CREF Policy Update Feb. 1: FHA Publishes Multifamily Loan Limits and High-Cost Threshold

House Passes Tax Package; MBA Pushes for Swift Action

Last night, the U.S. House of Representatives passed the bipartisan “Tax Relief for American Families and Workers Act of 2024(H.R. 7024) by a significant margin (357-70). The package, agreed upon via negotiations between House Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR), includes important Low Income Housing Tax Credit (LIHTC) program enhancements, an extension of the Research and Development tax credit, a revised Child Tax Credit, disaster relief, tax relief to help facilitate commerce between the U.S. and Taiwan, as well as provisions that favorably address business interest deductibility, small business expensing, and bonus depreciation.

Why it matters: H.R. 7024 restores a LIHTC ceiling increase from 9% to 12.5% for calendar years 2023 through 2025, thereby allowing states to allocate more credits for affordable housing projects, and temporarily lowers the Private Activity Bond (PAB) threshold test from 50% to 30% for 4% LIHTC property projects with an issue date before 2026.

What they’re saying: In a press statement this evening, MBA President and CEO Bob Broeksmit said, “MBA is pleased the House has passed this bipartisan bill that increases the availability of Low-Income Housing Tax Credits (LIHTC). The enhancements to the LIHTC program will improve the supply and affordably challenges in the rental market by producing an estimated 200,000 additional rental units over the next two years

Go deeper: See MBA’s previous letter in favor of the bill (particularly the LIHTC enhancements). You can also find a letter from a broader housing coalition in support of the bill’s housing provisions that are targeted towards the increased production of affordable rental units nationwide.

What’s next: MBA is engaged with Senators on both sides of the aisle and will call for the bill to pass the upper chamber as soon as possible. Rep. Jason Smith and Senator Ron Wyden have stated their hopes for the proposal to be signed into law in February to avoid complications during tax filing season.

For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelly at (202) 557-2816 or Bill Killmer at (202) 557-2736.

FHA Publishes Multifamily Loan Limits and High-Cost Threshold

Last Monday, the Department of Housing and Urban Development (HUD) published the Annual Revisions to Base City High Cost Percentage and High Cost Areas. The notice expands eligibility for the 315% high-cost area waiver. The notice also increased the large limit threshold to $125 million (from $120 million last year).

Why it matters: Increasing the multifamily limits is necessary to keep pace with increasing construction costs. The increase in eligibility for the 315% high-cost area waiver covers virtually the entire country, calling into question the terms “waiver” and “high-cost.” Such an increase supports MBA’s continued call for statutory loan limit reform from Congress.

What’s next: MBA will continue to call on Congress to increase statutory loan limits.

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

MBA Letters Call on HUD Changes to MAP Guide, E-Closing Protocols

MBA committees sent letters to HUD about two separate issues.

One letter urged HUD to publish the agreed changes to Chapter 6 of the MAP Guide, which deals with Energy and Water Conservation. An MBA workgroup of MAP lenders worked on the chapter revisions, which will provide a resiliency path to Green MIP for affordable and market rate properties.

MBA’s FHA closing subcommittee asked HUD to extend the implementation period for the new e-closing protocols and allow more time for training and feedback from the industry. The protocols were released with no opportunity for public comment, and industry analysis has concluded that the new program could cause severe disruptions in the market.

Why it matters: Discussion and partnership with the industry is critical to ensuring that Federal Housing Administration (FHA) multifamily lending programs are effective in increasing the supply of rental housing.

What’s next: MBA will continue working with HUD and FHA on all pertinent matters.

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

Senate Banking Committee Holds Flood Insurance Hearing

Recently, the Senate Banking Committee held a hearing titled, “Reauthorization of the National Flood Insurance Program (NFIP): Local Perspectives on Challenges and Solutions.” The panel heard from Mr. Michael Hecht, President & CEO, Greater New Orleans, Inc.; Dr. Daniel Kaniewski, Managing Director, Public Sector, Marsh McLennan; and The Honorable Steve Patterson, Mayor, City of Athens, Ohio. On a bipartisan basis, Senators supported a long-term reauthorization of the National Flood Insurance Program (NFIP) and asked the witnesses for their views on how it can be improved, with a focus on mitigation.

Go deeper: A summary of the hearing can be found here. Last November, MBA and a coalition of housing trade groups sent a letter to House and Senate leaders calling for an extension of federal flood insurance program authority to avoid harmful disruptions to the commercial, multifamily, and residential real estate markets.

