CREF Policy Update: FHFA Announces New Resident-Centered Practices for GSE-backed Multifamily Properties
FHFA Announces New Resident-Centered Practices for GSE-backed Multifamily Properties
Last week, the Federal Housing Finance Agency (FHFA) announced new resident-centered practices that will be required in new multifamily loan agreements backed by Fannie Mae and Freddie Mac (the GSEs) beginning in February 2025.
• The new standards stop short of mandating any rent control or caps but require multifamily borrowers to give: 1) a five-day grace period for non-payment of rent before late fees can be charged; (2) a written notice of a rent increase at least 30 calendar days before said increase; and (3) a written notice of the scheduled expiration of the lease at least 30 calendar days before said expiration (provided that such notice is not required if the existing term of the lease is two months or less).
• The new tenant protections will apply to loans originated on or after Feb. 28, 2025, with certain exemptions. A detailed description of the tenant protection policies is expected to be published by the GSEs in August 2024.
What they’re saying: In a joint statement, MBA, the National Apartment Association, and the National Multifamily Housing Council said:
“We appreciate FHFA’s ongoing, collaborative approach with our members and other industry stakeholders on ways to increase affordable rental housing supply and to adopt common sense practices that better serve tenants. Long-term, the only real way to sustainably lower housing costs and create more housing security for renters is to increase housing supply, as the Biden Administration Housing Supply Action Plan correctly points out.
“The actions detailed in today’s announcement are generally consistent with practices employed by quality, professionally managed housing providers and we will work diligently with FHFA, the GSEs and our members to make sure these new initiatives are implemented as efficiently as possible.”
Go deeper: In May 2023, FHFA issued a Request for Input (RFI) on resident-centered practices at properties backed by Fannie Mae and Freddie Mac. 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.
Why it matters: MBA and other industry stakeholders have met with the Biden administration numerous times on the topic of tenant protections and stressed the importance of increasing affordable housing supply and avoiding unnecessary regulations such as rent control.
• MBA sent a response letter to the RFI in July 2023 advocating strongly against rent control and offering alternative initiatives for FHFA to consider to support tenants.
What’s next: MBA will remain engaged with FHFA and the GSEs on the implementation of these new practices.
For more information, please contact Stephanie Milner at (202) 557-2747.
Fed Chair Powell Calls for Basel III Re-Proposal During Semi-Annual Hill Testimony
Last week, Federal Reserve Board Chair Jerome Powell testified before both the House Financial Services and Senate Banking Committees on the central bank’s Semiannual Monetary Policy Report to Congress. Summaries of the hearings can be found here and here.
Lawmakers’ questions to Powell centered on monetary policy, the Fed’s interest rate path, and the next steps for the Basel III “Endgame” proposal. There were several questions and criticisms from a bipartisan group of lawmakers in both hearings regarding the status of the proposed Basel rule, including calls for a re-proposal.
• Chair Powell also acknowledged the impact of sustained, elevated interest rates on housing and commercial real estate. He said the best way to achieve housing affordability was through reducing inflation.
On the Basel III Endgame proposal, Chair Powell was pressed by both House and Senate lawmakers on planned changes to the proposal and the path forward. He stated several times that key officials at the Fed, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller Currency (OCC) are “very close” to agreeing on a set of changes.
“It is my view, it is the strongly held view of members of the [Fed] Board, that we do need to put a revised proposal out for comment for some period,” Powell said. “And the reason is, when there are broad and material changes [to a proposal], that has been our practice.”
What they’re saying: Following Tuesday’s Senate hearing, MBA’s President and CEO, Bob Broeksmit, CMB, issued a press statement agreeing with Chair Powell’s comments that it is “essential” to re-propose the flawed Basel proposal, stating:
“MBA has been very vocal in testimony before Congress, speeches, comment letters, and in ongoing conversations with regulators about how certain provisions of the proposal would harm the U.S. economy, diminish mortgage credit availability – especially for low- and moderate-income homebuyers – and have detrimental impacts to the broader single-family housing and commercial real estate finance markets.”
What’s next: Chair Powell said a Basel III re-proposal, along with the release of results from the Fed’s Quantitative Impact Study, is imminent. Any re-proposal would then likely be followed by a new comment period, potentially pushing the implementation of a final rule into 2025.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557-2816 or Madysn Rhone at (202) 557-2741.
House Appropriators Emphasize Key MBA Priorities for HUD Budget
Last Wednesday, the full House Appropriations Committee met to consider the Fiscal Year (FY) 2025 Transportation, Housing and Urban Development (T-HUD) Appropriations Act. The overall measure, which is roughly $7 billion (7.3%) below the FY 2024 enacted level, was approved by the panel by a party-line vote of 31 to 26.
Go deeper: MBA supported HUD’s recommended funding levels for the Federal Housing Administration (FHA) and Ginnie Mae’s administrative expense accounts. More specifically, HUD recommended that Ginnie Mae salaries and expenses be funded at $67 million; the House committee allocated $54 million within its approved bill.
• Given that FHA’s production of rental housing units has decreased more than 50% over the last two years, MBA specifically asked appropriators to direct FHA to take steps to play its traditional countercyclical role and deliver on its Strategic Plan goal to increase housing supply.
• The full House T-HUD bill text is here. The House committee report and instructions that accompany the bill text is here.
Why it matters: Earlier this year, MBA submitted its funding request for FY 2025 to appropriators (and recently sent an additional letter regarding Ginnie Mae funding levels). Per MBA’s direct request, the committee report language, “encourages HUD to continue to take steps to deliver on its Strategic Plan goal of increasing the supply of housing. The Committee requests HUD to provide quarterly updates on FHA multifamily production numbers and any specific changes FHA has made to increase rental housing supply.”
