CREF Policy Update March 14: SEC Finalizes Climate-Related Disclosure Rules; Scope 3 Excluded
MBA, Other Stakeholders Participate in FHFA Multifamily Insurance Symposium
Yesterday, the Federal Housing Finance Agency hosted a symposium on multifamily property insurance. The symposium was originally announced at the MBA Commercial/Multifamily Finance Convention and Expo Feb. 12 in San Diego and featured a panel moderated by Stephanie Milner, MBA Associate Vice President of Commercial/Multifamily Policy.
“The availability and affordability of insurance is a profoundly critical issue impacting every region of the country,” said FHFA Director Sandra L. Thompson in a release about the symposium. “This next forum allows multifamily industry leaders and stakeholders the opportunity to exchange and openly discuss creative ideas to address the escalating insurance market stress and how we can help those impacted.”
What’s next: MBA continues to engage on the issue of multifamily property insurance and will continue to keep members updated on opportunities to participate in such forums.
For more information, please contact Stephanie Milner at (202) 557-2747.
SEC Finalizes Climate-Related Disclosure Rules; Scope 3 Excluded
Last Wednesday, the U.S. Securities and Exchange Commission (SEC) voted 3-2 to adopt rules to require registrants to provide certain climate-related information in their registration statements and annual reports.
• Read MBA’s summary.
• Click here to read the SEC’s fact sheet.
The final rules “require disclosure of Scope 1 and/or Scope 2 greenhouse gas (GHG) emissions on a phased-in basis by certain larger registrants when those emissions are material; the filing of an attestation report covering the required disclosure of such registrants’ Scope 1 and/or Scope 2 emissions, also on a phased-in basis; and disclosure of the financial statement effects of severe weather events and other natural conditions including, for example, costs and losses.”
• As a direct result of MBA’s and others’ successful advocacy, a proposed requirement for companies to report some indirect GHG emissions, known as Scope 3, was not included in the final rules.
• MBA argued that reporting processes under Scope 3 would be costly, difficult or impossible to implement, and the resulting reporting would not meaningfully increase investors’ understanding of a company’s climate-related financial risks.
The final rules also “require a registrant to disclose, among other things: material climate-related risks activities to mitigate or adapt to such risks; information about the registrant’s board of directors’ oversight of climate-related risks and management’s role in managing material climate-related risks; and information on any climate-related targets or goals that are material to the registrant’s business, results of operations, or financial condition.”
Go deeper: Read MBA’s June 2022 comment letter here.
What they’re saying: In a press statement, MBA’s Broeksmit said, “We are pleased that the SEC’s final rule addresses redundancies and that it does not contain some of the more complex and overly burdensome mandatory reporting requirements – particularly for Scope 3 emissions – that were issued in the proposal.”
• Broeksmit added, “We urge state legislatures to refrain from proceeding with, or introducing, proposals that exceed this rulemaking or that impose costly and time-consuming reporting requirements that adversely impact businesses and consumers in their state.”
What’s next: The final rules will become effective 60 days after publication in the Federal Register.
For more information, please contact Mike Flood at (202) 557-2745 or Stephanie Milner at (202) 557-2747.
MBA Offers Praise on Some Biden Administration Affordability Actions, Warns Against CFPB Reforms
Ahead of the State of the Union address to Congress, the Biden administration released a fact sheet on legislative and regulatory proposals it believes will increase ownership and rental housing supply, lower costs, and improve access to homeownership. Many of the proposals were mentioned during President Joe Biden’s address last night.
Go deeper: The Administration’s fact sheet outlined several action items – many of which require action from Congress – including homebuyer and seller tax credits, grants to facilitate the construction of more rental housing, downpayment assistance, expanding the volume of Low-Income Housing Tax Credit (LIHTC) allocations, and efforts to lower costs for renters.
Why it matters: Of deep concern to MBA and its members, the Administration said that the Consumer Financial Protection Bureau (CFPB) will pursue rulemaking and guidance to address anticompetitive closing costs imposed by lenders on homebuyers and homeowners, including title insurance.
What they’re saying: Shortly after the fact sheet’s release, MBA President and CEO Bob Broeksmit, CMB, in a press statement expressed significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition, cautioning, “Suggestions that another revamp of these rules is needed depart from the legal regime created by Congress in the Dodd-Frank Act and will only increase regulatory costs and make it untenable for smaller lenders to compete.”
• Broeksmit was more effusive on the Administration’s focus on increasing single-family and multifamily housing supply and urged the Senate to pass the bipartisan “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024), which passed the House earlier this year and would add 200,000 additional rental units over the next two years.
What’s next: MBA will further analyze the initiatives as more information is released and will continue to work with the Administration and Congress on effective solutions that bolster housing supply, improve affordability for both renters and borrowers, and improve access to sustainable homeownership while also pushing back on CFPB reforms that reduce lender competition, hike prices on consumers, and create confusion.
For more information, please contact Bill Killmer at (202) 557-2736, Pete Mills at (202) 557-2878 or Mike Flood at (202) 557-2745.
Basel III Proposal a Focus During Fed Chairman Powell’s Congressional Hearings
Last week, Federal Reserve Board Chair Jerome Powell testified before the House Financial Services Committee and Senate Banking Committee. Find the summaries of his semiannual testimonies to each Committee here and here.
