CREF Policy Update: FHFA Heeds MBA’s Recommendations; Re-proposes Suspended Counterparty Program Rule
FHFA Heeds MBA’s Recommendations; Re-proposes Suspended Counterparty Program Rule
Last Wednesday, the Federal Housing Finance Agency (FHFA) announced that it has revised and re-proposed its July 2023 proposal to amend the Suspended Counterparty Program (SCP).
• The July 2023 SCP proposal would have significantly expanded the SCP and exposed GSE-approved lenders and servicers to the threat of a draconian penalty – suspension of their seller/servicer status – for relatively minor civil/administrative sanctions or misconduct.
What they’re saying: In a press statement shortly after the announcement, MBA’s Broeksmit said, “A re-proposal is a smart move, and we commend FHFA for its receptiveness to our strong opposition to the initial proposal, which would have punished counterparties for potentially minor civil or administrative sanctions.”
Broeksmit added, “We are pleased to see the elimination of the proposed immediate suspension order, refinements that preserve due process, and a narrowing of the application of the SCP to violations of a certain magnitude or gravity.”
Why it matters: FHFA’s re-proposed rule addresses several of MBA’s concerns highlighted in a joint comment letter by distinguishing between misconduct that poses material risk to the safety and soundness of Fannie Mae and Freddie Mac from behavior with de minimis impact. Other MBA-recommended changes in the re-proposal include:
• Eliminating the ability to immediately suspend a counterparty with no hearing or notice, and
• Limiting the suspension option to misconduct that resulted in a federal prohibition order from another agency or a civil money penalty above a specific threshold (at least $1 million).
What’s next: Comments on the re-proposal are due 60 days after it is published in the Federal Register. MBA will review the re-proposed rule and make further recommendations, if needed, to ensure appropriate scoping and due process.
For more information, contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.
Congress Passes Three-Month, Stopgap Funding Bill; NFIP Also Extended Until December
Last Wednesday, the U.S. House and Senate passed an identical Continuing Resolution (CR) that averts a government shutdown and extends Fiscal Year (FY) 2024 funding levels through December 20, 2024.
• President Biden signed the bill into law before the Tuesday, October 1, deadline, ensuring that all the various government-supported segments of the mortgage market, including the Department of Housing and Urban Development (Ginnie Mae and FHA included) continue to operate uninterrupted.
Why it matters: The bill also includes an extension of the National Flood Insurance Program (NFIP) until December 20. MBA has been strongly advocating for the flood insurance extension on both sides of the Hill and with both political parties and continues to call for reforms to, and a long-term reauthorization of, this critical program.
What they’re saying: In a press statement before passage of the CR, MBA’s President and CEO Bob Broeksmit, CMB, said, “Our nation continues to face a housing supply and affordability crisis as well as the immediate threat this week of a major hurricane in the Southeast. The passage of this three-month CR would keep essential housing programs at the Department of Housing and Urban Development…running without interruption and would also avoid a lapse of the NFIP, which would leave millions of Americans at risk by disrupting the purchase of flood insurance in communities across our country.”
What’s next: With Congress now in recess until after the November 5th election, the three-month CR sets up a showdown over a full spending package just before the Christmas holiday. MBA will remain directly engaged in all relevant conversations regarding government funding and the NFIP ahead of the December 20th deadline.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
House Financial Services Subcommittee Basel III Hearing
Also on Wednesday, the House Financial Services Subcommittee on Financial Institutions and Monetary Policy held a hearing titled, “Regulatory Recipe for Economic Uncertainty: The Endless Basel Endgame and an Onslaught of Hurried Rulemaking Undertaken by the Administration.”
• Lawmakers on both sides of the aisle raised concerns about how these proposed regulations could impact the broader economy, increase costs, and limit credit access.
• Find a full hearing summary here.
Go deeper: Last month, Federal Reserve Vice Chair Michael Barr confirmed his intent to recommend to the Fed Board of Governors a set of sweeping changes to the proposal, including revisions that appear to address several of MBA’s top concerns regarding the mortgage market impact of the rule.
What next: MBA awaits the release of the Basel re-proposal and continues to urge regulators to ensure that the re-proposal and any final rule be the result of a rigorous impact analysis that is also subject to stakeholder comment.
• A re-proposal, followed by a new comment period, potentially pushes the implementation of a final rule beyond 2025. MBA will continue to discuss this issue with the engaged federal regulators as we await the release of the re-proposed rule.
For more information, please contact Megan Booth at (202) 557-2740, Fran Mordi at (202) 557-2860, Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
Senate Budget Committee Holds Hearing on Housing Affordability
Last Wednesday, the Senate Budget Committee held a hearing titled, “The Costs of Inaction: Economic Risks from Housing Unaffordability.” A transcript can be found here.
Why it matters: While there was broad agreement on the need to increase housing supply, the hearing exposed deep partisan divides over solutions to make housing more affordable. For example, Senators clashed over the housing-related campaign proposals announced by Vice President Harris and former President Trump.
Go deeper: The witnesses invited by Chairman Sheldon Whitehouse (D-RI) testified favorably for expanding housing tax credits and supporting state and local partnerships, including zoning reforms to encourage the production of more affordable housing.
The witnesses invited by Ranking Member Chuck Grassley (R-IA) suggested private philanthropy could address homelessness and cautioned against wasteful spending in federal housing programs. Senator John Kennedy (R-LA) attributed increased housing costs (in part) to heightened demand due to immigration flows.
What’s next: MBA has been actively and regularly engaged with Senators on both sides of the aisle on housing and tax policy matters and will monitor developments closely this year and during the next Congress.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
SEC Commissioners Appear Before House Financial Services Committee
Last Tuesday, the five Securities and Exchange Commission (SEC) commissioners appeared before the full House Financial Services Committee in an oversight hearing.
• The extended session saw lawmakers from both parties touch upon a wide array of issues regarding the agency and its regulated parties. Several panel members from both political parties criticized the agency’s approach to the digital asset sector, deeming it to be ideologically opposed and hostile to the industry at large, resulting in an onerous regulatory regime.
Go deeper: Throughout the discussion, Republican lawmakers expressed disapproval of multiple SEC rulemakings under the tenure of Chair Gary Gensler, pillorying what they termed a lack of stakeholder engagement and a pattern of “regulation by enforcement,” while questioning the agency’s lack of focus on capital formation. In contrast, the majority of Democrats on the committee effusively praised Chair Gensler’s record at the SEC, highlighting his efforts to protect consumers and investors.
• A full hearing summary can be found here. The full recorded hearing may be watched here.
What’s next: MBA will continue to work with policymakers (on both sides of the aisle) on issues within the SEC’s regulatory jurisdiction that materially impact our members.
For more information, please contact Rachel Kelley at (202) 557 2816 or Madisyn Rhone at (202) 557-2741.
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:
• Navigating Multifamily Income and Expenses from Fundamentals to Performance Metrics – Oct. 2
• Overview of Commercial Insurance Compliance – Oct. 3
• Unlocking Private Credit Finance: A Conversation On Key White Papers & Research – Oct. 9
• Mastering Commercial/Multifamily Lender-Placed Insurance – Nov. 7
• Navigating and Ensuring Accurate Reporting with the MBA Commercial and Multifamily Inspection Form – Dec. 5
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.