What’s next: MBA will continue to be an active advocate for a long-term NFIP reauthorization (up to five years), as well as pushing for appropriate treatment of commercial and multifamily properties within any proposed reforms that may emerge. The NFIP has been temporarily extended until March 8, 2024, at which time the Congress will need to determine the means of another extension to avoid disrupting real estate transactions via a lapse in program authority.

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

CREF Forecast: Commercial/Multifamily Borrowing and Lending Expected to Increase 29% to $576 Billion in 2024

Total commercial and multifamily mortgage borrowing and lending is expected to rise to $576 billion in 2024, which is a 29% increase from 2023’s estimated total of $444 billion. This is according to an updated forecast released lastTuesday.

Go deeper: Multifamily lending alone (which is included in the total figures) is expected to rise to $339 billion this year – a 25% increase from last year’s estimate of $271 billion. MBA anticipates borrowing and lending next year will increase to $717 billion in total commercial real estate lending, with $404 billion of that total in multifamily lending.

MBA’s Head of Commercial Real Estate Research Jamie Woodwell, said, “2023 is likely to go into the record books as the slowest year for commercial real estate borrowing and lending in roughly a decade. Commercial mortgage originations have historically followed property prices, and the uncertainty about the future path of interest rates has been a contributing factor to the current slowdown. If interest rates and cap rates were to fall, that should help boost values and promote borrowing. If they remain higher for longer, that will suppress activity. This uncertainty is a contributing factor in today’s slowdown.”

 For more information, please contact Jamie Woodwell at (202) 556-2936.

South Dakota Regulators Announce Live Date for FINCEN Rules on Non-Residential Mortgage Licensees

Last month, the South Dakota Division on Banking (SDDB) published a memorandum announcing the application of the final Financial Crimes Enforcement Network (FINCEN) rules to non-residential mortgage licensees. The memorandum states that the SDDB has determined the September 2020 final FINCEN rules apply to all non-residential mortgage lenders.

• Non-residential mortgage lenders are required to comply by March 31, 2024, and the scope of examinations starting in the third quarter of 2024 will include AML compliance.  

Why it matters: South Dakota would be the first state to apply these final FINCEN rules to non-residential mortgage lenders without a state statute to do so.

• The federal definitions for a “financial institution” and “loan or finance company” do not include a non-residential mortgage company and therefore should not apply. With the announcement this month and expected compliance by March 31, 2024, MBA believes this is a very short timeline for these lenders to implement a new compliance strategy.

What’s next: MBA is coordinating with other industry partners in a planned response and is reviewing other implications of this interpretation.

 For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.

REGISTER: MBA’s State and Local Workshop on March 18-19

Join us in Washington, D.C. the day before the National Advocacy Conference begins to collaborate with industry peers on shared challenges and priorities and receive actionable advice to grow your state or local association’s member base.

Why it matters: In today’s challenging market, it’s more important than ever that state and local associations are helping members not just survive, but grow.

What’s nextRegister before Feb. 5 and save $100. Take advantage of savings and maximize your impact when you register for both the State and Local Workshop and the National Advocacy Conference.

For more information, please contact Anthony Siller at (202) 557-2944.

REGISTER: MBA’s National Advocacy Conference on March 19-20; Separate CREF Track!

Join us in Washington, D.C. to meet with key policymakers, network with colleagues across the industry, and hear from policy experts on the topline issues impacting the industry – including a dedicated CREF track exclusively for our commercial/multifamily members. An exclusive reception will be held on Tuesday, March 19, at the National Museum of Women in the Arts. Lend your voice to our efforts and bring your expertise and experiences to the table.

Register before Feb. 5 and save $100. Check out MBA’s group passes pricing.

Why it matters: Your participation at NAC ensures that members of the 118th Congress and other policymakers understand how proposed legislation affects your employees, your end users, and the communities you (and they) serve.

What’s next: MBA will continue to advocate on issues that impact the commercial/multifamily sector of the real estate finance industry.

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

REGISTER: MBA’s mPact Summit on April 4 in Texas

Meet us in Texas for a full day of career development and networking on Thursday, April 4, 2024. Back by popular demand, this event is built by – and for – young professionals in the real estate industry who are focused on helping you get to the next level.

Why it matters: Event topics include developing leadership skills, learning how to navigate your career, and building and practicing networking skills. You don’t want to miss this opportunity.   

What’s next: Early bird registration ends on Feb. 29. Register now and save!

For more information, please contact Jacky Salazar at (202) 557-2746

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:

Revisiting Your Servicing Retained Versus Released Decision – Feb. 15
Private Credit Finance 201: A Deep Dive into Debt Funds and Their Impact to Commercial Real Estate Lending – March 6
Making Sense of Multifamily Finance – March 14
Builder’s Risk Insurance: Analysis & Perspectives – March 20

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.