CREF Policy Update Jan. 18: HUD Secretary Fudge Testifies at Contentious House Oversight Hearing
HUD Secretary Fudge Testifies at Contentious House Oversight Hearing
Last week, Housing and Urban Development (HUD) Secretary Marcia Fudge appeared before the full House Financial Services Committee at a long-planned oversight hearing for HUD and the Federal Housing Administration (FHA).
• Republicans criticized Secretary Fudge for a lack of serious attention on her watch to issues impacting renters and the homeless, including HUD’s oversight of its disabled veterans’ program and Public Housing Authorities. Democrats countered that they have worked with Fudge, FHA, and the administration to develop numerous solutions to combat homelessness and the affordable housing crisis.
• A full summary of the hearing is here.
Why it matters: The committee asked Secretary Fudge about a range of key topics of concern, including the potential for a near-term government shutdown, the Basel III “endgame” proposal’s possible impact on the mortgage market, the need for more housing tax credits (and other questions regarding barriers to the creation of additional housing supply), the adoption of energy-efficient building codes, a long-term extension or permanency for the Federal Financing Bank (FFB), and the ongoing conservatorship of the GSEs.
What’s next: Many of Secretary Fudge’s answers will require written follow-up by HUD to the committee members who asked questions. MBA will continue to work with HUD and congressional allies to advocate for policy changes that impact members, including improvements to the LIHTC program, workforce housing tax credits, and office conversion tax credits.
For more information, please contact Rachel Kelley at (202) 302-1185 or Bill Killmer at (202) 557-2936.
House Financial Services Subcommittee Holds Hearing on FSOC SIFI Framework
Last Wednesday, the House Financial Services Subcommittee on Digital Assets held a hearing titled, “Regulatory Whiplash: Examining the Impact of FSOC’s Ever-Changing Designation Framework on Innovation.”
• The hearing featured a panel of witnesses who offered perspectives and recommendations on the Financial Stability Oversight Council’s (FSOC) ability to designate non-bank financial institutions as systemically important under its updated Dodd-Frank Section 113 Systemically Important Financial Institution (SIFI) authority.
Go deeper: Republicans on the panel expressed concerns that the updated guidance would allow FSOC to circumvent Congress’ intent while also stifling innovation. Subcommittee Democrats countered that the updated guidance would allow FSOC to act more quickly to emerging risks. Witnesses largely agreed that the designation of non-bank entities is a tool that should be used sparingly. The full summary hearing is here.
Why it matters: MBA’s nonbank entities could potentially come under heightened scrutiny and more stringent regulatory requirements based on a shift in the FSOC’s guidance.
What’s next: MBA will continue to stay engaged with legislators and regulators to monitor any potential changes to FSOC guidance.
For more information, please contact Rachel Kelley at (202) 302-1185 or Bill Killmer at (202) 557-2936.
Federal Banking Agencies Release Webinar on Community Reinvestment Act
Last Wednesday, the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency (the “Agencies”) released a webinar providing an overview of the new final rule that updates the Community Reinvestment Act (CRA). In addition to general background information, the webinar provides details on assessment areas, evaluation framework, ratings, and more.
Why it matters: In October 2023, the Agencies approved and released a final rulemaking to reform and align the 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.
Go deeper: The final rule includes several of MBA’s recommendations, including increasing 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 will continue to engage with its members and other industry stakeholders to ensure a smooth transition to the new CRA framework.
For more information, please contact Stephanie Milner at (202) 557-2747.
HUD Publishes New Electronic Closing Guidelines
Last Wednesday, HUD published new guidance regarding Electronic Closing Protocols, effective Jan. 31, 2024.
• The memo updates the protocols for electronically-based closings of FHA multifamily and healthcare loan transactions. HUD has stated that “OGC will provide training on the new protocols, including how to compile and transmit Virtual Closing Binders, prior to implementation.”
Why it matters: Electronic closings became more commonplace during the COVID-19 pandemic, and this guidance extends that protocol. However, HUD made significant modifications to the protocol without the ability for the public to comment.
What’s next: HUD published this notice without the opportunity for industry feedback, and appears to have made some significant modifications to the protocol. MBA is reviewing the new guidance and will discuss it with the FHA Closing Subcommittee.
For more information, please contact Megan Booth at (202) 557-2740.
New York Governor Hochul Supports 421-a Program in 2024 Agenda
During remarks to the New York Legislature last week, Governor Kathy Hochul laid out the highlights of her 2024 legislative agenda, including the need to bring back the MBA-supported 421-a program. Among the elements of her affordable housing program, she called for the enactment of a tax abatement for new rental and affordable housing in New York City.
Go deeper: In the text that accompanied her speech, she lamented the failure of the Legislature to extend the 421-a program and cited the critical need for new rental housing.
• Governor Hochul also noted that the tax abatement will need to contain requirements pertaining to below-market housing and to wage standards for both building service and construction workers.
Why it matters: The Legislature adjourned without extending the 421-a program in June 2022, and negotiations last year on a broad housing agenda, including Governor Hochul’s support for the 421-a program, also failed.
What’s next: Governor Hochul will deliver her proposed budget bills to the Legislature in the next few weeks, which will include the details on implementing her agenda. The Legislature will then begin work on the budget, which is due before April 1, 2024.
For more information, please contact William Kooper (202) 557-2737 or Stephanie Millner (202) 557-2747.
MBA CREF Outlook Survey: Markets Expected to Become Less Unsettled as 2024 Progresses
Commercial and multifamily mortgage originators continue to experience an unsettled market for borrowing and lending but anticipate those conditions will stabilize over the course of 2024. That is according to the Mortgage Bankers Association’s (MBA) 2024 Commercial Real Estate Finance (CREF) Outlook Survey, which polled the leaders of the top commercial and multifamily mortgage finance firms for their outlook for the year ahead.
Jamie Woodwell, MBA’s Commercial Real Estate Research noted, “Commercial real estate markets are entering 2024 amid a great deal of uncertainty and, as a result, a significant slowdown in activity. Leaders of top commercial real estate finance firms believe that a host of factors may continue to act as a drag – rather than a boost – to the markets. However, they do believe that overall uncertainty will dissipate over the year, helping to boost borrowing and lending above 2023 levels.
Go deeper: Among property types, the office market is viewed as most negatively affecting today’s borrowing and lending. Meanwhile, half of respondents view the industrial outlook as having positive impacts.
For more information, please contact Jamie Woodwell at (202) 557-2936.
REGISTER: MBA’s National Advocacy Conference on March 19-20
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 – at a tailored CREF track! 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 Congress and key regulatory partners 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 behalf of key commercial/multifamily issues that impact our industry.
For more information, please contact Jamey Lynch, AMP, at (202) 557-2818.
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:
• Cybersecurity Risks, Recovery & Regulatory Requirements – Jan. 25
• 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 contact David Upbin at (202) 557-2931.
