MBA Advocacy Update Nov. 23 2020

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

On Wednesday, the Federal Housing Finance Agency issued a final rule establishing a revised capital framework for Fannie Mae and Freddie Mac. The final capital framework follows an initial proposal put forth by FHFA in 2018, which was re-proposed in 2020.

Also last week, the FHA released an update to its Single-Family Housing Policy Handbook. The update incorporates Mortgagee Letters released since January, and include the enhancements made to FHA’s Claims Without the Conveyance of Title procedures and the Loss Mitigation options for borrowers impacted by the COVID-19 pandemic.

1. FHFA Finalizes Capital Requirements for GSEs; MBA Voices Concerns

On Wednesday, the Federal Housing Finance Agency issued a final rule establishing a revised capital framework for Fannie Mae and Freddie Mac. The final capital framework follows an initial proposal put forth by FHFA in 2018, which was subsequently re-proposed in 2020. Under the terms of the final framework, as of June 30, the GSEs would have been required to hold a combined $283 billion in capital — $20 billion more than under the proposed rule — in order to avoid limits on capital distributions or discretionary bonuses. MBA President and CEO, Bob Broeksmit, CMB, released a statement expressing MBA’s disappointment that FHFA did not adequately address several concerns identified by MBA when the framework was re-proposed.

• Why it matters: The framework features a high level of required capital that likely will raise borrowing costs for consumers and adversely affect the availability of credit. Further, the harsh treatment of credit risk transfer mechanisms is unlikely to provide sufficient incentives for the GSEs to engage in significant levels of this activity, concentrating more risk at the GSEs.

• What’s next: MBA has called for FHFA to conduct a quantitative impact study to determine the full market impact of this rule – a common practice for calibrating other major capital rules applicable to banks. MBA will also continue to advocate for important market conduct reforms to be put in place prior to the GSEs’ eventual exits from conservatorship.

For more information, please contact Mike Fratantoni at (202) 557-2935, Dan Fichtler at (202) 557-2780, or Sasha Hewlett at (202) 557-2805.

2. FHA Releases Updated Single Family Housing Policy Handbook

On Wednesday, the Federal Housing Administration released an update to its SFHP Handbook. The update incorporates Mortgagee Letters released since January, which include enhancements made to FHA’s Claims Without the Conveyance of Title procedures and Loss Mitigation options for borrowers impacted by the COVID-19 pandemic. This update does not include the anticipated proposed changes to the servicing portion of the SFHP Handbook released in July on the FHA Single-Family Housing Drafting Table.

• What’s next: FHA is expected to release an additional update integrating the proposed changes to the servicing portion of the SFHP Handbook later this year.

For more information, please contact Sara Singhas at (202) 557-2826 or Darnell Peterson at (202) 557-2922.

3. Treasury Seeks to Sweep Unspent MSLP Funds

On Thursday, Treasury Secretary Steven Mnuchin sent a letter to Federal Reserve Chairman Jerome Powell asking for the return of unspent funds from the Main Street Lending Program and other programs after December 31. Mnuchin also asked the Fed to continue programs that provide short-term commercial paper loans to businesses, a money market program, and the Paycheck Protection Program, all for another 90 days.

• Why it matters: The MSLP is targeted towards small- and medium-sized businesses. MBA has advocated for facilities, such as the MSLP, to be modified and expanded to provide relief for MBA members.
• What’s next: The Federal Reserve expressed a preference for maintaining the full suite of emergency facilities established to address the pandemic to serve as a back-stop to the economy, including the MSLP. Under Section 4027 of the CARES Act, the Fed is not required to return unspent funds until 2026. As a result, those funds could be readily available for use under future changes in the program.

For more information, please contact Fran Mordi at (202) 557-2860.

4. IRS Updates its Tax Transcript Request Form

The Internal Revenue Service is changing the form lenders use to request tax transcripts in the Income Verification Express Service Program. 

• Why it matters: The new form is available for use now. The IRS will decline submissions of the old form beginning March 1, 2021. Lenders are encouraged to contact their IVES vendor now to begin planning the transition to the new form.

For more information, please contact Rick Hill at (202) 557-2718.

5. [VIDEO]: mPower Moments: Navigating Competing Demands and “Me Time” with 2021 MBA Chair Susan Stewart

In this episode of mPower Moments, mPower Founder Marcia M. Davies sits down with Susan Stewart, 2021 MBA Chair and CEO of SWBC Mortgage Corp.. Stewart, the third female chairman in MBA’s 107-year history, explains why improving minority homeownership is her main priority in the year ahead.

• Why it matters: In the insightful video, Stewart also shares advice on how to navigate competing work and family responsibilities, and explains why “me time” is crucial for women looking to advance in their careers.
• What’s next: To watch more mPower Moments, click here.

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

6. 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:

• CMBS Special Topics: Lender Rights, Remedies, and Recourse – December 2
• Leadership During Crises and Transitions – December 10
• Mortgage Market Developments and Becoming a Public Company – December 14
• MISMO: Introduction: Uniform Closing Instructions Templates – December 15
• Small Balance Lending in Today’s Market – December 17

MBA members can register for any of the above events and view recent webinar recordings by clicking here. For more information, please contact David Upbin at (202) 557-2890.