CREF Policy Update April 25: MBA, Coalition Responds to HUD’s RFI on Build America, Buy America

MBA, Coalition Responds to HUD’s RFI on Build America, Buy America

Last Monday, MBA joined the National Association of Home Builders and others in a joint letter to HUD on its Request for Information (RFI) regarding the implementation of the Build America, Buy America Act (BABA) as it applies to HUD’s housing programs using federal financial assistance.

• The RFI requested specific information on construction materials sourcing, supply issues, and where certain materials used in housing development are manufactured.

Go deeper: The coalition letter stressed the significant challenges housing developers face with rising construction costs and the negative outcomes that can result from applying domestic-only sourcing requirements to HUD’s affordable housing programs.

• The coalition urged HUD to postpone the implementation of BABA for at least a year and to conduct a thorough impact assessment of its impact on affordable housing supply.

What’s next: MBA will update members on any further developments related to this issue.

For more information, please contact Stephanie Milner at (202) 557-2747 or Megan Booth at (202) 557-2740.

HUD Increases Wind/Named Storm Deductible for New and Existing Properties

Last Wednesday, the Department of Housing and Urban Development (HUD) announced an increase to the maximum allowable deductible for the Federal Housing Administration’s (FHA) multifamily mortgage program, a move for which MBA has advocated for nearly two years.

• The updated policy permits deductibles up to the greater of $50,000 or 5% of the insurable value per location, up to a maximum amount of $475,000 per occurrence.

One big thing: HUD’s initial announcement only applied to new projects that have not yet received final endorsement. However, following immediate calls by MBA to apply the changes to existing properties, HUD clarified in a memo this morning that the changes are for both new and existing properties.

What they’re saying: MBA’s President and CEO Bob Broeksmit, CMB, in a press statement said, “Increasing the maximum deductible level on new deals is a good start that will help reduce financing costs and make it easier for borrowers to obtain adequate insurance coverage.”

Why it matters: Given the high costs of insurance, HUD’s deductible was often unattainable and/or expensive. Increasing the deductible will help to make rental housing development more feasible.

What’s next: MBA will continue to advocate for flexibility when it comes to property insurance as the markets adapt to new weather conditions.

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

Delinquency Rates for Commercial Properties Flat in First Quarter of 2024

Delinquency rates for mortgages backed by commercial properties were unchanged during the first quarter of 2024, but loans backed by office properties continued to see a rise in delinquencies. This is according to the MBA’s latest commercial real estate finance (CREF) Loan Performance Survey, released last week.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research noted, “While overall delinquencies remained flat, the delinquency rate for loans backed by office properties rose again during the first three months of this year. Loans across property types are adjusting to higher interest rates and uncertainty about property values, but the continued fog around the impact of hybrid work adds another challenge for office properties and their loans.”

Woodwell added, With 20% of the $4.7 trillion of outstanding commercial mortgage debt maturing this year, each of those factors will play a part in determining which loans may face challenges and which may not.”

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

Acting HUD Secretary Todman and FHFA Director Thompson Testify Before Senate Banking Panel

Last Thursday, Acting HUD Secretary Adrienne Todman and Federal Housing Finance Agency (FHFA) Director Sandra Thompson testified as witnesses at a housing regulator oversight hearing of the full Senate Banking Committee.

• Among other items, their statements and responses to Senators’ questions covered: the prospect of expanding opportunities for homeownership and affordable rental housingbuilding climate resilient communities, ending discrimination in housing, HUD’s Fair Market Rents, the conservatorship of the GSEs, incentivizing credit risk transfer at the Fannie Mae and Freddie Mac (the GSEs), FHFA’s Title Insurance Pilot Program, institutional investors purchasing affordable housing, Loan-Level Pricing Adjustment (LLPA) matrix changes, property insurance costs and availability, manufactured housing issues, and the activities and regulation of the eleven Federal Home Loan Banks.
• A full summary of the hearing can be found here.

Why it matters: The Senate Banking Committee is rumored to be scheduling a “mark-up” of various housing-related bills in the near future.  The hearing testimony from both these key regulators earlier this week could potentially impact the bills Senators may offer for consideration.

