MBA Advocacy Update: June 1, 2020

Bill Killmer; Pete Mills

MBA remains engaged with key regulators, lawmakers, and stakeholders on top issues stemming from the COVID-19 pandemic. In response to member inquiries regarding the GSEs’ payment deferral options for borrowers in COVID-19 forbearance plans, MBA, along with counterparts from other national trade associations, developed FAQs following discussions with FHFA, Fannie Mae and Freddie Mac representatives.

Please continue to stay safe during this time, and feel free to reach out to us if you have any questions or if there is anything we can do to be of help.

MBA Working For You

1. Mortgage Market Response to the COVID-19 Pandemic Moves Forward

Regulators and lawmakers continue ahead with policies to address challenges brought about by the impact of the virus on financial markets.

  • MBA released results of its latest Forbearance and Call Volume Survey, which estimated the share of loans in forbearance increased to 8.36% as of May 17. The forbearance take-up rate increased modestly from the prior week, while job losses continued at an alarming pace. MBA will monitor the forbearance data closely as it works with policymakers to develop further options for servicers in need of liquidity support to meet advancing obligations.
  • In response to member inquiries regarding the GSEs’ new payment deferral option for borrowers exiting a COVID-19 forbearance plan, MBA staff, along with counterparts from other national trade associations, developed FAQs following discussions with the Federal Housing Finance Agency, Fannie Mae and Freddie Mac representatives. These FAQs, while not official guidance, include an overview of information provided by FHFA and the GSEs to help market participants better implement the payment deferral options.
  • On Thursday, MBA submitted comments to the Federal Reserve seeking clarity on the eligibility of independent mortgage banks for its Main Street Lending Program. Similarly, the Federal Reserve Bank of Boston released a series of forms, agreements, and FAQs to provide market participants with detailed information regarding the Main Street Lending Program, which should begin operations shortly. The program is designed to support medium-sized and small businesses by providing credit to sustain operations and employment through the pandemic. As with the other business lending facilities, it is expected that there will be further refinements to the Main Street program over time.
  • Fannie Mae updated Lender Letter 2020-03 to publish new requirements for borrowers using self-employment income to qualify for loans. As a result of the COVID-19 pandemic, Fannie Mae is now requiring lenders to obtain and assess year-to-date profit and loss statements that are no older than 60 days prior to the note date. The Lender Letter provides further details regarding evaluations of business operations, income, and stability.
  • The Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency jointly released new FAQs addressing the eligibility of COVID-19 response activities for credit under the Community Reinvestment Act. The FAQs cover activities that promote affordable housing and housing stability for homeowners and renters experiencing COVID-19-related hardships, as well as provide details on the consideration of loans made under the Paycheck Protection Program and the Main Street Lending Program.
  • On Thursday, MBA provided suggested revisions to FAQs related to the Washington, D.C., Residential Mortgage and Commercial Mortgage Deferment Program at the request of the District of Columbia Department of Insurance, Securities and Banking. DISB recently contacted MBA for feedback on its revised FAQs that will reflect changes to the program enacted by the Coronavirus Support Congressional Review Emergency Amendment Act of 2020 (B23-0759). B23-0759 will exempt all “federally backed” residential and commercial loans from the D.C. Residential Mortgage and Commercial Mortgage Deferment Program. B23-0759 is currently before Mayor Muriel Bowser and awaits her signature.
  • Beginning Monday (June 1, 2020), MBA will be introducing a new webinar series on COVID-19 updates, which will occur every other Monday throughout the summer. You can register for the June 1 call here.

Why it matters: These developments are indicative of the rapid response to the economic, financial, and health impacts of COVID-19, and are reflective of MBA’s focused advocacy for the industry as it seeks to continue to serve consumers.

What’s next: Further agency actions and updates are expected in the coming days and weeks. MBA will continue to provide information on these developments, including through our COVID-19 resource page.

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

2. GSEs Publish LIBOR Transition Resources

On Thursday, FHFA announced release of new Fannie Mae and Freddie Mac resources to help guide market participants through the transition away from the London Interbank Offered Rate (LIBOR). New websites from each GSE feature a joint LIBOR Transition Playbook, FAQs, and a transition timeline. The GSEs also announced new details related to the transition from LIBOR to the Secured Overnight Financing Rate (SOFR) in their Credit Risk Transfer programs and their collateralized mortgage obligations.

  • Why it matters: These developments reflect continued, steady progress being made to transition the mortgage market away from LIBOR ahead of its expected discontinuation in 2021.
  • What’s next: Fannie Mae will begin accepting deliveries of SOFR-indexed loans on August 3, while Freddie Mac will begin accepting deliveries of SOFR-indexed loans on November 16. As a reminder, the GSEs will not accept LIBOR-indexed loans with application dates after September 30.

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

3. MAA Members in California Take Action to Oppose Harmful Forbearance Legislation in Sacramento

This week, the Mortgage Action Alliance and the California MBA collaborated to issue a Call to Action to oppose legislation that would enact sweeping new forbearance standards for residential and multifamily mortgages that conflict and diverge from existing federal standards. The bill, AB 2501, authored by California Assembly Banking and Finance Committee Chair Monique Limón, has cleared the Committee, and is being fast-tracked for approval by the entire Assembly. The Call to Action makes clear that this bill needs to be amended to ensure that companies that are subject to, and in compliance with, the federal CARES Act to also be deemed to be in compliance with these state mandates. Recently MBA and the California MBA joined a coalition of other trade associations on a letter to make this and other arguments in opposing the bill.

  • Why it matters: The bill includes numerous provisions that far exceed federal CARES Act mandates, including the loss of foreclosure as a remedy for any violation of the Act. Consequently, enactment of the provisions of this law may limit access to credit and produce other unintended consequences.
  • What’s next: Real estate finance professionals in California are encouraged to take action today.

For more information, please contact William Kooper at (202) 557-2737 or Alden Knowlton at (202) 557-2816.

4. MBA, Coalition Partners Urge FCC to Allow Calls Related to the COVID-19 Pandemic Under TCPA ‘Emergency Purposes’ Exception

Last Friday, MBA joined a coalition of financial services trade groups to comment on the Federal Communications Commission’s consideration of an open petition requesting an expedited declaratory ruling. It states that calls and text messages by financial services providers on matters related to the COVID-19 pandemic are “call[s] made for emergency purposes,” and thus may be placed with an autodialer without the consent of the called party.

  • Why it matters: The Telephone Consumer Protection Act generally prohibits calls or texts placed with an autodialer without the prior express consent of the called party. The TCPA includes an exception to the prohibition for calls and texts made for “emergency purposes.” The FCC is currently considering an earlier petition submitted by MBA seeking clarification from the FCC that certain communications related to the COVID-19 pandemic qualify as calls made for emergency purposes. MBA’s recent comments note broad support for the petition from industry and consumer groups.
  • What’s next: With the public comment period now closed, the FCC will weigh the comments received and consider whether to approve the petition. MBA will continue to monitor this issue closely.

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

5. Recent and Upcoming MBA Education Webinars on COVID-19-Related Topics

MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles, and solutions pertaining to the ongoing COVID-19 pandemic. Below, please see a list of upcoming and recent webinars – which are complimentary to MBA members:

MBA members can access the full list of COVID-19 webinar recordings by clicking here. For questions, please contact David Upbin at (202) 557-2890.