MBA Advocacy Update

HUD released its annual report detailing the financial condition of the FHA Mutual Mortgage Insurance Fund. And this past Tuesday, the FHFA published its semi-annual CRT Progress Report outlining the current state of the GSEs’ credit risk transfer programs, which reduce the GSEs’–and ultimately taxpayers’–exposure to mortgage credit risk.

The HUD annual report details the financial condition of the Federal Housing Administration Mutual Mortgage Insurance Fund. MBA President and CEO Bob Broeksmit, CMB, issued a statement in which he expressed encouragement regarding the steps being taken by HUD to strengthen the MMIF while ensuring that FHA continues to fulfill its mission.

Notably, the MMIF capital ratio increased from 2.76% a year ago to 4.84% in FY 2019. This figure reflects both effective policy changes by HUD and strong underlying conditions in the housing market and the economy. The FHA forward portfolio is performing well, with a 5.44% capital ratio and low delinquency rates. As in past years, though, HUD has pointed to a number of risk factors – such as increasing average DTI ratios, decreasing average credit scores, and increasing use of cash-out refinances – as reasons to show caution regarding the future status of the MMIF.

Meanwhile, the HECM program experienced a dramatic improvement in FY 2019, though it remains a drag on the health of the combined fund. The HECM portfolio stands at a negative 9.2% capital ratio, with a capital position of negative $5.9 billion.

MBA urges HUD to undertake further reforms to mitigate the impact of the HECM portfolio on the forward portfolio and address remaining pockets of what FHA defines as “extreme risk layering” – a small but growing cohort of loans with debt-to-income ratios above 50%, FICO scores below 640, and less than two months of cash reserves. Those changes should facilitate efforts to adjust FHA premiums to a level commensurate with the health and risk profile of the MMIF.

For more information, please see the MBA summary of the report or contact Dan Fichtler at (202) 557-2780 or Julienne Joseph at (202) 557-2782. 

FHFA Releases Semi-Annual Report on Fannie Mae and Freddie Mac Credit Risk Transfer Programs
On Tuesday, the Federal Housing Finance Agency published its latest semi-annual Credit Risk Transfer Progress Report outlining the current state of the GSEs’ CRT programs, which reduce the GSEs’ – and ultimately taxpayers’ – exposure to mortgage credit risk. The report noted that the GSEs combined to transfer risk on single-family loans with $281 billion in unpaid principal balance, with a total risk in force of $10 billion, in the first half of 2019. Securities issuances such as STACR and Connecticut Avenue Securities, which represent the most common form of credit risk transfer, accounted for 56% of single-family risk in force in the first half of 2019, while reinsurance transactions accounted for 26%, and lender risk sharing accounted for another 18%.

Since the start of the CRT programs in 2013, the GSEs have transferred a portion of credit risk on $3.1 trillion in UPB with a combined risk in force of $102 billion. MBA has frequently observed that effectively managing credit risk is a key component to a reformed secondary mortgage market, a sentiment that is also expressed in the recently released FHFA Strategic Plan for the Conservatorships and the 2020 GSE Scorecard. MBA will continue to advocate for the use of CRT transactions and other risk-sharing methods to protect taxpayers, and to help shape a safer and more stable housing finance system.

For more information, please contact Sasha Hewlett at (202) 557-2805.

MISMO® Releases Additional Background Info, FAQs on Taxpayer Consent Language for Sharing Tax Transcripts
Last week, MISMO®, the mortgage industry’s standards organization, released its Taxpayer Consent Language, which was created to provide a consistent way for the mortgage industry to comply with the Taxpayer First Act.

The new law, which goes into effect on December 28, requires taxpayers to provide consent for the express purpose for which their tax information will be used. Additionally, taxpayers must provide consent for their tax information to be shared with other parties.

MISMO has published updated background information and a list of frequently asked questions to assist organizations as they work to implement the Taxpayer Consent Language. Organizations are strongly encouraged to discuss the provisions of the Taxpayer First Act with their counsel and/or compliance departments to determine how best to comply. Communication with other parties involved in the mortgage transaction will be necessary to ensure that they meet the requirements.

