MBA Advocacy Update: Apr. 19, 2021

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

On Thursday, the House Financial Services Committee held hearings on the LIBOR transition and laying the groundwork for parts of President Biden’s $2 trillion infrastructure proposal. MBA also issued a MAA Call to Action last week in response to the implementation of the product caps placed on Fannie Mae and Freddie Mac by the Senior Preferred Stock Purchase Agreements.   

1. MBA Issues MAA Call to Action in Response to GSE Product Caps

Recently, MBA issued a Mortgage Action Alliance Call to Action in response to the implementation of the product caps placed on Fannie Mae and Freddie Mac through the Senior Preferred Stock Purchase Agreements. Over the past several weeks, MBA has continued its efforts to address market disruptions caused by the new limits. While MBA has also raised long-term concerns with the Federal Housing Finance Agency and Treasury Department about the caps, MBA focused the Call to Action on the near-term problems caused by the immediate implementation of the 7% limit on GSE acquisitions of loans secured by second homes and investor properties.

• Why it matters: The immediate implementation of these product caps – particularly for second homes and investor properties – significantly impacts existing lender pipelines and is creating major disruptions in the market. MBA believes the caps were intended to apply to the aggregate purchase volumes at each GSE, and not extended to the individual lender level. Lender-level implementation has created significant seasonal and geographic dislocations for certain markets.
• What’s next: MBA will continue to advocate with senior leadership at FHFA, Treasury and the GSEs to find a solution to the short-term implementation issues and will continue to urge re-evaluation of the various product limits, as well as the cash window limits that take effect in January 2022.

For more information, please contact Sasha Hewlett at (202) 557-2805 or Rosie Sheehan at (202) 557-2933.

2. House Financial Services Committee Holds Infrastructure Hearing 

On Wednesday, the House Financial Services Committee held a hearing laying the groundwork for parts of President Joe Biden’s $2 trillion infrastructure proposal known as The American Jobs Plan. The White House has provided a general outline of what it hopes will be its next major legislative initiative, which includes plans to “Build, preserve and retrofit more than two million homes and commercial buildings, modernize our nation’s schools and childcare facilities, and upgrade veterans’ hospitals and federal buildings.”       

• Why it matters: The consideration that infrastructure includes housing is original to this legislative package. But to what extent, and what revenues must be raised to pay for a massive national housing overhaul, are yet to be determined. 
• What’s next: Multiple committees will hold additional hearings and markups that will ultimately come together and serve as the text for The American Jobs Plan.

For more information, please contact Borden Hoskins at (202) 557-2912, Tallman Johnson at (202) 557-2866, or Ethan Saxon at (202) 557-2913.

3. Housing Advocates Seek Equity Provisions in Infrastructure Bill; Warn of Racial Discrimination in Housing

During Tuesday’s Senate Banking Committee hearing on racial discrimination in housing, several witnesses urged senators to include provisions that would ensure equity into President Biden’s proposed infrastructure package or they would risk repeating a history of public investments that locked minorities out of buying homes and building wealth. Past infrastructure investment, including the creation of the Federal Housing Administration (FHA) and construction of the federal highway system, created jobs and drove economic growth, but only for some communities, Senate Banking Chairman Sherrod Brown (D-OH) said during the hearing. A summary of the hearing can be found here.

• Why it matters: Brown, who will have substantial influence when drafting relevant housing provisions in upcoming legislation, asked witnesses how to fairly implement future infrastructure packages such as the one Biden introduced last month.
• What’s next: The president has made housing a centerpiece of his plan, proposing to invest $213 billion to produce, preserve, and retrofit more than 2 million affordable and sustainable housing units. MBA President and Chief Executive Officer Bob Broeksmit, CMB, issued a member letter welcoming the administration’s initiative on housing, while also highlighting MBA’s engagement on potential tax changes/revenue raisers to pay for these provisions that could affect our members’ business operations.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866.

4. House Financial Services Committee Holds Hearing on LIBOR Fix 

On Thursday, the House Financial Services Committee held a hearing, “The End of LIBOR: Transitioning to an Alternative Interest Rate Calculation for Mortgages, Student Loans, Business Borrowing, and Other Financial Products.” The hearing featured government witnesses from federal financial regulatory agencies, including the Federal Housing Finance Agency, Federal Reserve, Office of the Comptroller of the Currency, Securities and Exchange Commission and the U.S. Treasury, and was intended to focus on draft legislation that would provide a clear federal framework and a legal safe harbor for transitioning away from the LIBOR index. The draft text can be found here. Additionally, MBA, along with several industry trade groups, sent a letter to the House Financial Services Committee in support of federal legislation to address “tough legacy” contracts that utilize LIBOR.

• Why it matters: Members of Congress from both parties and all the witnesses agreed federal legislation is the best path forward. 
• What’s next: MBA is working with Congress and regulatory agencies on the draft legislation, which could see a vote this Congress. 

For more information, please contact Borden Hoskins at (202) 557-2912, Tallman Johnson at (202) 557-2866, or Ethan Saxon at (202) 557-2913.

5. IRS Commissioner Testifies Before Congress, Says $1 Trillion in Taxes Go Uncollected Annually

The amount of taxes going uncollected by the federal government could be $1 trillion or more per year, Internal Revenue Service Commissioner Chuck Rettig said Tuesday when testifying before the Senate Finance Committee. A confluence of factors suggests the tax-gap growth Rettig projected include increased virtual currency holdings, which weren’t figured in previous estimates but now amount to more than $2 trillion worldwide. Commissioner Rettig also mentioned a report focusing on income from pass-through businesses and offshore income, published last month by IRS researchers, which estimated collecting all unpaid taxes from taxpayers in the top 1 percent income bracket would raise $175 billion in annual revenue. A summary of the hearing can be found here.

