MBA Advocacy Update Oct. 26, 2020

Bill Killmer; Pete Mills

On Monday at the MBA Annual Convention and Expo 2020, Federal Housing Finance Agency Director Mark Calabria announced a proposed rule regarding development of new products and activities by the GSEs. Additionally, FHFA announced extension of GSE loan origination flexibilities related to appraisals, income documentation, employment verification and power of attorney through November 30. FHFA also extended through November its permission for the GSEs to purchase certain loans in forbearance.

On Tuesday, the Consumer Financial Protection Bureau released a final rule extending the GSE Patch. And on Wednesday, Senate Republicans failed to clear a procedural hurdle necessary to proceed to consideration of their latest “skinny” ($500 billion) COVID-relief package.

1. FHFA Proposes Rule to Increase Transparency of New GSE Products and Activities
On Monday at MBA’s
Annual Convention and Expo 2020, Federal Housing Finance Agency Director Mark Calabria announced the release of a proposed rule regarding the development of new products and activities by Fannie Mae and Freddie Mac. The proposed rule provides a more comprehensive and transparent framework for FHFA review of new GSE products and activities, as well as opportunities for public comment.

  • Why it matters: MBA has long advocated for greater transparency in the development of new GSE products and activities as one of several “market conduct” reforms that should be implemented prior to the GSEs’ eventual exits from conservatorship. The goal of such a policy should be to balance the need for innovation with a process to ensure that new activities and products meet well-defined objectives, do not confer permanent advantages to market participants, and do not encroach on primary market activities.
  • What’s next: MBA will work with its members to develop comments and recommendations in response to the proposed rule to ensure it properly balances the benefits of innovation with the need for transparency and a level playing field. Comments will be due 60 days following publication of the proposed rule in the Federal Register.

For more information, please see this Fact Sheet or contact Sasha Hewlett at (202) 557-2805 or Hanna Pitz at (202) 557-2796.

2. FHFA Further Extends GSE Loan Origination Flexibilities
In his appearance at MBA’s Annual Convention & Expo 2020, FHFA Director Mark Calabria
announced extension of GSE loan origination flexibilities related to appraisals, income documentation, employment verification and power of attorney through November 30. These policies had been set to expire at the end of October. Shortly thereafter, FHFA also extended the GSEs’ ability to purchase loans that went into forbearance after closing but prior to their delivery to the GSEs. This policy was extended through November 30, as well.

  • Why it matters: These loan origination flexibilities remain important as the pandemic necessitates limited person-to-person interaction and broader economic weakness makes mortgage forbearance a vital lifeline for many households.
  • What’s next: MBA will continue to work with FHFA and the GSEs to ensure these flexibilities are extended as long as market conditions warrant to provide support for borrowers and industry participants.

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

3. CFPB Issues Final Rule Extending the GSE Patch
On Tuesday, the Consumer Financial Protection Bureau released a
final rule extending the sunset date of the GSE Patch. Under the final rule, the GSE Patch (i.e., the Temporary GSE QM loan definition) will remain available for loan applications received before: (1) the mandatory compliance date of the final rule amending the General QM loan definition (i.e., the proposed price-based QM loan definition) and (2) before the GSEs exit conservatorship. An MBA-prepared summary of the final rule is available here. 

  • Why it matters: Consistent with MBA’s recommendations, the final rule uses loan application date to determine whether a loan qualifies for the Temporary GSE QM loan definition or the revised General QM loan definition. This will prevent a potential gap in QM coverage where applications are taken under the old rule and closed under the new rule. In addition, language in the final rule indicates the Bureau’s commitment to providing an appropriate implementation timeframe, which will help facilitate a smooth and orderly transition to a revised General QM loan definition.
  • What’s next: Additional QM rulemakings, including a final rule amending the General QM loan definition and a separate final rule potentially creating a Seasoned QM loan definition, are pending.

For more information, please contact Justin Wiseman at (202) 557-2854, Dan Fichtler at (202) 557-2780, or Blake Chavis at (202) 557-2930.

4. CFPB Announces Advance Notice of Proposed Rulemaking on Consumer Access to Financial Records
On Thursday, the CFPB released an
advance notice of proposed rulemaking seeking information that would assist the Bureau in drafting regulations to implement Section 1033 of the Dodd-Frank Act, which concerns consumer access to financial records. The ANPR requests “comments and information on costs and benefits of consumer data access; competitive incentives; standard-setting; access scope; consumer control and privacy; and data security and accuracy.” 

  • Why it matters: Given the ongoing shift towards greater digitalization of financial services, data access issues have become increasingly important. The Bureau seeks a framework that both protects consumer interests, while facilitating competition and innovation in the provision of consumer financial services.
  • What’s next: MBA will work with member firms to develop a response to the ANPR. 