• Moreover, MBA’s request that FHA’s general insurance and special risk insurance programs receive $35 billion in commitment authority was also accepted. The committee report also expresses concerns for the lack of affordable housing supply and urges HUD to work with the Department of Transportation (DOT) to create more market rate housing near transportation hubs.
What’s next: The legislation is scheduled to advance to the full House floor later this summer. The Senate is expected to begin consideration of its parallel iteration of a T-HUD “mark” prior to the August congressional recess.
• MBA will continue to engage with lawmakers on our key federal funding priorities (both single- and multifamily) as the appropriations process progresses.
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557-2816, Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
Treasury Secretary Yellen Offers House Testimony on International Banking
Last Wednesday, Treasury Secretary Janet Yellen testified before the House Financial Services Committee in a hearing titled, “The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System.” View a recording of the hearing here and a written summary here.
Why it matters: Topics of discussion at the hearing included (1) sanctions on Russia and Iran; (2) economic competition with China; (3) the Basel III “Endgame” proposal; (4) the impacts of climate change on insurance markets; and (5) U.S. participation/investment in international financial institutions.
Additionally, Republicans on the committee focused much of their questioning on the ongoing implementation of the Beneficial Ownership Information reporting requirement, expressing fears of the broad application of penalties on businesses that fail to meet the reporting deadline.
• Several committee Democrats agreed with their counterparts and suggested that the Treasury Department needs to conduct a more vigorous and prominent outreach and education campaign.
What’s next: MBA will continue monitoring ongoing legislative and regulatory requests made by the Treasury Department (and other key regulators).
For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.
Senate Banking Committee Holds Nomination Hearing for FDIC Chair
Last Thursday, the Senate Banking Committee considered the nomination of the Honorable Christy Goldsmith Romero (currently a Commissioner at the Commodity Futures Trading Commission) to be Chair and Member of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC).
• Committee Chair Sherrod Brown (D-OH) praised Romero as a highly qualified and dedicated public servant who has previously been unanimously confirmed by the Senate. Ranking Member Tim Scott (R-SC) agreed Romero has a long record of public service but “lacks the banking regulatory experience necessary to carry out the critical responsibilities of the FDIC.”
• Senator Mark Warner (D-VA), one of Romero’s home state Senators, said she has “dedicated much of her career to protecting consumers and investors.”
• A full summary of the hearing is here.
Why it matters: In the wake of the allegations concerning sexual harassment and interpersonal misconduct at the FDIC, there have been bipartisan calls for new leadership. If confirmed, Romero would replace current Chair Martin Gruenberg. The pending Basel III “Endgame” rule would then be among her first responsibilities at the FDIC.
Go deeper: Romero indicated her openness to a re-proposal of the current Basel rule, echoing comments made earlier this week by Fed Chair Jerome Powell.
What’s next: A full Senate confirmation vote on the Romero nomination is expected in the near future.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
Biden Administration Publishes Spring 2024 Regulatory Agenda
Recently, the Biden administration published the Spring 2024 Unified Agenda of Regulatory and Deregulatory Actions, outlining the regulatory actions federal administrative agencies plan to issue over the next six months. The rules and proposals published by federal agencies can have significant impacts on lenders and borrowers.
Why it matters: Topics of interest to members include:
• HUD Proposed Rule on Multifamily Risk-Sharing Program (July 2024)
• HUD Proposed Rule on Multifamily Loan Disbursements (October 2024)
• HUD Proposed Rule on Promoting Climate Resilience, Advancing Equity, and Streamlining Environmental Reviews (December 2024)
• HUD Advanced Notice of Proposed Rulemaking on Accessibility (September 2024)
• HUD Proposed Rule on Section 504 Accessibility Standard (October 2024)
• HUD Proposed Rule on Certifying NSPIRE Inspectors (December 2024)
• FHFA Proposed Rule on Enterprise Housing Goals (July 2024)
• FHFA Proposed Rules on the Federal Home Loan Banks, including Federal Home Loan Banks Core Mission Activities (September 2024) and Members of the Federal Home Loan Banks (September 2024)
• Banking Agencies’ Final Rule on Basel III Bank Capital Requirements (September 2024) **unlikely – see aforementioned blurb above**
What’s next: The dates listed above are their expected published dates, but federal agencies regularly miss these targets. MBA will work with members to monitor and respond to proposals put forth by government agencies that impact multifamily and commercial lending activities.
For more information, please contact Megan Booth at (202) 557-2740.
REGISTER: MBA’s Commercial/Multifamily Insurance Conclave 2024
MBA is hosting a Commercial/Multifamily Insurance Conclave 2024 on Oct. 6-8 in Kansas City, Missouri.
• This premier event brings together Insurance and Risk professionals from all capital sources to discuss insurance market trends, best practices for addressing and implementing changes in the future, and much more.
Why it matters: Rising property insurance costs and diminishing policy options are increasingly becoming a problem in several states, and insurance requirements are becoming more strict.
What’s next: Register today to secure your seat.
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 commercial/multifamily and single-family 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:
• Be a Bold Visionary in Mortgage Finance – July 16
• Essential Overview of Business Income Insurance – July 1
• Analyzing the Commercial/Multifamily Borrower’s Balance Sheet and REO Schedule – Aug. 27
• Affordable Housing Insights: Understanding Consumers, Buyers, and Uses of Accessory Dwelling Units – Aug. 29
• Finding Opportunities with Distressed CRE in 2024 – Sept. 10
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.
