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MBA Advocacy Update (Aug. 24, 2020)

August 24, 2020

Bill Killmer bkillmer@mba.org; Pete Mills pmills@mba.org

MBA continued its advocacy on the GSEs’ recently announced adverse market fee, urging the agencies and their regulator to withdraw the proposal and engage stakeholders on the following: the rationale behind the imposition of the 50 basis point fee; ways to ensure consumer impacts are mitigated; and, the need to respect existing market commitments between lenders and consumers.

Earlier this week, the Alternative Reference Rates Committee released a LIBOR ARM Transition Resource Guide to assist mortgage market participants as they move away from use of the LIBOR index. On Tuesday, the Consumer Financial Protection Bureau released a Notice of Proposed Rulemaking that would create a “Seasoned QM” category for portfolio loans that meet certain performance requirements. And on Wednesday, the CFPB approved a request from MBA and other industry trades and consumer advocates seeking an extension of the comment period for the CFPB’s recent RFI on ECOA and Regulation B.

1. MBA Urges Withdrawal of Adverse Market Fee

On the heels of the strong industry response to the Mortgage Action Alliance Call to Action – 80,000-plus letters were sent to Capitol Hill last week – MBA continued to engage with the Federal Housing Finance Agency and Congress to urge withdrawal of the GSEs’ 50 basis point adverse market fee, which is scheduled to be levied on all loan refinance loans delivered on or after September 1. 

  • Why it matters: The proposed fee would raise interest rates for borrowers seeking to lower their monthly debt service or access their equity to support their small businesses, pay education expenses, etc. MBA noted this fee runs contrary to the efforts of the Federal Reserve to keep rates low, and the recent Executive Orders directing FHFA, Treasury, HUD and other agencies to take all necessary measures to help homeowners impacted by the COVID-19 pandemic. MBA also emphasized that imposing a fee on such short notice is unprecedented and fails to respect prior contractual commitments by lenders to their customers.
  • What’s next:  MBA will continue to urge FHFA to withdraw the effective date, engage with industry and other stakeholders, and develop an aligned approach to the GSEs’ need to address the risks imposed by the pandemic. 

For more information, please contact Pete Mills at (202) 557-2878 or Bill Killmer at (202) 557-2736.

2. New Resource Guide Provides Information on LIBOR Transition 

Earlier this week, the Alternative Reference Rates Committee released a LIBOR ARM Transition Resource Guide to assist mortgage market participants as they move away from use of the LIBOR index. The Guide – which was developed with input from lenders, servicers, investors, consumer advocates, and other stakeholders – includes a timeline and key milestones, relevant risks to market participants, potential impacts of the transition, and links to various published guidance and tools.

  • Why it matters: This Guide provides further resources for institutions as they develop and execute their plans to transition away from the use of LIBOR in their adjustable-rate products.
  • What’s next: MBA will continue to work with market participants and regulators to ensure a smooth transition for the mortgage market.

For more information, please contact Dan Fichtler at (202) 557-2780.

3. CFPB Proposes New QM Category for Seasoned Portfolio Loans

On Tuesday, the Consumer Financial Protection Bureau released a notice of proposed rulemaking that would create a “Seasoned QM” category for portfolio loans that meet certain performance requirements. Among other criteria, Seasoned QMs must have no more than two 30-day delinquencies and no 60-day delinquencies during the 36-month seasoning period. 

  • Why it matters: The Bureau believes that creating an alternative pathway to a QM safe harbor for loans originated as non-QMs, or rebuttable presumption QMs, will expand access to affordable mortgage credit and promote safe and responsible innovation in the mortgage origination market.
  • What’s next: MBA will gather member feedback as we prepare a response to the Bureau’s Seasoned QM proposal. Comments are due 30 days after the NPR’s publication in the Federal Register.

For more information, please contact Justin Wiseman at (202) 557-2854, Dan Fichtler at (202) 557-2780, or Blake Chavis at (202) 557-2930.

