MBA Urges Action on T-HUD Appropriations Bill

With key appropriations votes coming up in Congress, the Mortgage Bankers Association sent a letter yesterday to Senate Appropriations Committee leaders, urging funding to support HUD’s technology needs.

The Senate Appropriations Committee is expected to consider the fiscal year 2020 Transportation-Housing and Urban Development appropriations bill this month, known as T-HUD. The letter from MBA Senior Vice President of Legislative and Political Affairs Bill Killmer reiterated MBA’s support for the T-HUD bill along with recommendations to strengthen the bill.

“We continue to support the overall efforts to accelerate [HUD’s] IT modernization and maximize the impact to the public and return on investment to taxpayers,” Killmer wrote. “Given the scope of need to modernize the decades-old IT infrastructure at FHA, additional ongoing appropriations or set-asides of at least $20 million from the HUD IT Fund for FHA systems improvements are again warranted for FY 2020.”

Beyond funding levels, Killmer said MBA has been a long-time proponent of potential improvements to FHA’s IT systems that would allow the agency to better manage the risks to its Mutual Mortgage Insurance Fund. Additionally, Killmer said MBA is pleased that FHA has proposed significant revisions to its annual and loan-level certifications and a new version of its defect taxonomy for stakeholder review and feedback. “These updates will provide lenders with greater certainty regarding loan review–and, in doing so, expand access to credit for low- to moderate-income homebuyers,” he said.

For Ginnie Mae, MBA supports increasing funding for staffing, training and technology needs, supporting Ginnie Mae’s full request for $28.4 billion for these purposes is an appropriate level of funding. “Given Ginnie Mae’s role in providing liquidity targeted to low- and moderate-income families, first-time homebuyers, renters, veterans and rural households, this funding level is necessary to prudently manage the increased loan volume in the single-family and multifamily mortgage markets,” MBA said. “In addition, in recent years, market share for FHA, VA, and Rural Housing Service single-family lending has continued to shift towards a more diversified base of smaller lenders. MBA believes that this is a positive trend for Ginnie Mae that reduces concentration risks in the program, but cautions that it may require increased oversight or funding in the near future to support Ginnie Mae’s counterparty risk management of the expanded issuer base.”

With respect to FHA’s multifamily and healthcare finance programs, MBA asked the Committees to continue to include $30 billion in commitment authority for the General and Special Risk Insurance Fund in its FY 2020 proposal, as well as adequate funding for rental assistance, particularly Section 8 Project Based Rental Assistance.

“Together, these programs allow private sector lenders to continue to finance workforce and affordable apartments and residential healthcare facilities that serve millions of Americans,” MBA said.

MBA also urged the Committees to retain protection for the government with regard to financing FHA multifamily loans through Ginnie Mae by providing a statutory prohibition on the use of Ginnie Mae securitizations in HUD’s risk sharing programs, also known as Sections 542 (b) and (c), by Housing Finance Agencies.

Additionally, MBA asked the full Committee mark to maintain the prohibition on federal funds being used to facilitate eminent domain seizures of performing mortgage loans. “By enacting this prohibition for the past five fiscal years, Congress was able to defuse this threat,” MBA said. “If the ban is not renewed, the threat posed by these schemes may return. If so, the introduction of this new risk to the housing finance system would severely impact the return of private capital to our markets, and would undermine any congressional efforts to successfully transition to a new housing finance system.”

MBA also urged the committees to continue $60 million in funding for housing and homeownership counseling. “These funds are critical to assisting homeowners facing foreclosure, helping first-time homebuyers navigate the challenges of the purchase process, and counseling for reverse mortgages (a program requirement) for seniors, a traditionally high-risk group for financial fraud.”