CREF Policy Update Oct. 26

On Tuesday, the Federal Reserve Board, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. released a final rulemaking to reform and align each agency’s Community Reinvestment Act (CRA) framework that depository banks must comply with.

The final rule makes certain changes from the proposed rule, which help to better achieve some of the Agencies’ goals of ensuring that regulations continue to reflect the original intent of the statute, especially in light of significant changes in the banking industry over the last few years.

These changes are fully applicable to large banks (asset size of $2 billion and above) and partially applicable to intermediate banks (asset sizes between $600 million and $2 billion). Small banks (asset sizes of less than $600 million) will continue to be evaluated under the current CRA framework but may choose to opt into the application of the new rules. 

Why it matters: Last year, MBA expressed support for the objectives to update the regulatory framework implementing the CRA and offered recommendations to ensure that the final rule achieves the intended goals of the statute without resulting in unnecessary burdens for the banks that have to implement them. The final rule includes several of MBA’s recommendations, including to increase the threshold for delineating additional assessment areas, revising the weightings assigned to the overall Retail Lending and Community Development tests, maintaining full CRA credit for LIHTC investment, and recognizing Special Purpose Credit Programs in a bank’s CRA rating. The final rule also extends the implementation timeline as requested by MBA, with the first applicability date not until January 2026.

What’s next: MBA is reviewing the nearly 1,500-page final rule and will provide a detailed summary in the coming days. 

For more information, contact Fran Mordi at (202) 557-2860 or Stephanie Milner at (202) 557-2747.

Senate Votes to Overturn CFPB Small Business Lending Reporting Rule

Last Wednesday, the Senate voted 53-44 to overturn the Consumer Financial Protection Bureau’s (CFPB) 1071 Small Business Reporting Rule. Senator John Kennedy (R-LA) sponsored the bill (S.J. Resolution 32) under the Congressional Review Act.

Why it matters: In August, MBA sent a joint letter to the CFPB requesting it to pause the 1071 Small Business Reporting Rule’s effective date and tiered implementation dates until all legal challenges against the CFPB are resolved. The 1071 small business reporting rule requires some MBA members to collect and report data on commercial real estate loans. MBA’s comments in response to the CFPB’s proposed rule argued that the rule should only apply to small business lending and exempt most commercial and multifamily real estate loans. 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. The latest filing instructions for 1071 reporting can be found here.

What’s next: The bill now moves to a full House vote, where if passed, President Joe Biden has threatened to veto it.

For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.

FHFA to Host Property Insurance Symposium Series

Last Monday, the Federal Housing Finance Agency (FHFA) announced at MBA’s 2023 Annual Convention and Expo that it will host a series of property insurance symposiums starting in November 2023. These sessions will give FHFA the opportunity to engage with the industry on the availability and affordability of property insurance. The first symposium will take place on November 14 and 15, 2023, and will focus on how to address the insurance needs of the market.

Why it matters: Insurance premiums have risen for 20 straight quarters due to increased risk from natural disasters. Finding adequate insurance coverage is increasingly difficult and has affected homeowners, commercial owner/operators, and lenders.

What’s next: MBA will aim to participate in these forums and share all relevant information with members.

For more information, please contact Stephanie Milner at (202) 557-2747.

MBA Forecast: Commercial/Multifamily Lending Expected to Fall 46 Percent to $442 Billion in 2023

Total commercial and multifamily mortgage borrowing and lending is expected to fall to $442 billion this year, which is a 46 percent decline from 2022’s total of $816 billion. This is according to an updated baseline forecast released yesterday by MBA.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research said, “The logjam in the commercial real estate markets that began last summer has remained firmly in place. Questions about supply and demand dynamics for some properties, the rise and volatility in interest rates, and the low number of transactions and coinciding lack of price discovery have all contributed to a marked decline in demand for new mortgages. Unfortunately, those and other factors will likely continue to exert downward pressure on borrowing and lending volumes in the coming quarters.”

To download the forecast, click here.

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

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:

Using Data Analysis as Part of a Strong Fair Lending Compliance Program – October 24

Strategies for Serving Millennial and Gen Z Homebuyers – November 2

CREF Career Conversations – November 9

Avoiding TCPA Class Actions and Do Not Call Complaints – November 9

Adopting Best Practices for Prefunding QA and Post-Close QC – November 14

Originating and Succeeding with High-Net-Worth Borrowers – November 29

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.