4. CFPB Extends Comment Period on Request for Information on Equal Credit Opportunity Act (ECOA)

On Wednesday, the CFPB approved a request from MBA and other industry trades and consumer advocates seeking an extension of the comment period for the CFPB’s recent Request for Information on ECOA and Regulation B. The extension provides an additional 60 days for public comment. 

  • Why it matters: The additional time will help stakeholders respond to the important issues presented in the RFI, including ways to expand minority homeownership opportunities, reduce regulatory uncertainty, and develop viable solutions to compliance challenges under ECOA.
  • What’s next: MBA will work with members to prepare a response by the new comment period deadline of December 1, 2020.

For more information, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.

5. FHA Launches Technology Module for Single-Family Appraisals

On Tuesday, the Federal Housing Administration announced the upcoming release of its FHA Catalyst: Electronic Appraisal Delivery module on the FHA Catalyst platform.

  • Why it matters: FHA Catalyst will allow lenders to electronically submit, track, and manage single-family property appraisals. The new cloud-based platform will also serve as a centralized location for stakeholders to do business with FHA. MBA has strongly advocated for the continued funding of upgrades to FHA’s IT systems. To date, Congress has appropriated $40 million dollars toward the agency’s technology modernization effort.
  • What’s next: Mortgagees are encouraged to contact the FHA Resource Center via email at answers@hud.gov or by calling 1-800-225-5342 to request access to the EAD module in FHA Catalyst, and may start delivering appraisal submissions for forward mortgages through the EAD module in FHA Catalyst on or after September 1.

For more information, please contact Julienne Joseph at (202) 557-2782. 

6. Problematic California COVID-19 Response Bill Advances with Amendments

On Tuesday, the California Judiciary Committee unanimously approved AB-1436, a bill that would enact sweeping new forbearance standards that conflict and diverge from existing federal mandates for residential and multifamily mortgages. While the bill now includes a “safe harbor” for all loans subject to the federal CARES Act, it still contains many of the problematic provisions of legislation (AB 2501) that a broad industry coalition had previously defeated in June. Ahead of the Judiciary Committee meeting, MBA and the California MBA signed on to a industry coalition letter opposing the bill.

  • Why it matters: The bill still fails to acknowledge that mortgage servicers are intermediaries that must adhere to contractual obligations and investor guidelines. Additionally, the bill raises legal and constitutional issues, such as takings and impairment of contracts, the potential for preemption for federally chartered institutions, and imposed punitive penalties.
  • What’s next: The bill was referenced by the Senate Rules Committee and must also be approved by the full Senate before it may be considered for concurrence by the Assembly. Further amendments are possible, and MBA and the California MBA will continue to collaborate with industry partners.

For more information, please contact William Kooper (202) 557-2737 or Kobie Pruitt (202) 557-2870.

7. NMLS Ombudsman Meeting Rescheduled for September 9

The biannual Nationwide Mortgage Licensing System and Registry Ombudsman meeting, which was to take place in early August, will now take place Wednesday, September 9 from 3:30 – 5:30 p.m. ET. The NMLS Ombudsman hosts open meetings twice a year with industry representatives and state regulators throughout the country, but will not convene in person this year because of the COVID-19 pandemic. Instead, questions for panelists and commentary will be taken online for the presentation. MBA will participate in the meeting and strongly encourages state-regulated member companies to get engaged with the Ombudsman by attending the meetings. If you cannot participate on September 9, please note that the session will be recorded and made available after the event.

  • What’s next: Click here to view the agenda and submitted topics for discussion and click here to register for the meeting (use password: NMLS2020).

For more information, please contact William Kooper (202) 557-2737 or Kobie Pruitt (202) 557-2870.

8. Upcoming and Recent 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:

MBA members can access the list of recent webinar recordings by clicking here. For more information, please contact David Upbin at (202) 557-2890.

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