Go deeper: Senator Bill Hagerty (R-TN) noted that Director Thompson had stated that lifting the GSEs out of conservatorship would require the building of capital through retained earnings and congressional action. Senator Hagerty also affirmed his belief that former FHFA Director Mark Calabria’s work “needs to be continued,” and that the enterprises should be returned to the private markets.

• Senator Katie Britt (R-AL) and Thompson discussed that FHFA’s recently-announced Title Insurance Pilot Program has not yet been operationalized and would have limited applicability. Senator Britt stated her firm belief that FHFA should ask for public notice and comment on the proposal before implementing the title pilot. Senator Thom Tillis (R-NC) said Congress may need to consider re-tailoring FHFA’s regulatory authorities regarding required notice-and-comment procedures given last year’s revised LLPA rollout – and the resulting congressional debate.

What’s next: MBA will continue to monitor further information that HUD and FHFA are asked to provide publicly as a result of Senators’ questions at the hearing.

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

MBA Shares Views on Pertinent Bills at Extensive House Financial Services Committee Markup

Last Wednesday, the full House Financial Services Committee (HFSC) considered and advanced 13 bills during an extensive legislative “markup.”

• Included among the full group of measures discussed were several Congressional Review Act (CRA) resolutions to disapprove specific regulatory actions, as well as several bills related to housing, financial innovation, and bank capital standards.

Why it matters: MBA shared a letter in advance of the markup with all HFSC member offices to reveal our specific industry views regarding: (1) a CRA resolution to disapprove the Financial Stability Oversight Council’s (FSOC) rule regarding the designation of nonbank financial entities as Systemically Important Financial Institutions (SIFIs); (2) one bill impacting the protection of insurance-related data; and, (3) another bill that corrects a CARES Act drafting error regarding eviction notice requirements for federally-assisted or federally-backed housing.

Go deeper: All three of the MBA-supported bills were cleared by the panel. Find additional details here. Examine a joint industry letter signed by MBA and other trade groups in support of the FSOC rule related CRA resolution here.

What’s next: MBA will continue to weigh in on – and seek to advance – our industry’s priority policies in the few remaining HFSC markups expected to be held before the end of the 118th Congress.

For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.

Key House Energy & Commerce Subcommittee Debates Data Privacy

Last Wednesday, the House Energy & Commerce Committee’s Innovation, Data, and Commerce Subcommittee held a hearing titled, “Legislative Solutions to Protect Kids Online and Ensure Americans’ Data Privacy Rights.”

• Both Full Energy and Commerce Chair Cathy McMorris-Rodgers (R-WA) and Ranking Member Frank Pallone (D-NJ) spoke in favor of the data privacy bill known as the American Privacy Rights Act (APRA)The APRA would establish a comprehensive framework for a national data privacy standard designed to protect consumer data privacy and security and create new requirements for covered entities.

Why it matters: MBA has identified several problems with the bill’s current text, including 1) an incomplete carveout of Gramm-Leach-Bliley Act (GLBA) covered entities; 2) an exemption from federal preemption for certain provisions contained within specific state privacy laws; 3) the proposal’s private right of action provision; and 4) the proposal’s provision allowing for a request to substitute manual underwriting as an alternative to an evaluation by algorithm for “consequential decisions.”

Go deeper: The U.S. Chamber of Commerce sent a letter to subcommittee leaders before the hearing outlining the proposal’s major drawbacks.

What’s next: Though chances for enactment of major federal data privacy legislation are slim this Congress, MBA will work with its members and industry trade association partners to enumerate our positions on APRA before any full Energy and Commerce Committee (or subcommittee) “mark-up” of the bill (deemed likely in a few weeks).

For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.

FHFA Releases 2023 Housing Mission Report

On Wednesday, FHFA released a progress report detailing the GSEs’ mission activities for 2023 related to financing affordable housing, supporting equitable access to housing, and promoting “resident centered practices” or tenant protections.

• The report includes a few key highlights related to rental housing, including the GSEs’ partnership with vendors to collect rental payment history to help build renter credit scores, investment in Low-Income Housing Tax Credits, and financing of transactions in underserved rural communities.

