CREF Policy Update Jan. 11: FHFA Releases Report Summary on Tenant Protections Feedback

FHFA Releases Report Summary on Tenant Protections Feedback

Last Wednesday, the Federal Housing Finance Agency (FHFA) released a report summarizing the responses it received on its May 2023 Request for Input (RFI) on resident-centered practices at properties backed by Fannie Mae and Freddie Mac (the GSEs). The report is primarily a list of the responses and suggestions received and contains no endorsements, proposals, or announcements.

Go deeper: The responses generally cover five themes:

1. Access/Barriers to Housing
2. Access to Information
3. Tenant Stability
4. Data and Research
5. Risk Management

Concerning rent control, many tenant and tenant advocate respondents stressed the need for FHFA to take action to prevent excessive rent increases, including capping annual rent increases, stabilizing rents based on inflation and market rates and/or defining and investigating “rent gouging.” Other respondents, however, expressed concern that enacting new or expanded obligations, such as rent control, could discourage participation in the GSEs’ programs, and decrease overall production of affordable housing.

Why it matters: The RFI was issued in response to an announcement by the Biden-Harris Administration in January 2023 that FHFA would engage in industry outreach to determine if there are opportunities to further enhance protections for tenants. The Administration’s announcement included new actions by several federal agencies, a “Blueprint for a Renters Bill of Rights,” and a voluntary challenge to the industry to adopt stronger policies and practices that better serve tenants.

MBA and other industry stakeholders met with the Biden Administration numerous times in 2023 on the topic of tenant protections and stressed the importance of increasing affordable housing supply and avoiding unnecessary regulations such as rent control.

FHFA noted that a significant amount of work will be required to further resident-centered practices at GSE-backed properties and that it plans to continue industry outreach in 2024.

What’s next: MBA will remain engaged with FHFA and industry stakeholders on this issue and others in 2024.

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

MBA Responds to RHS Proposal on Property Insurance Flexibility

On Dec. 26, MBA and coalition partners sent a joint comment letter in response to the Rural Housing Service’s (RHS) proposal to provide flexibility around property insurance.

• The proposal would “allow higher deductible limits and provide flexibility to the owner to select a deductible that can lower the premium costs.” RHS also “intends to align RD insurance coverages and deductible limits with affordable housing industry standards.”

• The proposal only applies to the Agency’s own direct loans and grants. The comment letter urged them to expand this language to all loan programs and made other suggestions to make flexibility even more effective in reducing costs and supporting affordable housing.

Why it matters: Property insurance costs continue to rise and obtaining coverage is difficult, especially when federal programs create requirements that are ever more challenging to meet.

What’s next: MBA will continue to work with RHS, the Department of Housing and Urban Development, and the GSEs to advocate for reasonable insurance requirements that can be flexible enough to meet the availability of the marketplace.

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

New York Regulator Releases Final Climate Risk Mitigation Guidance

The New York Department of Financial Services (NYDFS) in late December issued final Guidance for New York State Regulated Banking and Mortgage Institutions Relating to Management of Material Financial Risks from Climate Change. The Guidance is sweeping in its scope and represents one of the first attempts by a state financial services regulator to establish regulatory expectations specifically designed to mitigate climate risks.

Go deeper: While the final document contains changes from the 2022 proposal related to organizational governance and operational resilience, it tracks closely to the original proposal.

• Last March, the New York Mortgage Bankers Association (NYMBA) and MBA filed a comment letter that urged NYDFS to align its work with federal regulators to the maximum extent possible to help produce a common approach on mortgage-specific topics.

• While there is no specific implementation date provided by NYDFS, MBA recommends members review the Guidance and begin consideration of how policies and procedures should be amended to comply.

Why it matters: Addressing climate risk will require an aligned approach between state and federal financial regulators rather than a patchwork quilt of requirements and supervisory expectations.

What’s next: NYDFS will host a webinar on Jan. 11, 2024, at 11:30 a.m. EST to provide an overview of the Guidance. Register here.

For more information, please contact William Kooper at (202) 557-2737 or Stephanie Milner at (202) 557-2747. 

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:

• C-PACE for New Development, Refinance, Renovation, and Rescue–Jan. 30

• Transforming Lending Operations: How to Leverage Intelligent Automation–Jan. 30

• Private Credit Finance 201: A Deep Dive into Debt Funds and Their Impact to Commercial Real Estate Lending–March 6

• 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.