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MBA Advocacy Update Sept. 8, 2020

September 8, 2020

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

Last week, the White House announced that the Department of Health and Human Services and the Centers for Disease Control and Prevention declared a health emergency due to COVID-19, requiring a halt to evictions for renters through December 31.

Also last week, MBA submitted extensive recommendations to the Federal Housing Finance Agency in response to its proposed rule to update the capital framework for Fannie Mae and Freddie Mac. And California Governor Gavin Newsom (D) signed into law AB 3088, which provides a residential safe harbor for federally backed and non-federally backed loans that comply with the federal CARES Act and agency forbearance standards.

1. MBA Provides Detailed Views on New GSE Capital Standards
On Aug. 31, MBA submitted extensive recommendations to the Federal Housing Finance Agency in response to its proposed rule to update the capital framework for Fannie Mae and Freddie Mac. MBA comments focused on ways to promote the positive changes to the GSEs’ business models over the past decade, including revisions to the proposal’s punitive treatment of the GSEs’ credit risk transfer programs. MBA also strongly urges the FHFA to lock-in through formal rulemaking several specific prior GSE reforms – including requiring the GSEs to ensure pricing and underwriting parity regardless of size or business model – before taking steps to release the GSEs from conservatorship.

  • Why it matters: The revised capital standards for the GSEs will have important consequences for GSE pricing, MBS market liquidity, consumer access to credit, the GSEs’ safety and soundness, and the paths for the GSEs to exit conservatorship.
  • What’s next: FHFA will begin reviewing the public input and adjust the capital framework accordingly. In addition, FHFA will be convening listening sessions on September 10 and September 14 to hear further public input on the impact of the proposal on credit risk transfers and affordable housing access, respectively.

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

2. CDC Issues Order Halting Evictions Through December 31, 2020; Take Action Through the Mortgage Action Alliance
On Sept. 1, the White House announced that the Department of Health and Human Services and the Centers for Disease Control and Prevention declared a health emergency due to COVID-19 that requires a halt to evictions for renters through December 31.

  • What it does: The Agency Order – published in the Federal Register Sept. 4 – applies to all renters regardless of whether the property they are living in is financed by private or government-backed loans. To apply for the new moratorium, tenants must meet certain income requirements, attest to a loss of household income due to the pandemic, and disclose they have made best efforts to pay at least partial rent. They must also stipulate that an eviction would likely leave them homeless or force them to live in close quarters with others. MBA’s summary can be found here.
  • MBA sent a press statement on Tuesday from President and CEO Bob Broeksmit, CMB, explaining MBA’s appreciation for the administration’s intent, but explaining why an eviction moratorium is not a complete or long-term solution. The statement also called on Congress to work with the administration and pass legislation – as quickly as possible – that provides direct financial support and emergency rental assistance with workable mechanisms to ensure it reaches tenants in need.
  • On August 21, MBA signed a coalition letter along with 30 trade associations requesting that stimulus negotiations immediately restart and include assistance for renters.
  • What’s next: MBA held a member call on Thursday to walk through the 37-page order. In the coming days, MBA will formulate its own strategy and will work with other industry trades on a combined response that continues to push for direct rental assistance. This will include a coalition letter to Congress urging action, and a Mortgage Action Alliance “Call to Action.”
  • MAA “Call to Action”: Please take action by sharing the following link internally and/or with your contact list and encouraging them to send an auto-generated letter to your senators and representatives: http://www.votervoice.net/Shares/BQYYgA-2ACYzSA2A14W7FAA.

For more information, please contact Bill Killmer at (202) 557-2736 and Mike Flood at (202) 557-2745.

3. FHA Extends Origination Flexibilities and Quality Control Review Waivers
Last Friday, the Federal Housing Administration extended its appraisal and re-verification of employment flexibilities through October 2020, as well as its quality control review waivers for early payment defaults caused by COVID-19-related forbearance through the August QC reviews.

  • Why it matters: The appraisal and re-verification of employment flexibilities allow for reduced face-to-face contact in the homebuying process and relieve difficulties associated with social distancing or work-from-home policies. The waivers for QC reviews of loans impacted by the pandemic will save lenders unnecessary costs that would have arisen from conducting QC reviews on loans simply because borrowers sought forbearance under the CARES Act within 6 months of closing.  
  • 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.

4. MBA Comments on the OCC’s True Lender Rule  
On Thursday, MBA commented on the Office of the Comptroller of the Currency’s True Lender Rule. The OCC proposal would clarify that a national bank or federal savings association is the “true lender” of a loan if, as of the loan’s origination, the bank (1) is named the lender in the loan agreement, or (2) funds the loan. MBA’s comments urged the OCC to revise the rule to ensure that warehouse lenders do not fall within the “true lender” definition.

  • Why it matters: Warehouse lenders play an integral role in the mortgage market by providing capital to independent mortgage banks and other loan originators. Exposure to liability as “true lenders,” would likely reduce capital in the system and limit consumer access to credit.

