CREF Policy Update: May 11, 2023

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

MBA Leads Coalition Letter in Support of Draft Legislation to Improve FHA Multifamily Lending

Last Tuesday, MBA led a coalition letter of real estate trade groups in a letter sent to Senator Bob Menendez (D-NJ) in support of his draft legislation to increase the statutory caps on Federal Housing Administration (FHA) multifamily loans.

• Why it matters: The statutory limits, which have not been adjusted since 2003, are pegged significantly below current multifamily construction costs and pose an unintentional regulatory barrier to the supply of affordable rental housing.
• What’s next: MBA staff will continue our work to help create bipartisan support for the Menendez bill upon its introduction.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866.

House and Senate Committees Hold Hearings on the National Flood Insurance Program

The House Financial Services Subcommittee on Housing and Insurance and the Senate Banking Committee recently held hearings on the need for reauthorization of the National Flood Insurance Program (NFIP). A summary of the hearings can be found here.

• Why it matters: Congress has extended the NFIP 25 times since 2017. The latest extension will expire on September 30, 2023.
• What’s next: It is unlikely that Congress will reach consensus on how to reform the NFIP in Fiscal Year 2023, setting up the need for another extension for Fiscal Year 2024.

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

New York Budget Enacted Without Action on a Housing Plan

Last week, following months of negotiations on the 2023-2024 state budget, New York Governor Kathy Hochul and legislative leaders agreed on a new fiscal plan. Unfortunately, no compromise was achieved on competing proposals to address New York’s housing supply and affordability needs. MBA-supported policies proposed by the Governor, such as commercial-to-residential building conversions or an extension of the 421-a tax incentive, received no action. In a positive development, however, the final budget excluded a plan for taxing mezzanine debt and preferred equity investment, as well as language related to “good cause” eviction.

• Why it matters: Enactment of a state budget does not conclude the legislative year. Lawmakers will continue their work through at least mid-June, and important initiatives, including proposals on good cause eviction and rent control, have been or may be considered in separate bills.
• What’s next: MBA will continue to work with the New York MBA to monitor the progress of legislation in Albany and will coordinate any appropriate response to developments with all allied industry partners.

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

Federal Reserve Announces Tenth 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 5.00-5.25% last Wednesday.

• Why it matters: The Fed’s short-term rate hike marks the tenth consecutive increase since March 2022, with the Fed noting that they “will continue to monitor the implications of incoming information for the economic outlook” and “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” in regards to future monetary policy decisions.
• MBA’s SVP and Chief Economist Mike Fratantoni noted, “We expect that the Fed will be ‘data dependent,’ and certainly would react to any renewed increase in inflation, but today’s statement is consistent with a plan to pause rates at this level. Inflation is likely to trend down over the course of the year, particularly as weakness in the rental market begins to be reflected in the inflation numbers. In the near term, tighter credit conditions will slow the pace of economic activity. The housing sector is already operating under tight credit, so we don’t expect this headwind to outweigh the benefits from somewhat lower mortgage rates. The housing market is likely pulling the economy out of this slowdown, as it typically does.”

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

Rent Control Map and State Trackers

• On March 29, MBA became a founding member of the Housing Solutions Coalition, a group of real estate trade associations formed 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. It will 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

• 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, 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 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:

• Credit Scores – What the FHFA Announcement Means for the Mortgage Ecosystem – May 1
• MSR Transfers: Balancing Risk, Customer Experience and Efficiency – May 11
• Managing Opportunity and Risk in Volatile Economic Conditions – May 16
• Leveraging AI, Blockchain & New Technologies in Today’s Challenging Environment – May 17
• Explore Build-to-Rent Advantages, Trends & Opportunities – May 18
• MSR Transfers: Balancing Risk, Customer Experience and Efficiency – June 15
• Office Doldrums: Challenges, Opportunities, and Nuances – July 26

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.