns to push back and offer proven, effective alternative solutions on rent control policies and proposals where they arise. It will also serve as a clearinghouse to organize efforts to oppose rent control initiatives, working together on policies and solutions that lead to the creation and preservation of more affordable housing for Americans.
• For more information on this very important issue, visit www.HousingSolutionsCoalition.org, which will become a clearinghouse and resource center for the Coalition’s ongoing efforts.

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

Federal Banking Regulators Testify Before Congress about Recent Bank Failures

Last week, the Senate Banking and House Financial Services Committees each held hearings to examine the recent failures of Silicon Valley Bank (SVB) and Signature Bank. The discussion featured testimony from several of the nation’s top financial regulators — including Federal Reserve Vice Chair for Supervision Michael Barr, Federal Deposit Insurance Corporation (FDIC) Chair Martin Gruenberg, and Treasury Department Undersecretary for Domestic Finance Nellie Liang.

• Why it Matters: Lawmakers probed the witnesses on topics ranging from the root cause of the failure of these banks, the ensuing response from regulators, bank risk management practices, interest rate risk impacts on non-banks, and whether regulators failed in their supervisory roles. A detailed summary of both hearings can be found here.

• What’s Next: Additional hearings with state regulators and bank executives are possible. MBA continues to ensure that policymakers learn the right lessons from these events by sifting through the political noise, gathering reliable intelligence and data, and advocating for appropriately tailored policy responses.

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

Real Estate Coalition Weighs in On Debt Limit
Last week, a group of fourteen commercial, multifamily, and residential real estate groups (including MBA) sent a letter to congressional leaders urging the White House and Congress to work together to raise the statutory debt limit as soon as possible. After meeting in person in February, President Biden and House Speaker Kevin McCarthy (R-CA) this week exchanged letters framing the key issues for discussion should debt ceiling negotiations begin in earnest (in coming weeks) on this highly charged topic.

• Why it matters: Given the more than $10.3 trillion in outstanding mortgage debt backed by the federal government through the GSEs, Ginnie Mae, and other federal agencies, the housing and real estate markets are particularly susceptible to an instability stemming from concern about the U.S. meeting its financial obligations.
• What’s next: Treasury Secretary Janet Yellen has notified Congress that extraordinary measures to meet the country’s debt obligations will likely be exhausted by June. MBA will continue to closely monitor this critical debate as budget, appropriations, and debt limit discussions between the White House and Congress start to take shape.

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

CFPB Says TILA Does Not Preempt State Disclosure Laws on Commercial Lending

On Tuesday, CFPB issued a determination that states with laws covering lending to business in California, New York, Utah, and Virginia are not exempted by the Truth in Lending Act (TILA).

·       Why it matters: After analyzing comments from MBA and others, CFPB determined that TILA has no application to business-to-business commercial transactions, and a decision that TILA preempts any state law governing commercial transactions would run completely contrary to its stated purpose. If the CFPB determined TILA applied to business-to-business transactions, commercial and multifamily lenders would have been required to comply with TILA, a consumer law, and submit disclosures to the CFPB.

• MBA will follow developments on this issue and others pertaining to the CFPB.

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

MBA Issues MAA Call to Action to Oppose the Implementation of Rent Control in Colorado

MBA’s Mortgage Action Alliance (MAA) issued a Call to Action last week that urges Colorado MAA members to halt HB23-1115. The bill, which is opposed by the Colorado Mortgage Lenders Association, would remove Colorado’s statewide preemption of local rent control and create a patchwork of harmful and confusing local rent control laws in the state.

• Why it matters: Research based on real-life examples, along with an overwhelming majority of economists, has concluded that rent control decreases housing affordability and creates negative spillover to the surrounding neighborhood. HB23-1115 would remove incentives to develop new affordable housing units, leading to higher housing costs in Colorado’s rental housing market and causing undue harm to renters and the entire real estate finance industry in general – and especially multifamily mortgage lenders. Moreover, if HB23-1115 succeeds, it is certain to be emulated by other states.
• What’s next: HB23-1115 is currently pending before the Senate Local Government and Housing Committee, where it would be considered before advancing to the Senate floor.To truly tackle housing affordability in Colorado, lawmakers should instead support efforts to increase the supply of affordable housing through public-private partnerships and reform of burdensome local zoning laws and complex application processes. Colorado MAA members need to contact their state senators today and urge them to oppose this bill before it is considered on the Senate floor.

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

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

Register Today: MBA’s National Advocacy Conference – April 18-19

Registration remains open for MBA’s National Advocacy Conference (NAC) held on April 18-19 in Washington, D.C. Attending this critical event will allow you to connect directly with elected officials in our nation’s capital. Your story matters – share it with key policymakers as they consider legislation that affects our industry.

• Why it matters: The NAC gives you the opportunity to share your member company’s narrative with key congressional staff and elected officials – while networking with your industry colleagues.
• What’s next: Share your experiences, your voice, and your passion for our industry April 18-19! As in the past, there is a tailored CREF track for our commercial/multifamily members. Register for yourself – and encourage your colleagues to attend – today at mba.org/nac.

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

Upcoming and Recent 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 and recent webinars – which are complimentary to MBA members:

• Warehouse Lending: Latest Activity, Trends and Developments – April 12
• Multifamily Finance Faces Headwinds Head-On – April 18
• Turn Distressed Mortgage Loans into Performing Portfolios Faster – April 20
• ROI Guide to Risk & QC Technology – April 25
• What Trends will Shape the Lending Space in the Second Half of 2023 – June 1

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

For any questions, contact David Upbin at Dupbin@mba.org or 202-557-2931.