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

5. HUD Launches FHA Catalyst Single-Family Origination Module
On Wednesday, HUD released
Mortgagee Letter 2020-35 announcing the first Federal Housing Administration-specific automated underwriting system module within FHA Catalyst. Through this module, lenders will be able to integrate their loan origination systems with FHA Catalyst, submit borrower loan application data, and receive TOTAL Mortgage Scorecard risk assessments via the platform.

  • Why it matters: MBA has consistently advocated for FHA technology upgrades, and the launch of this origination module is an important step in the modernization of the FHA program. This technology enhancement highlights the tangible benefits of the dedicated congressional appropriations that HUD has received for FHA modernization in recent years – appropriations for which MBA has strongly advocated.
  • What’s next: Effective October 30, 2020, lenders who have established integration between their LOS and FHA Catalyst may use the Single-Family Origination Module – AUS for single-family forward mortgages.

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

6. FHA Removes Early Start Letter Requirement in New Construction Financing
On Thursday, HUD released
Mortgagee Letter 2020-36 announcing a series of Federal Housing Administration policy changes – including elimination of the Early Start Letter requirement – to better facilitate financing of new construction projects.  The policies implement changes made from a December 2018 rulemaking resulting in FHA no longer mandating a limit to maximum financing of new construction without pre-approval.

  • Why it matters: The requirement to obtain an Early Start Letter from localities prior to issuance of FHA insurance case numbers was burdensome to lenders. This development, along with the consolidation of financing requirements regardless of LTV ratio, provision of alternative inspection options, and updates to documentation requirements, should enhance the process of financing an FHA-insured mortgage on new construction.
  • What’s next: The guidance can be applied immediately for existing cases, and must be used for all cases with FHA case numbers on or after January 4, 2021.

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

7. FHA Extends Deadline for Initial Forbearance Request
On Tuesday, FHA released ML 2020-34, extending the amount of time borrowers have to make initial COVID-19 forbearance requests.
 Originally borrowers had until October 30, to make their initial request. The ML expands the deadline through the end of the year, December 31, consistent with the FHFA’s recent announcement. 

  • Why it matters: The extension provides protection for a possible second wave of borrowers impacted by COVID-19.
  • What’s next: MBA will continue to engage with policymakers on future COVID-19 related policies.

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

8. MBA Forecast: Purchase Originations to Increase 8.5% to Record $1.54 Trillion in 2021
On Wednesday, MBA economists Mike Fratantoni, Marina Walsh, CMB, and Joel Kan presented virtually the 2021 outlook during MBA’s 
Annual Convention & Expo 2020. The trio’s presentation focused on the COVID-19 pandemic’s impact on the economy and mortgage market, credit availability, mortgage banker performance and servicing, and 2021 expectations for originations volume and mortgage rates.

  • Why it matters: MBA’s 2021 forecast assumes an effective vaccine will bring the COVID-19 pandemic under control, leading to a gradual economic recovery that is aided by further fiscal stimulus. In 2021, purchase originations are expected to grow 8.5% to a new record of $1.54 trillion. After a substantial 70.9% jump in activity this year, MBA anticipates refinance originations will slow in 2021, decreasing by 46.3% to $946 billion. Overall, mortgage originations are expected to fall to around $2.49 trillion, which would still be the second-highest total in the past 15 years.
  • What he said: “2021, particularly the second half, should be a year of continued purchase growth and slowing refinance activity,” said Fratantoni.
  • View the 2021 forecast tables: Economic & Mortgage Market

For more information, please contact MBA Research.

9. MBA Sends Joint Letter to North Carolina Secretary of State Urging to Adopt RON Model
On Oct. 23, MBA was joined by MBA of the Carolinas, the American Land Title Association and North Carolina Land Title Association in a joint letter to North Carolina Secretary of State William Toole to express concern over the state potentially codifying temporary COVID-19 response policies for remote notarizations that do not align with industry standards.

  • Why it matters: The temporary policies are inconsistent with those adopted throughout the country that have established robust consumer protections, and would introduce unnecessary legal uncertainty and risk to transactions conducted under such a legal framework. If the state adopts legislation that does not include the minimum standards that are necessary to safely implement remote online notarizations (RON), the result will be a non-uniform standard that interjects a high-level of uncertainty into what might constitute a valid notarial act.
  • What’s next: MBA will continue to partner with MBAC, ALTA and NCLTA to advocate for the adoption of RON legislation consistent with the MBA-ALTA model and the national consensus for implementing RON.

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

10. [VIDEO]: mPower Moments: The Power of Diplomacy with Capricia Marshall
In the latest
episode of mPower Moments, Capricia Marshall, Former Chief of Protocol in the Obama Administration and Ambassador-in-Residence at the Atlantic Council, shared incredible stories from her career on how protocol, preparation, and flexibility are necessary components to being an effective leader.

  • Why it matters: Marshall shared with mPower Founder Marcia M. Davies why empathy is at the heart of diplomacy and leadership.
  • To watch more mPower Moments, click here.

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

11. 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.