Why it matters: An overwhelming majority of questions Powell received from lawmakers centered on monetary policy and interest rates – and the Fed’s views on the Basel III “Endgame” proposal (including specific mortgage-related elements of the proposed rule). Of note, Powell said, “My view is that it will be appropriate to make material and broad changes to that [Basel III] before we finalize it,” suggesting that a re-proposal is a plausible option.
During both the House and Senate hearings, Powell received a series of other pointed questions from lawmakers (on both sides of the aisle) on topics such as: the cost and availability of insurance, the impact of the commercial real estate sector on banking and the U.S. economy, bank merger proposals, the availability of LIHTC credits, and housing affordability.
What’s next: MBA will continue to encourage lawmakers to weigh in with regulators like Powell on the Basel III proposal and all pertinent real estate finance issues.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2736.
Congress on Track to Avoid Partial Government Shutdown
Last Wednesday, the U.S. House advanced a Fiscal Year (FY) 2024 “minibus” appropriations package consisting of six separate funding measures (including the Department of Housing and Urban Development (HUD) – the most recent congressional step to avert a partial government shutdown. The measure passed by a strong bipartisan vote of 339-85, funding the impacted agencies through Sept. 30, 2024. The Senate passed it and President Joe Biden signed the measure.
What they are saying: MBA’s Broeksmit in a press statement said, “We especially support the government spending to boost homeownership opportunities and affordable rental housing. This includes a much-needed increase in funding for Ginnie Mae salaries and expenses, dedicated funding for Federal Housing Administration (FHA) IT modernization, backing for homeownership counseling, requiring HUD to take actions to increase FHA multifamily lending for new construction and rehabilitation, and $100 million in grants to encourage localities to remove legal and regulatory barriers that impede housing development.”
• Per the terms of the most recently enacted Continuing Resolution (CR), National Flood Insurance Program (NFIP) authorities are scheduled to expire on March 22, 2024. MBA continues to advocate for an NFIP extension to avoid disruptions to the housing market. In the short-term, enactment of this first “tranche” of FY24 appropriations bills will ensure that all the various Ginnie Mae-securitized, government-supported segments of the mortgage market will continue to operate uninterrupted.
Go deeper: A failure to enact all twelve of the individual FY 2024 appropriations bills by the end of April would trigger an “across the board” 1 percent funding cut – impacting all federal programs – under the terms of the Fiscal Responsibility Act enacted last year.
What’s next: The rest of the FY 2024 measures, including more contentious bills that would fund the Pentagon, the Department of Homeland Security and the Departments of Labor, Health and Human Services and Education, have a deadline for enactment of March 22, 2024, under the terms of the current CR.
• MBA remains engaged in all relevant conversations regarding government funding and the NFIP and will provide ongoing updates.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2736.
Treasury Announces New Efforts to Increase Affordable Housing Supply, Study Property Insurance
Last Wednesday, the U.S. Department of Treasury announced several updates and initiatives to help boost the supply of affordable housing. The new efforts include updates to use remaining State and Local Fiscal Recovery Funds (SLFRF) for housing, clarifications to the Emergency Rental Assistance (ERA) program, and an initiative to study the impact of rising insurance costs on housing.
Go deeper: Most notably, the announcement outlines the following:
• States and localities will now be able to use their remaining SLFRF to support additional types of housing, including housing for families earning up to 120% of area median income and workforce housing financed by Fannie Mae and Freddie Mac.
• Qualifying recipients can use their remaining ERA funds for predevelopment, construction, and acquisition costs for affordable housing serving very low-income families.
• Treasury will be working with federal and state regulators to study the impact of rising insurance costs on housing.
Why it matters: MBA and its members are committed to increasing the supply of affordable housing and will continue work with the Biden administration and Congress on this issue.
• MBA joined coalition partners last week in a letter that urges the Administration to focus on increasing supply.
For more information, please contact Stephanie Milner at (202) 557-2747.
Senator Menendez Introduces Bill to Increase FHA MF Statutory Limits
Last Wednesday, Senator Bob Menendez (D-NJ) introduced legislation to increase FHA multifamily statutory limits, a move for which MBA has strongly advocated for many years.
• Earlier this year, FHA provided waiver authority of up to 315% of the limits in every community in the nation in order to keep up with increased construction costs. However, FHA does not have the authority to move the limits any higher without Congressional action.
Why it matters: The statutory limits have not been adjusted since 2003 and are significantly below multifamily construction costs, creating a regulatory barrier that constrains access to rental housing.
What’s next: The bill, S.3682, will be a priority at MBA’s National Advocacy Conference.
For more information, please contact Ethan Saxon at (202) 557 2913 or Megan Booth at (202) 557-2740.
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.
• 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 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 next: 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 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: Register by March 29 to reserve your spot!
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:
• Who Are Today’s Borrowers? A Look at the Lending Preferences and Expectations of Today’s Consumers – March 14
• Making Sense of Multifamily Finance – March 14
• Rethink Everything You “Know” To Be A Next Gen Loan Officer (Personal Branding) – March 19
• The Intersection of Pricing Concessions and Fair Lending – April 4
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.
