#MBASPRING21 Broeksmit: Industry Faces ‘Different Landscape’ in 2021

(MBA President & CEO Robert Broeksmit, CMB, addresses MBA Spring Conference & Expo.)

So, if 2020 was one of the strangest years on record, is 2021 the “hold my beer” year? Mortgage Bankers Association President & CEO says the real estate finance industry is facing a “very different landscape” fraught with potential difficulties.

“This year promises to be just as busy, if not more so,” Broeksmit said yesterday during the MBA Spring Conference & Expo. “Once again, economic conditions will be a major factor. But the industry is also facing a very different landscape in Washington, D.C.”

Candidly, Broeksmit said 2021 “has the potential to be difficult.”

“We’re likely looking at a ‘snap-back’ to the policy goals and regulatory style of 2009 to 2016,” Broeksmit said. “On the one hand, the narrow majorities in Congress mean that most new legislation is likely to be middle-of-the-road. On the other hand, the White House and federal agencies are likely to take a more aggressive approach. We are likely looking at less guidance and more enforcement.”

Broeksmit said he has heard MBA member concerns. “But my message to you and the entire industry is one of reassurance: We’ve got your back,” he said. “The Mortgage Bankers Association was made for this moment. We are uniquely positioned to protect your companies and ensure your continued ability to serve the American people. We proved it in the wake of the Great Recession just over a decade ago. We’re proving it again right now.”

The key to MBA’s success has been a bipartisan approach, Broeksmit said, noting MBA has spent years building strong relationships with leaders on both sides of the aisle. “We are always part of the conversation, whenever and wherever it happens,” he said.

MBA’s message to policymakers is three-fold: “First, we’re telling them how much you matter and the difference you make in people’s lives,” Broeksmit said. “Second, we tell them you need policies that enable you to empower families and improve communities. We show policymakers what’s working, what’s not, what policies are needed, and what proposals would do more harm than good. We always urge regulation and legislation that is clear, easy to implement, and beneficial to your companies and the millions of Americans you serve.”

Broeksmit said MBA’s third message is perhaps the most important right now: “We’re telling policymakers this isn’t 2009. The industry is in a much better place, and so are your customers. The reforms put in place in the wake of the last crisis have been well implemented. While improvements can always be made, there’s no need for dramatic change. The good news is that, so far, policymakers tend to agree. They know our industry isn’t the problem, but rather, part of the solution. Leaders on both the left and right have been receptive to these messages. As a result, we’ve already steered policy in a sensible direction.”

For example, In the waning days of the last administration, there was little clarity on what would happen to the GSEs. The situation changed rapidly after November 3.

“There was a very real threat the GSEs would see a rushed release from conservatorship,” Broeksmit said. “That would have been damaging, causing disruption in the markets and hurting consumers, so MBA pushed back, successfully. But we didn’t only prevent bad outcomes. We also secured good progress. In January, FHFA and Treasury updated Fannie and Freddie’s PSPA agreement. Thanks to our efforts, the new agreement strengthened the level playing field for lenders of all charter types and volumes. We have never been closer to making that guarantee a permanent reform reality.”

That said, Broeksmit noted, MBA still has work to do. “The recent move to limit purchases for second homes and investment properties is concerning,” he said. “But rest assured, MBA is making your voice heard. In the last six weeks, I have spoken to key officials at both GSEs, FHFA and Treasury. My message to them is clear: There’s a better way to do this. They don’t have to disrupt your business and limit consumer choice. I believe this message has been received. And I’m hopeful we will soon have positive news.”

Broeksmit stressed MBA’s positive working relationship with the Biden administration. “We laid the groundwork well before the inauguration,” he said. “We worked with the transition teams for Treasury, HUD, the VA, FHFA, the CFPB and other key agencies. MBA has doubled down on outreach since January. I have personally had high-level meetings with key White House officials and departments, including the Domestic Policy Council and the National Economic Council, the CFPB and Treasury. More face-to-face meetings are in the works. We also continue to strengthen our relationships in Congress. We’ve worked with current Democratic and Republican leaders going back years. This puts us in a strong position to shape key legislation, which we’re already doing.”

