MBA Advocacy Update Nov. 3, 2020

November 2, 2020

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

On Wednesday, HUD extended FHA’s appraisal and reverification of employment flexibilities through December 31. On Tuesday, MBA submitted comments in response to the proposed interagency flood insurance Q&A jointly issued by the OCC, the Federal Reserve, FDIC, NCUA and FCA. Also on Tuesday, MBA issued a call to action to MAA members in Pennsylvania urging Gov. Tom Wolf to approve legislation (HB 2370) that would permanently enable the use of RON in the state.

1. HUD Extends FHA Origination Flexibilities
On Wednesday, HUD extended the Federal Housing Administration’s appraisal and reverification of employment flexibilities through December 31, . The updated policy permits the ongoing use of exterior-only appraisals for most transactions, but discontinues the desktop-only appraisal option.

Why it matters: The appraisal and reverification of employment flexibilities allow for reduced face-to-face contact in the home-buying process and relieve difficulties associated with social distancing or work-from-home policies.

What’s next: MBA will continue to advocate for these flexibilities to be extended for the duration of the pandemic to ensure smooth market functioning.

For more information, please contact Hanna Pitz at (202) 557-2796.

2. MBA Provides Feedback on Proposed Interagency Flood Insurance Q&As

On Tuesday, MBA submitted comments on proposed interagency questions and answers on flood insurance. It was jointly issued by the Office of the Comptroller of the Currency, Federal Reserve, Federal Deposit Insurance Corp., National Credit Union Administration and Farm Credit Administration. The comments are the product of work done by the members of MBA’s Flood Insurance Forum, who met weekly since the proposed Q&As were released in July. On Wednesday, MBA presented the Q&As and MBA’s comments to a panel hosted by the National Flood Association.

Why it matters: MBA’s comments are intended to clarify how those regulations apply across every business context, and to facilitate lenders’ and servicers’ ability to operationalize compliance.

What’s next: The Agencies will consider comments before issuing the Q&As in final form. They will replace the outdated flood insurance Q&As that are currently in place and have not been revised since passage of the Biggert-Waters flood insurance reform legislation. Separately, the Agencies will also issue proposed private flood insurance Q&As for public comment.

For additional information, or to join MBA’s Flood Insurance Forum, please contact Sara Singhas at (202) 557-2826.

3. OCC Finalizes True Lender Rule

On Tuesday, the OCC released a final rule clarifying the standard used to determine when a national bank or federal savings institution is the “true lender” with respect to a loan. The rule provides that a bank is deemed the true lender when “a bank makes a loan when it, as of the date of origination, (1) is named as the lender in the loan agreement or (2) funds the loan.”

Why it matters: Consistent with comments submitted by MBA, the final rule clarifies that a bank providing mortgage warehouse lending would not fall within the “true lender” definition.
What’s next: The rule takes effect 60 days after publication in the Federal Register.

For more information, please contact Justin Wiseman at (202) 557-2854, Blake Chavis at (202) 557-2930, or Lucia Jacangelo at (202) 557-2941.

4. Federal Financial Regulators Propose Rule on Supervisory Guidance

A group of federal financial regulators, including the Consumer Financial Protection Bureau, OCC, FDIC, NCUA and Federal Reserve, issued a notice of proposed rulemaking on the role of supervisory guidance. The proposed rule would create regulations establishing that guidance does not “have the force and effect of law” and therefore cannot serve as the basis for an enforcement action or the issuance of “matters requiring attention, matters requiring immediate attention, matters requiring board attention, documents of resolution, and supervisory recommendations for the public.” A summary of the proposal is available here.

Why it matters: Consistent with a longstanding MBA advocacy goal, the proposed rule would prevent federal regulators from using guidance to create binding obligations for regulated entities.
What’s next: MBA will work with member committees to prepare a response to the proposed rule.

For more information, please contact Justin Wiseman at (202) 557-2854, Blake Chavis at (202) 557-2930, or Lucia Jacangelo at (202) 557-2941.

5. GSEs Meet 2019 Affordable Housing Goals and Duty to Serve Obligations

On Friday, the Federal Housing Finance Agency released the 2020 Annual Housing Report, which provides an overview of the affordable housing activities of Fannie Mae and Freddie Mac during the course of 2019. In both the single-family and multifamily markets, each GSE met all of its housing goals in 2019. Similarly, FHFA determined that each GSE complied with its Duty to Serve requirements in all three underserved markets – manufactured housing, affordable housing preservation, and rural housing.

Why it matters: The affordable housing goals and Duty to Serve obligations, along with requirements to make allocations to the Housing Trust Fund and the Capital Magnet Fund, represent important components of the GSEs’ efforts to further housing affordability.
What’s next: MBA will continue to work with FHFA and the GSEs to increase the effectiveness of these efforts to promote affordable housing – efforts that take on even greater importance in response to the negative impacts of the ongoing COVID-19 pandemic.

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

6. Pennsylvania Governor Signs Legislation to Permanently Adopt Remote Online Notarization

On Thursday, Pennsylvania Gov. Tom Wolf signed legislation (HB 2370) that permanently enables the use of remote online notarization in the state.

Why it matters: In response to the health emergency created by COVID-19, the Pennsylvania Legislature enacted legislation (SB 841) that suspended the in-person requirement mandated by state law for notarial acts to allow for RON. However, the authority to utilize RON would have ended 60 days after the termination or expiration of the COVID-19 Disaster Emergency Order. On Tuesday, MBA, through the Mortgage Action Alliance, issued a call to action to MAA members in Pennsylvania to urge Wolf to approve HB 2370 and permanently authorize the use of audiovisual technology to complete financial transactions. More than 50 MAA members participated in this advocacy effort urging the governor to sign the bill into law.

Pennsylvania’s RON legislation is consistent with the MBA-ALTA state model bill and the model language in the Revised Uniform Law on Notarial Acts (RULONA) developed by the Uniform Law Commission, a nonpartisan group of legal experts.
What’s next: HB 2370 is effective immediately, and the Pennsylvania Department of State may authorize a notary public to conduct notarial acts consistent with current standards for identity proofing.

For more information, please contact Kobie Pruitt at (202) 557-2870.

7. Mortgage Forbearance Guest Column in the Journal of Structured Finance by MBA’s Mike Fratantoni
Mike Fratantoni, MBA SVP and Chief Economist, wrote a peer-reviewed research article for the Journal of Structured Finance on the key features of the mortgage forbearance plans during the COVID-19 pandemic. Read the full article here.

What it says: Fratantoni’s article – written in August and published this week – gives an overview of mortgage forbearance as the principal policy intervention during the pandemic, and highlights key findings from MBA’s Weekly Forbearance and Call Volume Survey.

For more information, please contact Mike Fratantoni at (202) 557-2935.

8. Upcoming and Recent MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely webinars that cover 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: