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MBA CREF Policy Update March 30, 2023

March 23, 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. 

Federal Reserve Announces Ninth Consecutive Rate Hike

The Federal Reserve in its ongoing efforts to slow inflation raised the federal funds rate by another 25 basis points to a target range of 4.75-5.00% last week.

  • Why it matters: This short-term rate hike marks the ninth consecutive increase since March 2022. Additionally, the FOMC anticipates that, “some additional policy firming may be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time.”
  • MBA’s SVP and Chief Economist Mike Fratantoni noted, “Even with the heightened financial market volatility stemming from recent bank failures, the FOMC decided at its March meeting to increase the federal funds target another 25 basis points. However, this was a ‘dovish hike,’ as the commentary and economic projections suggest we may be at or near the peak fed funds rate for this cycle. Inflation is still quite high, but it is slowing. And while the job market is still quite strong, it is weakening, as evidenced by slowing wage growth. Coupled with the advent of much tighter financial conditions after the events of the past couple of weeks, we are anticipating a much slower economy over the next few quarters — which should further bring down inflation per the Fed’s goal.”

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

MISMO Names David Coleman President 

MISMO, the real estate finance industry’s standards organization, named mortgage industry veteran David Coleman as its new president. Coleman has more than 25 years of mortgage industry experience as an IT executive, management consultant, and senior business leader. 

  • Why it matters: With MBA’s stepped-up investment in MISMO, the organization has become an increasingly important vehicle for streamlining operations and facilitating regulatory compliance for mortgage lenders and servicers. The scope of Coleman’s 25-plus year career includes experience as a financial services and consumer and mortgage lending specialist with experience as a senior IT executive and management consultant.
  • What’s next: MISMO will continue to deliver on its mission to reduce costs, increase efficiency, and enhance interoperability across the mortgage finance industry under Coleman’s leadership. He will join MISMO on April 3, 2023.

For more information, contact Jan Davis at (202) 557-2715.

Secretary Yellen Testifies Before Senate Appropriations Committee

Last week, the Senate Appropriations Committee’s Subcommittee on Financial Services and General Government (FSGG) and its counterpart House Appropriations Committee’s FSGG Subcommittee held hearings to examine President Biden’s fiscal year (FY) 2024 budget request. Treasury Secretary Janet Yellen explained the many policies and provisions found within the Biden administration’s funding request for her Department and defended the administration’s response to the recent bank failures. A summary of the hearings can be found here. 

  • Why it matters: Secretary Yellen detailed how the Internal Revenue Service (IRS) will use additional funding it has received and urged Congress to vote to raise the federal debt ceiling. She also stated her openness to new financial regulations, including the potential for the Financial Stability Oversight Council (FSOC) to designate non-bank financial institutions for additional oversight (which would require a notice and comment period).
  • What’s next: Both the Senate Banking and House Financial Services Committees have scheduled oversight hearings next week on the federal regulators’ response to the recent bank failures. 

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

Second Circuit Court of Appeals Finds CFPB Funding Structure Is Constitutional

Last week the U.S. Second Circuit Court of Appeals found that the Consumer Financial Protection Bureau’s funding structure is constitutional. This case revolves around a law firm challenging the Bureau’s ability to enforce an administrative subpoena on the grounds that the Bureau’s funding structure is unconstitutional. The Court sided with the Bureau finding that the funding structure did not violate the Appropriations Clause because it was authorized by Congress and bound by specific statutory provisions. The Court specifically rejected the Fifth Circuit’s decision in Community Financial Services Association of America, Ltd. v. CFPB, finding no constitutional violation, as the Bureau’s funding mechanism was directed by Congress and specific in how and where the funds were to be drawn. 

  • Why it matters: This decision creates a Circuit Court split on the constitutionality of the Bureau’s funding. The issue of the constitutionality of the Bureau funding is already before the Supreme Court due to the Fifth Circuit decision and will be heard next term. 
  • What’s next: MBA will continue to monitor this litigation around the Bureau’s constitutionality and keep members informed of any updates.

For more information, contact Justin Wiseman at 202-557-2854 or Alisha Sears at 202-557-2930.

HUD Restores “Discriminatory Effects” Rule

The Department of Housing and Urban Development announced a final rule rescinding the Department’s 2020 rule governing Fair Housing Act disparate impact claims and restoring the 2013 discriminatory effects rule. HUD released the following fact sheet to support its decision. MBA expressed support for the 2020 rule change, along with other trade organizations, as the Supreme Court’s landmark case on disparate impact, Texas Department of Housing and Community Affairs vs. Inclusive Communities, was decided in 2015 and contains important “safeguards” around the application of the disparate impact theory.

  • Why it matters: The final rule will go into effect 30 days after it is published in the Federal Register. Due to a preliminary injunction staying the implementation of the 2020 Rule in Massachusetts Fair Housing Center v. HUD, the 2020 Rule never went into effect, and the 2013 Rule – which has been in place for nearly a decade – has been and is currently still in effect. Accordingly, regulated entities that were complying with the 2013 Rule have no need to change any practices they have in place to comply with this rule.
  • What’s next: MBA will continue to monitor the rule change and any associated developments. 

For more information, contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.

Commercial and Multifamily Mortgage Debt Outstanding Increased By $324 Billion in Fourth-Quarter 2022

The level of commercial/multifamily mortgage debt outstanding at the end of 2022 was $324 billion (7.7 percent) higher than at the end of 2021, according to the Mortgage Bankers Association’s (MBA) latest Commercial/Multifamily Mortgage Debt Outstanding quarterly report, released Tuesday. 

  • Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “Commercial and multifamily mortgage debt outstanding grew at another strong clip in 2022. The rate of growth was the second largest since 2007 – just below 2021’s pace. Among capital sources, depositories led the growth, increasing their holdings of commercial and multifamily mortgages by 12 percent. Additionally, growth in multifamily mortgage balances accounted for almost half of the annual increase.”
  • To view the report, 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.  
  • The 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.

  1. Upcoming MBA Education Webinars on Critical Industry Issues
  • Meet the Homeseeker: 2023’s Most Important Borrower – March 30
  • Deciphering ESG in Affordable Multifamily Lending – March 30
  • Warehouse Lending: Latest Activity, Trends and Developments – April 12
  • Multifamily Finance Faces Headwinds Head-On – April 18
  • 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 more information, please contact David Upbin at (202) 557-2931.

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