MISMO’s Taxpayer Consent Language is issued as a Candidate Recommendation, which means the standard has been thoroughly reviewed by a wide range of organizations and industry participants. It is available – at no charge – for broad use across the entire residential mortgage industry. 

The Taxpayer Consent Language can be accessed at: Industry participants who have comments or questions about the Taxpayer Consent Language can contact MISMO at

For more information, please contact Jonathan Kearns at (202) 557-2838.

IRS Tax Transcript Fee Likely to Increase to $3 on January 1, 2020   
The Internal Revenue Service is expected to announce as early as next week that effective January 1, 2020, it will be raising its tax transcript request fee from $2 to $3. The additional funding collected from the new assessed fee will help pay for the Taxpayer First Act’s automation of the new tax transcript process.

MBA believes the Taxpayer First Act, which requires automation of the existing process to provide near real-time responses, will result in significant improvements for taxpayers seeking to purchase a new home. However, the mortgage industry is currently the largest private sector consumer of tax transcripts, and will likely incur most of the funding costs associated with the IRS building out its new automated system.

An efficient, effective, and timely implementation of the Taxpayer First Act is of great interest to the mortgage industry. In October, MBA and the Consumer Data Industry Association (CDIA) sent a joint comment letter to the IRS with consensus recommendations ahead of the law’s implementation on December 28, 2019. The letter outlined several recommendations, including ongoing collaboration between the IRS and the mortgage industry; a focus on automation; and, most importantly, protecting taxpayer information.

For more information, please contact Jonathan Kearns at (202) 557-2838.

Wisconsin Remote Online Notarization Bill Clears First Chamber
Last week, Wisconsin Assembly Bill 293 was approved during a floor vote in that chamber following unanimous support in the Assembly Committee on Local Government. The bill, which would authorize remote online notarization in the state, is consistent with model state legislation offered by MBA and the American Land Title Association, and was drafted with input from the Wisconsin Mortgage Bankers Association. A companion bill has been introduced in the Senate (SB-317), and has received broad sponsorship.

Wisconsin’s legislature meets throughout the year, and industry advocacy will continue to work for Senate passage and enactment in the weeks ahead. Currently 22 states have enacted RON legislation, and MBA continues to work with state partners to advocate for legislation consistent with the MBA-ALTA model. Both associations are also advocating for use of MISMO’s RON implementation standards for regulations to operationalize state RON laws.

For more information on MBA’s RON campaign, visit MBA’s RON Resource Center or contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

MBA Expresses Support for the CFPB’s Tech Sprint Proposal 
Last Friday, MBA submitted comments in response to the Consumer Financial Protection Bureau’s Request for Information regarding Tech Sprints. As explained in the RFI, Tech Sprints “gather regulators, technologists, financial institutions, and subject matter experts from key stakeholders for several days to work together to develop innovative solutions to clearly identified challenges.” Consistent with its statutory mandate to foster innovation in financial services, the Bureau is considering using Tech Sprints “as a means to encourage regulatory innovation and collaborate with stakeholders in developing viable solutions to regulatory compliance challenges.”

In its comment letter, MBA applauded the Tech Sprint proposal as well as other recently announced efforts such as the revised No-Action Letter Policy and the “Product Sandbox” program, which together demonstrate the Bureau’s commitment to fostering innovation. The comment letter urged the Bureau to ensure broad participation in the Tech Sprints, and also offered several suggestions on how certain rule changes by the CFPB and other regulators can facilitate greater innovation in the mortgage industry.

For questions on MBA’s Tech Sprint comments, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.   

mPower Moment: Bank of America’s D. Steve Boland Discusses Stepping Out of Your Comfort Zone
In this month’s episode of mPower Moment, D. Steve Boland, Bank of America’s Head of Consumer Lending, chatted with MBA COO and mPower Founder Marcia Davies and offered professional advice for the mPower community. He shared how he advanced his career by being intellectually curious, stepping out of his comfort zone, and identifying great mentors who helped him boost his success. One noteworthy piece of advice Boland offered was, “Don’t be afraid to fail; instead be interested in learning.” 

Watch the video here.

For more information, please contact Marcia Davies at (202) 557-2707.