MBA Mortgage Action Alliance Update

(Editor’s Note: Because of the short Thanksgiving week, MBA did not publish its weekly Advocacy Update. This week we are publishing excerpts from the MBA Mortgage Action Alliance newsletter. For more information about MAA, click

Last Thursday, Congress passed, and the president signed into law, another short-term continuing resolution to fund the government until December 20. On Tuesday, FHFA announced plans to repropose the agency’s rule on capital requirements for Fannie Mae and Freddie Mac in 2020. And on Nov. 24, the mortgage loan originator temporary authority law went into effect.

MBA Continues Advocacy Roadshow Initiative 

MBA recently hosted dinners in Nashville and Memphis in conjunction with the MBA Advocacy Roadshow initiative to discuss the vital role that MBA’s public policy efforts play in promoting and advancing key industry issues in Congress, with federal regulators, and within state capitals. In Nashville, MBA staff joined MORPAC Steering Committee Member West Biebers, CMB, and leadership of the Tennessee and Nashville Mortgage Bankers Associations, including Tennessee MBA President Jeff Tucker, CMB, Nashville MBA President Kevin Blankenship, and others from the boards of directors from both associations.

In Memphis, MBA and MORPAC teams met with Mortgage Bankers Association of Memphis leadership, including Chapter President Katie Clements and others from their board of directors. At both events, ideas to cooperate and collaborate were discussed, along with future initiatives that integrate the advocacy efforts of local, state, and national associations.

For more information about this initiative or to host an MBA Advocacy Roadshow program in your city or region, please contact Alden Knowlton at (202) 557-2816. 

Congress Clears Temporary Government Funding Bill for President’s Signature
Last Thursday, Congress passed a short-term funding bill to fund the government until December 20, buying legislators four additional weeks to reach a broader spending agreement amid disputes over border wall funding. The Senate passed the continuing resolution on Thursday afternoon, while the House passed the measure on Tuesday. As expected, President Donald Trump signed the measure into law in advance of Thursday’s midnight deadline. Embedded in the CR is a temporary reauthorization of the National Flood Insurance Program.

CFPB to Consider Changes to Loan Originator Compensation Rule
Last Wednesday, the Consumer Financial Protection Bureau released its Fall 2019 Agenda, which for the first time includes a review of the Loan Originator Compensation Rule. The agenda identifies regulatory matters that the Bureau “reasonably anticipates having under consideration during the period from October 1, 2019, to September 30, 2020” as well as long-term regulatory actions that the Bureau is considering undertaking beyond the current fiscal year.

After significant advocacy by MBA, the Bureau has added the Loan Originator Compensation Rule to its long-term rulemaking priorities. This is the first formal acknowledgment by the Bureau that it views LO Comp as a priority. As explained in the agenda’s preamble, “the Bureau has received feedback that aspects of Regulation Z’s loan originator compensation requirements are unnecessarily restrictive.” As a result, the Bureau is now considering “whether to permit adjustments to a loan originator’s compensation in connection with originating state housing finance authority loans[,]” and “whether to permit creditors to decrease a loan originator’s compensation due to the loan originator’s error in order to provide clearer rules of the road for regulated entities.” This is a very positive first step, and MBA will remain engaged with the Bureau in order to expedite consideration.

The Fall 2019 Rule List also includes several items impacting mortgage finance, most significantly rulemakings on the Qualified Mortgage/Ability-to-Repay Rule (QM/ATR Rule), PACE financing, and several rulemakings impacting HMDA. 

