MBA Advocacy Update Sept. 1, 2020
On Tuesday, the Federal Housing Finance Agency announced steps to limit the impact on both lenders and consumers of its newly issued 50-basis-point GSE Adverse Market Refinance Fee. Following two weeks of sustained MBA-led advocacy with its coalition partners, FHFA delayed the implementation date of the fee from September 1 to December 1.
Following that announcement, FHFA also issued an extension of several COVID-19-related loan origination flexibilities, including those related to appraisals, income and employment verification, and power of attorney, through September 30.
1. Sustained MBA/Coalition Advocacy Leads to GSE Refinance Fee Delay, Narrowed Scope
On Tuesday, the Federal Housing Finance Agency announced steps to limit the impact on both lenders and consumers of its newly issued 50-basis-point GSE Adverse Market Refinance Fee. Following two weeks of sustained MBA-led advocacy, which included close coordination with consumer and industry coalition partners, the administration and Congress, FHFA delayed the implementation date of the fee from September 1 to December 1 and exempted loans with balances below $125,000, as well as refinance loans originated through the Home Ready and Home Possible programs.
MBA President and CEO Bob Broeksmit, CMB, issued a statement commending the decision, noting that “extending the effective date will permit lenders to close refinance loans that are in their pipelines and honor the rate lock commitments they made to their borrowers, ensuring that economic relief in the form of record-low interest rates will continue to flow to consumers.”
- Why it matters: These much-needed revisions to the previously announced policy will promote a healthier, more vibrant refinance market – particularly for the consumers most in need of support.
- What’s next: MBA will continue to collaborate with FHFA, the GSEs, the administration, Congress and all other stakeholders to ensure that future policy and pricing decisions strike the right balance between allowing the GSEs to appropriately manage their risk and continuing to offer affordable and sustainable home purchase and refinance opportunities to all qualified borrowers.
2. FHFA Extends GSE Loan Origination Flexibilities; Allows Further GSE Purchases of Loans in Forbearance
Last week, FHFA also issued an extension of several important COVID-19-related loan origination flexibilities, including those related to appraisals, income and employment verification and power of attorney, through September 30. Notably, the extensions include the GSEs’ ability to purchase loans in forbearance – a critically important policy to preserve the availability of affordable credit, and one that previously had been slated to sunset on August 31. MBA President and CEO Bob Broeksmit, CMB, released a statement thanking FHFA and the GSEs for this extension.
- Why it matters: As the economy remains heavily impacted by the effects of the COVID-19 pandemic, these flexibilities allow for transactions to occur in a safer manner that avoids person-to-person contact whenever possible. The early forbearance purchase policy also mitigates the need for credit overlays by ensuring liquidity – albeit with steep LLPAs – for loans in which borrowers seek forbearance shortly after closing.
- What’s next: MBA will continue working with FHFA and the GSEs on the potential for further extensions as needed, as well as long-term improvements to some of these policies.
For more information, please contact Dan Fichtler at (202) 557-2780.
3. FHFA, FHA, VA Extend Foreclosure and Eviction Moratoriums
- Why it matters: The current moratoriums were set to expire August 31, but now will be extended through the end of the year, expiring on December 31. The extension provides additional protection to borrowers impacted by the COVID-19 pandemic.
For more information, please contact Darnell Peterson at (202) 557-2922.
4. FHFA to Hold Public Listening Sessions on Re-Proposed GSE Capital Rule
On Friday FHFA announced it will hold public listening sessions on its proposed capital framework for Fannie Mae and Freddie Mac on September 10 and September 14. According to the announcement, “These listening sessions are opportunities for interested parties to elaborate on specific subjects and do not substitute for formal comment letters.”
The first session on September 10 will focus on credit risk transfers. The second session on September 14 will focus on affordable housing access. MBA plans to provide its observations and recommendations on these topics at each listening session.
- Why it matters: The capital standards for the GSEs lay the foundation for a possible exit from conservatorship, and will influence future GSE business decisions, including pricing.
- What’s next: The comment period on the re-proposal ends Monday, August 31, and MBA will be filing a detailed submission with recommendations to improve the capital framework.
For more information, please contact Dan Fichtler at (202) 557-2780.
5. MBA Supports CFPB’s Advisory Opinion Proposal
Last Friday, MBA submitted comments in response to the Consumer Financial Protection Bureau’s proposed Advisory Opinion Program. The comment letter notes MBA’s strong support for the proposed Advisory Opinion Program, while offering several recommendations to enhance the Program’s effectiveness.
- Why it matters: Once finalized, the Advisory Opinion Program will allow regulated entities and third parties, including trade associations, to request written, reliable guidance on areas of regulatory uncertainty. The AO program was strongly recommended by MBA in its 2017 CFPB 2.0 white paper, and again in the 2018 follow-up, Roadmap to CFPB 2.0.
- What’s next: Given the urgent need for guidance, particularly on matters related to technology, MBA’s letter urges the Bureau to finalize the program as expeditiously as possible.
6. Federal Regulatory Agencies Issue Final CBLR and CECL Rules
On Wednesday, the federal bank regulatory agencies issued final rules relating to the CARES Act modifications to the community bank leverage ratio, current expected credit loss implementation and restrictions on distributions for banks with capital ratios that decline below specified levels. These final rules are similar to interim final rules that were issued earlier this year.
- Why it matters: The CBLR final rule, which temporarily lowers the established community bank leverage ratio from 9 percent to 8 percent, would allow more community banks to qualify to use the simplified capital and liquidity calculation methodology.
- The CECL final rule gives institutions that adopt CECL in 2020 the option to mitigate the estimated regulatory capital impact of CECL for two years, followed by a three-year transition period – thereby providing a transition period of up to five years for these institutions.
- The final rule on automatic restrictions on distributions makes restrictions on capital distributions such as share repurchases, dividend payments, and bonus payments more gradual.
- What’s next: The CBLR interim final rule continues to be in effect until October 1, 2020, when the final rule becomes effective. The CECL final rule is effective immediately upon publication in the Federal Register. The interim final rules on automatic restrictions on distributions continue to be in effect until January 1, 2021, when the identical final rule becomes effective.
For more information, please contact Fran Mordi at (202) 557-2860.
7. MBA Comments on FHA Single-Family Condo Approval Process
MBA submitted comments in response to HUD’s Proposed Information Collection on Project and Single-Unit Approvals for Single-Family Condominiums. HUD incorporated feedback, including significant suggestions from MBA, received in March 2020 on forms HUD-9991 and HUD-9992, and is seeking comments again before finalization of the updated forms.
- Why it matters: Since the release of HUD’s Final Rule on FHA Condominium Project Approvals, concerns have been raised regarding the questionnaires used in the approval process. MBA’s comment letter outlines how difficulty with the questionnaires results in incomplete data and delayed or failed project and single-unit approvals.
- What’s next: HUD will finalize the updated versions of forms HUD-9991 and HUD-9992.
For more information, please contact Hanna Pitz at (202) 557-2796.
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 CREF Market Intelligence: ESG in CREF – September 3
- Budgeting and Financial Planning for Non-Believers – September 10
- Understanding Reverse Mortgages: Impact on Your Lending Business and Consumers – September 10
- LIBOR Transition: Servicing Issues – September 18
- Lending 2021: Will You Change the Way You Work to Compete? – September 24
MBA members can access the list of recent webinar recordings by clicking here.
For more information, please contact David Upbin at (202) 557-2890.