CREF Policy Update May 2: HUD Increases Floodplain Management Standards

HUD Increases Floodplain Management Standards

Last week, the Department of Housing and Urban Development (HUD) published its final rule on Minimum Property Standards for FHA-insured properties.

• The new policy expands the floodplain of concern, requiring most properties located within it to elevate residential living space by an additional two feet to the base flood elevation (the 100-year, or 1-percent-annual-chance flood elevation) for non-critical actions and by adding an additional three feet to the base flood elevation for critical actions.

Why it matters: While MBA and its members support efforts to combat climate change, the costs associated with this rule will result in a reduction of in housing construction – especially affordable housing. MBA had urged HUD to reconsider the rule during the proposed rule stage. A summary of the final rule is available here.

What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “At a time when housing markets across the country continue to suffer from weakening affordability, supply shortages, and rising property insurance costs, we are disappointed that several aspects of the final rule will slow housing production and ultimately increase costs for homeowners, renters, and builders.”

What’s next: The effective date for most properties is January 1, 2025. MBA will continue to work with HUD to limit the impact of these new regulations.

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

HUD Increases Building Standards for New Construction

Last Thursday, HUD published its final rule on Energy Efficiency Building Standards. The new rule will require any new construction with Federal Housing Administration-insured (FHA) and Department of Agriculture (USDA) financing to use significantly advanced building codes.

MBA previously urged HUD and USDA to reconsider the impact of this proposal on affordable housing.

Why it matters: The required building codes have not been adopted by the vast majority of states and will add costs and complexity for FHA-insured properties.

What’s next: The effective date for multifamily new construction is May 26, 2025. MBA’s summary can be found here.

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

Total Commercial Real Estate Borrowing and Lending Declined 47% in 2023

Total commercial real estate (CRE) mortgage borrowing and lending is estimated to have totaled $429 billion in 2023, a 47% decrease from the $816 billion in 2022, and a 52% decrease from the record $891 billion in 2021. This is according to the Mortgage Bankers Association’s (MBA) 2023 Commercial Real Estate/Multifamily Finance Annual Origination Volume Summation, released last Tuesday.

Jamie Woodwell, MBA’s Head of Commercial Real Estate Research noted, “Higher interest rates, uncertainty about property values, and questions about some properties’ fundamentals led to a steep fall-off in borrowing and lending backed by commercial real estate last year. The declines were broad-based, covering every major property type and capital source.

Woodwell added, “All indications are that 2024 is off to a slow start as well. While higher interest rates are likely to continue to act as a deterrent for many property owners, more than $900 billion of maturities – and perhaps acquiescence to those higher rates – are likely to bring some additional deals to the market this year.”

Go deeper: Excluding activity from smaller and mid-sized depositories not directly captured, MBA’s survey tracked $306 billion of loans closed by dedicated commercial mortgage bankers in 2023–49% less than the $595 billion reported in 2022.

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

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:

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
Fundamentals of Secondary Marketing: Broad Concepts Every Mortgage Professional Should Know – May 15
Introduction to Commercial Mortgage Backed Securities – May 23

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

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