The Fall 2019 Rule List can be found here. The Spring 2019 Agency Rule List of long-term actions can be found here. The CFPB’s semiannual regulatory agenda can be found here

MBA Seeks Flexibility from VA on Refinance Cures
Last Friday, MBA submitted comments to the Department of Veterans Affairs regarding its enforcement of fee recoupment and other requirements on refinanced loans. Specifically, MBA discussed the confusion in the market as a result of ambiguous phrasing in VA guidance documents, as well as inaccurate guidance provided by some VA staff. For example, it was unclear whether refinance loans that reduced the borrower’s term or moved the borrower from an adjustable to a fixed interest rate were subject to the fee recoupment requirements put in place by Congress. Guidance from the VA’s regional offices suggested this was permissible, but VA later disclaimed that interpretation. The widespread market confusion has led to VA seeking remediation from hundreds of lenders for thousands of potentially non-compliant loans.

As a result, MBA requested that VA “use its discretion to accept cures that will satisfy the requirements of the [legislation] while also recognizing the unique challenges faced by lenders offering these cures.” MBA offered examples of cures that would provide appropriate relief to borrowers while mitigating the costs to lenders. Finally, MBA urged VA to provide flexibility with respect to the timelines associated with any potential cures.

FHFA Announces Reproposal of Enterprise Capital Rule in 2020
On November 19, the Federal Housing Finance Agency announced plans to fully repropose the rule on capital requirements for Fannie Mae and Freddie Mac in 2020. The agency stated that the 2018 rule was proposed prior to recent changes allowing the GSEs to retain capital, and noted that comments previously received were submitted under a different set of assumptions about the future of the GSEs. Director Mark Calabria stressed the importance of this rule and stated that the rule would be “reproposed and finalized within a timeline fully consistent with ending the conservatorships.”

MBA strongly supports the development of revised capital requirements for the GSEs and our 2018 comment letter outlines many of our recommendations including adopting a countercyclical approach to risk-based capital, implementing appropriate stress testing, and using the regulatory frameworks of other large financial institutions as a guide to forming these requirements. MBA looks forward to working with FHFA to establish the new capital rule as we move toward an end to conservatorship.

CFPB Requests Public Comment on its TRID Rule Assessment Plan
Last Wednesday, the Consumer Financial Protection Bureau published a request for information (RFI) on its assessment plan for the TILA/RESPA Integrated Disclosure Rule (TRID Rule). Like prior assessments of the ATR/QM Rule and the RESPA Mortgage Servicing Rule, the TRID assessment will be conducted pursuant to section 1022(d) of the Dodd-Frank Act, which requires the Bureau to assess each significant rule and publish a report of the assessment within five years of the effective date of such rule. Based on the TRID Rule’s October 3, 2015, effective date, “the Bureau anticipates that it will issue an assessment report not later than October 3, 2020.” The assessment will address, among other factors, the TRID Rule’s effectiveness in meeting the purposes and objectives of Title X of the Dodd-Frank Act, as well as the specific goals of the TRID Rule: aiding consumers in understanding their mortgage loan transactions, facilitating cost comparisons, helping consumers decide whether they can afford a loan as offered, etc.

The Bureau notes that the TRID assessment plan “is informed by a cost-benefit perspective[.]” Given this approach, research questions presented in the assessment plan “seek to quantify the costs and benefits of the TRID Rule” by examining its consumer, firm, and market effects. The RFI invites comment on a series of specific questions relating to proposed assessment plan, including the plan’s scope, feasibility, and recommendations for improvement. The Bureau also requests data and other factual information on the TRID Rule’s benefits and costs; comments on unclear aspects of the TRID Rule; and recommendations for modifying, expanding, or eliminating the TRID Rule. The Bureau does note that while these comments will be informative, the assessment is not necessarily the first step to a subsequent rule-making. Comments in response to the Bureau’s TRID assessment plan must be submitted by January 20, 2020. MBA will prepare a response to the Bureau’s RFI.

Senate Banking Committee Holds Hearing for HUD Deputy Secretary Nominee Montgomery
Last Wednesday, the Senate Banking Committee conducted a hearing on several political nominees, including Federal Housing Administration Commissioner Brian Montgomery’s nomination to be HUD Deputy Secretary.

Committee Chairman Mike Crapo, R-Idaho, began his questioning by discussing HUD’s GSE white paper released in September, and Montgomery pledged to continue working with the committee on housing finance reform. Crapo also asked Montgomery if the memorandum of understanding between HUD and the Department of Justice on the False Claims Act will encourage more lenders to participate in FHA lending programs. Montgomery was optimistic that the MOU and HUD’s recent initiatives on annual certification and defect taxonomy will “widen the aperture” for lenders to return to FHA.

Ranking Member Sherrod Brown, D-Ohio, asked Montgomery about his involvement with HUD’s Disparate Impact rule, and Sen. Catherine Cortez Masto, D-Nev., pushed Montgomery to admit that there is an affordable housing crisis in some areas of the country. A confirmation vote on Montgomery by the committee is now expected to take place sometime in early December.

House Panel Discusses Data Privacy Standards
Last Thursday, the House Financial Services Committee’s Task Force on Financial Technology held a hearing, “Banking on Your Data: The Role of Big Data in Financial Services.” The task force heard testimony from a panel consisting of academics, scientists, and industry participants that offered differing viewpoints on the increased use of “big data” in financial services – and how that has led to the rapid development of new products and services – and the role of data aggregators (and responsibilities of the participating entities).

During the hearing’s question-and-answer exchange, members of the task force pressed witnesses on a number of topics including inadequate and overly complex disclosure requirements, “screen scraping” technology, the potential for establishing a national framework for privacy standards, and the ability of consumers to control what data they do choose to share. As part of the hearing, multiple legislative drafts were proffered – though none were substantively discussed. Both Democrats and Republicans expressed general agreement on the need to address consumer privacy as it applies to financial technology and big data in a bipartisan manner. MBA will remain engaged with key HFSC members as discussions on consumer data – and appropriate levels of third-party access to data for legitimate business purposes – continue.

IMB Profits Rise to Near Seven-Year High in Third Quarter of 2019
Last Thursday, MBA released its latest quarterly Mortgage Bankers Performance Report. During the third quarter, independent mortgage banks and mortgage subsidiaries of chartered banks reported a net gain of $1,924 on each loan they originated, up from $1,675 per loan in second quarter.

According to Marina Walsh, MBA Vice President of Industry Analysis, a surge in refinance activity and a healthy purchase market led to robust mortgage volume in the third quarter, pushing up production profits to a high not seen since the fourth quarter of 2012 ($2,256 per loan). The increase in profits was primarily driven by declining production expenses and higher loan balances, which mitigated the effects of lower basis-point revenue.

“Overall, it was a strong summer for independent mortgage banks, with 91 percent reporting profitability,” Walsh said.

FHFA, GSEs Discuss New URLA Implementation Timeline
Last Wednesday, Fannie Mae, Freddie Mac and the Federal Housing Finance Agency discussed a proposed timeline for the implementation of the new Uniform Residential Loan Application. The new timeline is a result of changes to the URLA that were announced in August, which include eliminating the language preference question. The proposed schedule includes mandatory use of the new form by November 1, 2020. Early adoption can begin on August 1, 2020. Lenders that coordinate with the GSEs and complete a readiness questionnaire may be permitted to use the new form beginning May 1, 2020. 

MBA is currently soliciting feedback on the GSEs’ proposed timeline to implement URLA.

CFPB Issues Servicer Report
Last Thursday afternoon, the Consumer Financial Protection Bureau issued a report on small and large mortgage servicers. The report uses data obtained from the National Mortgage Database and the National Survey of Mortgage Origination to highlight servicing disparities. The report offers descriptive data on small versus large servicers, but does not draw performance or policy conclusions. The CFPB hopes to use this report to gain insight into developments in mortgage servicing and predict the effect of new rules on servicers of different sizes.  Click here for an MBA summary of the report.

Political Update

The political map continues to shift as Representatives and Senators make the important decision to run for re-election, run for a different office or retire altogether. MAA is keeping track! Follow along and check out our 116th Congress Casualty List

Weekly Political Synopsis