MBA Advocacy Update Oct. 12, 2020

Bill Killmer; Pete Mills

On Monday, MBA submitted comments to the Federal Housing Finance Agency in response to its Strategic Plan for Fiscal Years 2021-2024. The Strategic Plan includes several important reforms to the market conduct of the GSEs. And on Wednesday, the Consumer Financial Protection Bureau released new guidance on RESPA and marketing services agreements.

1. MBA Reiterates Views on GSE Reforms, FHFA Oversight
On Monday, MBA submitted comments to the Federal Housing Finance Agency in response to its 
Strategic Plan for Fiscal Years 2021-2024, which provides insight on their activities and priorities in the coming years. The Strategic Plan includes several important MBA-supported reforms to the market conduct of the GSEs, including “a fair playing field for large and small lenders,” and efforts to ensure the activities of the GSEs “stay within the boundaries of their charters.” The Strategic Plan also notes FHFA’s desire to obtain authority to examine nonbank servicers that do business with the GSEs.

In its comments, MBA applauded many of the market conduct reforms included in the Strategic Plan, but raised significant concerns with FHFA’s request for Congress to grant the agency examination authority over nonbank servicers. MBA’s letter argues that the FHFA’s rationale for seeking such authority is flawed.

  • Why it matters: Many of the objectives identified in the Strategic Plan, along with recent reforms to the GSEs, are critical prerequisites in preparing the GSEs to safely and sustainably exit conservatorship at the appropriate time.
  • What’s next: MBA will continue to advocate for more permanent reforms to ensure the GSEs operate with financial strength and appropriate market conduct post-conservatorship. MBA will also educate Congress regarding our concerns with the FHFA’s request for examination authority over GSE customers.

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

2. CFPB Issues Guidance on MSAs and RESPA Section 8
On Wednesday, the Consumer Financial Protection Bureau released
new guidance on the Real Estate Settlement Procedures Act and marketing services agreements. The guidance explains how RESPA Section 8 applies to MSAs, gifts and promotional activities. In addition, the Bureau announced that it is rescinding Compliance Bulletin 2015-05, RESPA Compliance and Marketing Services Agreements. The bulletin expressed an interpretation of RESPA that has been rejected by courts, and has caused confusion and uncertainty for lenders and other parties seeking to comply with RESPA’s requirements.

Just last month, MBA and a group of financial services trade associations sent a joint letter urging CFPB Director Kathy Kraninger to withdraw the problematic bulletin, and to clarify how RESPA applies to MSAs. The Bureau’s decision to rescind the bulletin is welcomed.

  • Why it matters: The inconsistency between the 2015 Compliance Bulletin and the recent court decisions had created significant compliance uncertainty for the industry. Pursuing clarity on RESPA Section 8, particularly on the rule’s requirements for MSAs, has been an MBA priority for years.
  • What’s next: MBA will continue its advocacy efforts aimed at resolving uncertainty surrounding RESPA Section 8, including on the rule’s application to traditionally common business arrangements such as MSAs, joint advertising arrangements, and desk rentals.

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

3. CFPB Releases TRID Rule Assessment
Last week, the Consumer Financial Protection Bureau released its assessment of the TILA/RESPA Integrated Disclosure (TRID) Rule. The assessment found that the rule made progress towards several of its goals, including improving “consumers’ ability to locate key information, compare terms and costs between initial and final disclosures, and compare terms and costs across mortgage offers.” While the TRID Rule “created sizeable implementation costs for lenders and closing companies[,]” the Bureau was not able to clearly determine the rule’s impact on ongoing costs.

The Bureau also published a research report titled, Data Point: How Mortgages Change Before Origination, which documents how loan terms and costs change during the origination process. The report found “that almost 90 percent of mortgage loans involved at least one revision, 62 percent received at least one revised Loan Estimate, and 49 percent received at least one corrected Closing Disclosure.”

  • Why it matters: While the assessment does not include recommendations for changing the rule, the information gathered and conclusions drawn will “help inform the Bureau’s future policy decisions concerning mortgage disclosures[,]” as well as “help the Bureau decide what issues to consider in a future rulemaking to make the TRID Rule more effective.”
  • What’s next: MBA will continue advocating for clarity on the rule’s disclosure requirements and liability provisions.

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

4. CFPB Issues Policy Statement on Early Termination of Consent Orders
On Monday, the Consumer Financial Protection Bureau issued a
policy statement outlining a process through which entities may request early termination of administrative consent orders. It says the Bureau will approve a request for early termination if: (1) the consent order is eligible for early termination; (2) the entity has complied with the terms and conditions of the consent order; and (3) the entity’s compliance position is “satisfactory” in the product line or compliance area covered by the Consent Order. A detailed MBA summary of the Bureau’s new policy is available here

  • Why it matters: Consent orders can impose significant burdens, including, in some circumstances, limiting an entity’s ability to merge, open new branches, etc. It is therefore important that the policies governing consent orders and other enforcement mechanisms operate transparently.
  • What’s next: MBA appreciates this statement by the Bureau and will continue advocating for clarity on Bureau enforcement processes. 

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

5. D.C. Council Holds Committee Hearing on Making AMC Licensing Law Permanent
On Thursday, Washington D.C. Council’s Committee on Business and Economic Development held a hearing to discuss
B23-0445, which would require the D.C. Department of Insurance, Securities and Banking to establish a permanent licensing regime for appraisal management companies. Prior to the hearing, MBA met with Committee staff to discuss a MBA-led coalition letter sent to Chairman Kenyan McDuffie urging the Committee to pass the bill. At the hearing, DISB’s Commissioner Karima Woods and Deputy Commissioner Brian Williams spoke in favor of the bill’s passage.

  • Why it matters: The Council established DISB’s AMC licensing authority in emergency legislation passed last year to meet the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank) deadline for all states to meet federally mandated minimum standards for AMCs. The District’s current AMC law is scheduled to lapse at the end of the year, jeopardizing access to AMC services. Lenders employ cost-saving entities like AMCs because they help lower costs, preserve appraiser independence, and facilitate the use of the federal government’s affordable housing programs.
  • What’s next: The Committee must now determine if B23-0445 moves to a vote by the D.C. Council. MBA will continue to work with its partners to advocate for the passage of B23-0445.

For more information, please contact Kobie Pruitt at (202) 557-2780.

6. Upcoming and Recent MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely 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.