Go deeper: The progress report notes that in 2023, 73.9% of Fannie Mae’s 2023 business was mission-driven and 65.9% of Freddie Mac’s 2023 business was mission-driven (compared to 67.9% and 68.9%, respectively, in 2022).

• The report also mentions FHFA’s Request for Input released last year on tenant protections and states that “in 2024, FHFA will evaluate a range of policy solutions and identify foreseeable market, industry, and risk impacts of any policy changes.”

What’s next: MBA will continue to monitor reports from FHFA and communicate all relevant information to members.

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

New York Policymakers Reach Landmark Agreement on Housing Issues; Replacement and Extension Included for 421a Tax Incentive Program

Last week, legislative leaders in Albany reached a conceptual agreement with New York Governor Kathy Hochul on several issues related to housing affordability. With negotiations continuing through the week, the budget bills related to housing issues, when in print, are expected to include:

• A replacement for the MBA-supported 421a tax incentive program as well as a six-year extension for existing projects that have been affected since the program expired in 2022.
• A version of “good cause” eviction less robust than in stand-alone legislation MBA has opposed.

Go deeper: Reports indicate that the new 485x program will provide up to a 40-year property tax exemption in exchange for a larger share of units being designated as affordable housing in each property and new higher minimum wage levels and other benefits for construction workers employed on certain projects. The new good cause tenant protections are reported to limit the scope of policy by:

• Requiring local communities to opt in to the program.
• Adding a number of new exemptions not in the original, such as exemptions for newly constructed residential buildings (built in the last 30 years), owner-occupied buildings with eight units or less, landlords with a portfolio of 10 units or less, and apartments priced at 200% of federal fair market rent.
• Increasing the caps on permissible rent increases

Among other provisions, the budget is also expected to include: $500 million in state funding to develop 15,000 units on state-owned sites such as former prisons; flexibility to increase rents if tied to apartment improvements; and a plan to eliminate certain caps on the density of residential properties in order for landlords to convert office buildings to residential apartments.

Why it matters: MBA and the New York MBA supported the effort to restore the 421a program and other affordable housing measures and have opposed good cause eviction, as highlighted in letters to the Governor Hochul and legislative leaders earlier this year.

What’s next: With the State Legislature likely to continue its session through mid-June, both MBA and the NYMBA will continue to work together to advocate for industry priorities.

For more information, please contact William Kooper (202) 557-2737.

Get Involved in MAA Action Week: April 29-May 3!

MBA’s annual Mortgage Action Alliance (MAA) Action Week is arriving soon, April 29-May 3! Sign up today and promote the importance of advocacy within your company or organization. This industry-wide campaign allows ALL of us to take part and engage in the legislative and regulatory process on issues that directly impact real estate finance professionals. Membership in MAA can make a difference in how YOU and your company drive positive change by adding your voice to our collective efforts.

Why it matters: Advocacy happens 365 days a year. Through regular contact with your lawmakers and their staff members via MAA Calls to Action and other sustained “grasstops” efforts, you can establish yourself as a “go-to” constituent for our industry.

What’s next: Save the date for MAA’s Quarterly Webinar Series hosted by the Legislative & Political Affairs team on Thursday, May 2, at 2:00 PM ET. Hear key policy updates – along with case studies describing how the MBA staff is advocating on behalf of our association’s members to help achieve pro-industry outcomes. More information will be shared in the coming weeks.

For more information, please contact Jamey Lynch, AMP at (202) 557-2818 or Erin Reilly at (202) 557-2751.

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:

Minimizing Risks with GSE Borrower Verifications – April 24
Responding to Cybersecurity Incidents – A Live Demo – April 30
Basics of Commercial Loan Closing and Loan Documentation – May 9
Using Data and Technology to Connect with Today’s Buyers to Increase Homeownership – May 14
Rethink Everything: You “Know” To Be a Next Gen Loan Officer – A Deeper Dive with the Writers & Experts Webinar Series: Show Up on Video – May 14

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

For any questions, please contact David Upbin at (202) 557-2931.