The recently passed American Rescue Plan is the proof, Broeksmit said. “Last month, we worked with Congress and the White House to include $10 billion for mortgage assistance in the final bill,” he said. “It’s the first time Congress has included mortgage assistance in pandemic relief. It wouldn’t have happened without MBA’s hard work.”

Even as the economic impact of the pandemic wanes, MBA’s work on forbearance is ongoing and deep, Broeksmit said. “Last year, we launched a nationwide ad campaign to help Americans understand their options,” he said. “It has made 26 million impressions and counting. Additionally, the MBA partnered with the CFPB to make the campaign such a great success. Such collaboration with a key agency is a positive sign.

That said, Broeksmit noted the CFPB is “perhaps the biggest question mark over the next few years. The bureau will closely monitor how our members handle forbearance exits. We also expect it to increase emphasis on fair lending. MBA has made clear to the new leadership at the Bureau that our members are just as focused on these important issues.

Broeksmit cautioned the CFPB could reverse some recent policies that MBA supported, noting it has already proposed to delay the implementation of the QM Patch. “Frankly, I’m disappointed. I know you are, too,” he said. “The final regulation reflected MBA’s input, and would have benefitted your companies and customers. I said as much to the Acting Director when I spoke with him in February. Given this about-face, we are re-activating the coalition that backed reform. Industry, consumer, and civil rights groups supported the final rule, and they want to see it put in place. We have not come this far on the QM Patch only to fall short.”

Broeksmit also said MBA is gearing up to influence the coming debate on infrastructure and taxes. “As you know, the White House and Congress have indicated that tax changes are in the works,” he said. “While the details aren’t yet clear, MBA is moving fast to provide practical guidance. I’ve personally held multiple meetings with congressional leaders, including senior Democrats on the tax-writing committees and key Democratic moderates in both the House and Senate. At every stage, I’ve underscored your needs and discussed the tax provisions of most concern to you.”

MBA has also set up a blue-ribbon task force representing every part of the mortgage industry. “It’s modeled after a similar task force we established in 2017,” Broeksmit said. “Then, we helped shape the previous administration’s tax cuts for the better. We’re confident we will positively affect future legislation, too.”

On the technology front, MBA continues to push passage of bipartisan federal remote online notarization legislation before the year is out. In December, MBA hired Seth Appleton as MISMO’s new president. MISMO has also rolled out standards for remote online notarizations and fostered the widespread deployment of taxpayer consent language for the sharing of tax data.

“To support these and other efforts, we have established a new funding source for MISMO,” Broeksmit said. “The Innovation Investment Fee is a 75-cent charge for every new loan origination. This gives MISMO the capacity to make progress on many issues simultaneously, benefitting every part of the industry. The digital future is getting closer by the day.”

Looking ahead, Broeksmit said MBA would pivot from the current virtual conferences back to live conferences this fall. “If you’re like me, you’re probably tired of virtual events,” he said. “There’s no hobnobbing, no happy hours, no deal-making in the hallways. While the content is still world-class, it’s just not the same as an in-person conference….I’m pleased to announce that we are planning to hold MBA’s Annual Convention in October in-person. We’ll meet in San Diego, California, from October 17th to the 20th. You can register online as soon as you’d like. I look forward to seeing you in sunny San Diego six months from now. By the time October arrives, we hope the coronavirus pandemic will be in the rearview mirror. But the achievements of the past year-plus will still be top of mind.”

Broeksmit praised the mortgage industry for its work in the past year. “Over the past 12 months, your companies have gone to great lengths to serve your customers and protect your communities,” he said. “Last year alone, you produced more than $3.8 trillion in new originations, the highest total ever. Home purchases hit a 14-year high, as well. Low interest rates led to a more than 100% surge in refis, and families tapped into some of the record $6 trillion in home equity they’ve built up. On top of it all, you’ve gone above and beyond to help struggling families keep their homes and maintain stability.

“Let me be clear: Your round-the-clock work has helped millions of Americans when they needed it most. MBA has never been more proud to represent you, nor have we ever delivered more for you in such short order. Thank you for all you’ve done and all you’re doing still.”