• Why it matters: The focus on unpaid taxes comes amid a debate over how to pay for President Biden’s $2.25 trillion infrastructure package. The White House is pushing for an increased corporate tax rate, in addition to stepped-up enforcement of collecting taxes from companies.
• What’s next: Senator Ron Wyden (D-OR), who became chairman of the Senate Finance Committee earlier this year, indicated that addressing the tax gap will be one of his top priorities in his new post. MBA continues to urge tax writers to carefully consider the importance of the parity between the current corporate rate and the rate reduction for pass-through entities created by Section 199A.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866.

6. Gary Gensler Confirmed to Lead SEC, Wall Street’s Top Regulator

Gary Gensler will lead the SEC after the Senate voted 53-45 on Wednesday to confirm his nomination to head the nation’s top financial regulator. Gensler, chosen for the role by President Biden, will now play a key part in enforcing and drafting the rules that govern Wall Street, investors and a wide range of other financial entities.

• Why it matters: Gensler is returning to government after serving as a top regulator in the Obama administration, where he focused on big-bank trading activities that contributed to the 2008 global financial crisis. One of the priorities of the Gensler-led SEC will be a meaningful expansion of disclosure requirements, especially in areas that intersect with broader policy priorities such as climate change, campaign finance, and diversity.
• What’s next: Gensler’s efforts to expand the disclosure requirements on these fronts will influence the public debate, increase shareholder activity and intersect with key elements of the Biden administration’s broader policy agenda.

For more information, please contact Ethan Saxon at (202) 557-2913 or Tallman Johnson at (202) 557-2866. 

7. VA Implements Law Extending Homeownership Benefits to Certain National Guard Members

On Thursday, the U.S. Department of Veterans Affairs announced certain members of the National Guard are now eligible for VA home loan benefits. The new policy implements Section 2101 of the Veterans Health Care and Benefits Improvement Act of 2020.

• Why it matters: VA lenders can now work with National Guard members to realize their new VA homeownership benefits.  
• What’s next: Individuals who performed full-time National Guard duty with applications for a Certificate of Eligibility (COE) on or after January 5, are now eligible for COE approval. Applicants previously denied may also reapply.

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

8. MBA Seeks Nominations for Residential Board of Governors; Deadline April 30

On behalf of the Mortgage Bankers Association Residential Board of Governors (RESBOG), MBA seeks members’ recommendations for individuals/companies to serve on RESBOG in future terms.

• Why it matters: RESBOG comprises 46 senior executives from across the industry who oversee MBA’s residential advocacy efforts and public policy work. RESBOG members come from a diverse set of backgrounds – in terms of both personal backgrounds as well as company types and business models.
• What’s next: Please submit your recommendations by Friday, April 30, to https://www.surveymonkey.com/r/3PSVZPZ.

For more information, please contact Dan Fichtler at (202) 557-2780 or Hanna Pitz at (202) 557-2796.

9. Sign Up for the Sixth Annual MAA Action Week 

The Mortgage Action Alliance, MBA’s free grassroots advocacy network, will be holding its sixth annual Action Week, May 3-14. Action Week is a national, industrywide campaign aimed at growing MAA and activating real estate finance professionals in key states and congressional districts. MAA has more than 71,000 active members nationwide.

• Why it matters: MAA needs to be louder and stronger than ever to ensure that Congress does not end up harming, more than helping, real estate and housing with any targeted changes to federal taxes that reduce support for capital formation and investment and negatively impact consumers.
• What’s next: MBA’s goal is to grow and sustain MAA’s membership to 75,000 members.

Complete this form to join nearly 60 participating companies and receive further information.

For more information, please contact Rosie Sheehan at (202) 557-2933.

10. Speaker Highlights and Last Day to Save: MBA’s National Advocacy Conference – May 11-12

Register for NAC today to hear from Senator Raphael Warnock (D-GA) and Congressman Steve Stivers (R-OH).

• Why it matters: Sen. Warnock will share insights on the Senate Banking Committee’s ongoing work to strengthen the nation’s economy in the wake of the pandemic, increase access to homeownership, and bolster affordable rental housing and community development. Rep. Stivers has been a leading voice on core issues for our industry, such as secondary mortgage market reform, transitional licensing for mortgage loan officers, the Terrorism Risk Insurance Act, flood insurance reauthorization, and many others. NAC provides a great opportunity for our industry to advocate for reasonable changes to the regulations and laws that are increasing costs or preventing you from doing business.
• What’s next: Share your experiences, your voice, and your passion for our industry May 11-12! Register today at mba.org/nac and take advantage of the $99 early bird rate.

For more information, please contact Alden Knowlton at (202) 557-2816.

11. Upcoming 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 webinars – which are complimentary to MBA members:

• Construction Loan Considerations During the COVID-19 Pandemic – April 28
• The 2020 Pandemic and Other Primary Factors of Urban Exodus – May 4
• Basics of Commercial Loan Closing and Loan Documentation – May 11
• Key FDCPA Compliance Issues and Considerations – May 18
• Harnessing and Leveraging Data in Today’s CRE Markets – May 18
• Introduction to Commercial Mortgage-Backed Securities – May 19
• CONVERGENCE: The Future Is Female: How Women Are Shaping the Future of Housing – May 26

MBA members can register for any of the above events and view recent webinar recordings by clicking here.

For more information, please contact David Upbin at (202) 557-2890.