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

5. FHA Announces Additional Modules for Case Binder and Single-Family Forward Claims
This week, FHA released two mortgagee letters announcing additional FHA Catalyst modules.  Mortgagee Letter (ML) 2020-29, FHA Catalyst: Case Binder Module, announced additional functionality and updated requirements for the electronic submission of case binders selected for post-endorsement review. Mortgagee Letter (ML) 2020-18, FHA Catalyst: Claims Module Single Family Forward Claims announced mortgagees’ ability to complete digital submissions of loss mitigation home retention claims and supplemental claims for single-family forward mortgages. Last month, FHA released Mortgagee Letter (ML) 2020-26, which announced the platform’s ability to accept electronic appraisal submissions for forward mortgages through the EAD module. The feature went live on Sept. 1.

  • Why it matters: MBA has strongly advocated for continued funding for upgrades to FHA’s IT systems. To date, Congress has appropriated $40 million dollars toward the agency’s technology modernization effort. FHA Catalyst allows lenders to electronically submit, track, and manage single family property appraisals, property evaluations, case binders, and forward claims.
  • What’s next: Effective September 14, mortgagees not approved for electronic Case Binder submission through FHA Connection are required to use the Case Binder module to submit single-family forward and HECM case binders that FHA requests for review in the Loan Review System.

For more information, please contact Julienne Joseph at 202-557-2782.

6. MBA, Coalition Partners Urge FCC to Address Erroneous Call Blocking and Call Mislabeling
On Tuesday, MBA and a coalition of financial services trade groups filed comments in response to the Federal Communications Commission’s recent TRACED Act rulemaking. The coalition’s comments ask the FCC to require voice service providers to: notify callers immediately when a call is blocked or when a derogatory label is placed on a caller; remove erroneous blocks and derogatory labels within 24 hours; and to apply the TRACED Act redress mechanisms to the third-party call-labeling services, often used by voice service providers.

  • Why it matters: Overbroad call blocking and inaccurate call labeling obstructs legitimate callers’ communication efforts, including those of mortgage servicers, and deprives consumers from receiving time-sensitive, critical information relevant to their financial well-being.
  • What’s next: MBA will continue to engage the FCC on matters related to TRACED Act implementation. 

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

7. Sustained Industry Advocacy Results in Vastly Improved California COVID-19 Response Law
This week, California Governor Gavin Newsom (D) signed AB 3088, legislation that extends the state’s residential foreclosure and eviction protections until January 31, 2021. Importantly, unlike previous versions of the bill (AB 2501  and AB 1436), AB 3088 contains significant improvements that were supported by a broad industry coalition. Previous industry advocacy efforts resulted in defeat of AB 2501, and stalled action on AB 1436, which led to a workable compromise among legislative leaders and the Governor’s office. MBA and the California MBA worked closely together since the introduction of AB 2501 earlier this year as well as with industry partners in California and allied national groups. Additionally, MAA members weighed in multiple times during recent months via calls to action and phone calls to key state Assembly Members and Senators. AB 3088 was quickly passed over the weekend by both chambers and then swiftly signed into law by Newsom.

  • Why it matters: The new law provides a safe harbor for both federally backed and non-federally backed loans that are serviced in compliance with the federal CARES Act. The law also allows a mortgage servicer to comply with applicable federal guidance regarding borrower options following a COVID-19 related forbearance. In addition, it removes multifamily forbearance provisions that were included in previous versions of the bill, as well as in AB 2501 and AB 1436.
  • What’s next: The Legislature will likely revisit the tenant rent and mortgage relief provisions of the law in future legislative sessions, and MBA will continue to work with California MBA to monitor and engage. 

For more information, please contact: William Kooper at (202) 557-2737 Kobie Pruitt at (516) 557-2870.

8. Oregon Extends Emergency Foreclosure Moratorium Period Despite Industry Objections
On Aug. 31, Oregon Gov. Kate Brown (D) issued Executive Order 20-37, which extended foreclosure protections for Oregon homeowners and business owners through December 31. The current moratorium on foreclosures is contained in HB 4204, which passed during a special legislative session operating under expedited procedures in which several bills went from introduction to passage in just over 48 hours. Since passage, MBA has worked closely with the Oregon MBA, engaged the Mortgage Action Alliance and led an industry coalition in urging Brown not to extend the provisions. MBA Education also held an informative webinar about the new law, which can be accessed here.

  • Why it matters: HB 4204 required Brown to announce an extension of the moratorium 30 days before the moratorium expired on September 30. The Oregon law does not provide lenders and servicers a safe harbor for loans subject to and in compliance with federal CARES Act provisions. By providing forbearance and foreclosure protections well beyond those federal mandates, Oregon has created compliance difficulty and legal and regulatory risk for the industry.
  • What’s next: MBA will continue to work with the Oregon MBA to advocate for a CARES Act safe harbor and other improvements.

For more information, please contact William Kooper (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

9. 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:

MBA members can access the list of recent webinar recordings by clicking here. For more information, please contact David Upbin at 202-557-2890.

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