CREF Policy Update: May 18, 2023

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

Lawmakers Reintroduce Bipartisan, Bicameral Legislation to Enhance and Expand the Low-Income Housing Tax Credit

Last week, Reps. Darin LaHood (R-IL), Suzan DelBene (D-WA), Don Beyer (D-VA), Brad Wenstrup (R-OH), Jimmy Panetta (D-CA), and Claudia Tenney (R-NY), along with Sens. Maria Cantwell (D-WA), Ron Wyden (D-OR), Todd Young (R-IN), and Marsha Blackburn (R-TN) reintroduced the Affordable Housing Credit Improvement Act.

This bipartisan, bicameral legislation would expand and strengthen the Low-Income Housing Tax Credit (LIHTC) to address the nationwide affordable housing shortage. The legislation would enable the construction of more than two million new affordable rental housing units over the next decade, while ensuring the LIHTC program better serves a variety of at-risk and underserved communities.

• Why it Matters: A key issue at MBA’s National Advocacy Conference (NAC), this bill would increase the number of credits allocated to each state, reinstating a 12.5 percent increase that was made in 2018 but expired in 2021. The bill also includes tweaks to account for properties receiving Inflation Reduction Act benefits and to improve data sharing among federal agencies.
• What’s Next: MBA will continue to advocate for housing affordability-related priorities, including LIHTC, to be incorporated in any tax legislation potentially considered by the House and Senate prior to year’s end.

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

MBA Responds to FHFA’s Proposed Amendments to the Enterprise Regulatory Capital Framework
Last Friday, MBA submitted comments to the Federal Housing Finance Agency (FHFA) in response to its Notice of Proposed Rulemaking (NPR) that would amend certain portions of the Enterprise Regulatory Capital Framework (ERCF).

The proposed rule includes modifications of certain provisions of the ERCF related to guarantees on commingled securities, multifamily mortgage exposures secured by properties with government subsidies, derivatives and cleared transactions, and credit scores. MBA was generally supportive of most of the amendments in the proposal. However, the letter expresses concerns regarding changes to representative credit score calculations and encourages FHFA to delay implementation and further analyze the potential impacts. MBA also urged FHFA to evaluate and reconsider two additional portions of the ERCF not included in the proposal that MBA believes are critically important: reducing the risk surcharge on third-party originated loans and the inclusion of a multifamily countercyclical adjustment.

• Why it matters: The capital rule continues to be used as a tool to manage the Enterprises’ risk, which has been evident in recent policy decisions. While the NPR contains important amendments reflecting previous issues highlighted by MBA, such as the risk weighting for comingled securities, it does not directly address longstanding issues such as disparities in Third-Party Origination pricing. Because the rule addresses risk weightings within the ERCF, MBA used this opportunity to reiterate these positions while FHFA considers other proposed amendments.
• What’s next: MBA will remain engaged with FHFA as they review submitted comments and welcomes further discussion on the various elements of the response. MBA will continue to work with FHFA on this and other critically important housing issues.

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

Commercial/Multifamily Borrowing Declines 56 Percent in First-Quarter 2023

Commercial and multifamily mortgage loan originations were 56 percent lower in the first quarter of 2023 compared to a year ago, and decreased 42 percent from the fourth quarter of 2022, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations, released Tuesday.

• Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “While the first quarter is typically the quietest quarter of the year, borrowing and lending backed by commercial and multifamily properties declined in the first quarter to the slowest pace since the first quarter of 2014. Uncertainty and volatility in regard to interest rates and property values, and supply and demand imbalances for some property types, has led to a logjam in commercial real estate sales and financing markets. As loans mature and adjustable-rate loans reset, we should start to get greater insights into where things stand.”
• To view the report, click here.

For more information, please contact Jamie Woodwell at (202) 557-2936.

MBA Forecast: Commercial/Multifamily Lending to Fall 20 Percent in 2023

Total commercial and multifamily mortgage borrowing and lending is expected to fall to $654 billion this year, which is a 20 percent decline from $816 billion in 2022. This is according to an updated baseline forecast released by MBA at its 2023 Commercial/Multifamily Finance Servicing & Technology Conference in Chicago.

• Jamie Woodwell, MBA’s Head of Commercial Real Estate Research, said, “Higher interest rates, uncertainty about property values, and questions about the outlook for the cash flows of some properties led to a slowdown in commercial real estate transactions and financing beginning in the middle of 2022. That slowdown is likely to persist through much of this year as investors, lenders, and others look for greater transparency into the markets. We expect maturing loans to begin to break the logjam and provide greater clarity as this year goes on. However, it may take until 2025 for volumes to get back to previous years’ levels.”

For more information, contact Jamie Woodwell at (202) 557-2936.

MBA Recognizes 17 New Commercial Certified Mortgage Servicer Graduates

Last Wednesday, MBA Education, recognized 17 individuals who earned the Commercial Certified Mortgage Servicer (CCMS®) designation at MBA’s 2023 Commercial/Multifamily Finance Servicing and Technology Conference.

Matt Rocco, MBA 2023 Chairman and President of Colliers Mortgage, said, “The CCMS designation is prestigious and has become increasingly desirable by commercial and multifamily servicing professionals. This year’s record number of graduates join a growing list of those who have set themselves apart by expanding their expertise and taking their career to the next level.”

• Why it matters: Earning the CCMS is the highest professional honor within the commercial real estate finance industry, and the 2023 class is the largest graduating class in program history.
• What’s next: CCMS designees demonstrate high levels of achievement and command respect due to their professional accomplishments, as well as their unparalleled knowledge. Learn more here.

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

[VIDEO] mPower Moments: On Overcoming Adversity with Freddie Mac’s Emily Davies

In this mPower Moments episode, Marcia Davies sits down with her daughter Emily Davies, Account Executive at Freddie Mac. During this inspiring interview, Davies discusses her career journey at Freddie Mac as well as certain obstacles she has faced in her career.

Davies emphasizes the importance of speaking up in uncomfortable situations and how doing so can help you remain authentic to your true self. She also discusses how mentors (including Marcia) have shaped her career and passion to help and elevate others.

• To watch more mPower Moments, click here.

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

MBA Joins Housing Solutions Coalition
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:

• 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.