MBA Advocacy Update Apr. 26, 2021

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

On Wednesday, the 11th Circuit Court ruled that using a vendor to generate a letter to a debtor violated the FDCPA’s prohibition on disclosing a consumer’s debt to a third party. Also last week, the House passed H.R. 1395, the Housing Financial Literacy Act of 2021, and H.R. 1532, the Improving FHA Support for Small-Dollar Mortgages Act of 2021. 

1. Significant 11th Circuit Court Decision Has Potential Servicing Implications 

On Wednesday, the 11th Circuit Court — which covers Florida, Georgia and Alabama — ruled in Hunstein v. Preferred Collection that using a vendor to generate a letter to a debtor violated the Fair Debt Collection Practices Act’s (FDCPA) prohibition on disclosing a consumer’s debt to a third party. The decision articulates no limiting principle on liability beyond the information sharing authorized by the statute and suggests that all third-party relationships may be implicated by this decision.  

• Why it matters: This is the first opinion that touches on this issue. Its conclusion that the FDCPA bars the sharing of information between those subject to FDCPA, and typical vendors used in the ordinary course of loan servicing business, has concerning ramifications. With millions of borrowers exiting COVID-19-related forbearance in the coming months, the decision is particularly ill-timed and could impair the ability of servicers to work effectively with trusted intermediaries to provide successful loss mitigation options for borrowers.
• What’s next: MBA will explore all options to ensure that this decision does not harm servicers or consumers – for instance, by curtailing the usage of third-party nonprofit housing counselors or complicating servicing transfers. 

For more information, please contact Justin Wiseman at (202) 557-2854 or Sara Singhas at (202) 557-2826.

2. House Financial Services Committee Holds First Legislative Markup of 117th Congress  

Last week, the House Financial Services Committee held a markup and passed multiple bills. The list of legislation advanced included, among others, bills that would overturn the Supreme Court ruling on Obduskey V. McCarthy & Holthus LLP, create a Real Estate Valuation Task Force to encourage diversity in the appraisal industry and make certain data elements related to diversity and inclusion reporting mandatory. A link to MBA’s letter to the Committee can be found here.

• Why it matters: MBA has been working with the Committee to provide suggestions on how to improve the legislation without creating undue and burdensome obligations on industry stakeholders. 
• What’s next: These bills are likely to advance to the full House for a vote before potentially being taken up by the Senate.  

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. House Passes FHA-Related Legislation 

On Wednesday, the House passed H.R. 1395, the Housing Financial Literacy Act of 2021, and H.R. 1532, the Improving FHA Support for Small-Dollar Mortgages Act of 2021. H.R. 1395 provides a mortgage insurance premium discount for first-time buyers, and H.R. 1532 requires HUD to produce a report on the barriers for small-dollar Federal Housing Administration mortgages, specifically loans of $70,000 and less. MBA sent a letter to the House on these bills, which can be found here.

• Why it matters: These bills passed with wide bipartisan support, indicating they could gain traction in the upper chamber in the coming months.
• What’s next: Senate Banking Committee Chairman Sherrod Brown (D-OH) has publicly stated his intention to focus on all aspects of housing, especially issues related to affordability. 

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

4. MBA Comments on FHFA Climate and Natural Disaster Risk Management RFI  

On Monday, MBA submitted comments to the Federal Housing Finance Agency’s Request for Input (RFI) on climate and natural disaster risk management at Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

• Why it matters: MBA and its members are focused on the potential for direct losses from natural disasters and climate risks, and on changing operational requirements for firms and the industry. Additionally, MBA highlighted in its comments potential transitions for existing businesses and markets, as well as potential changes to regulatory requirements that would impact real estate and real estate finance markets.
• What’s next: FHFA has not announced a timeline for future action in regard to this RFI. MBA will continue to engage with members across the industry to develop climate and natural disaster risk management and mitigation proposals, and will closely monitor further regulatory efforts in this area. MBA seeks uniform federal standards and principles in this area. 

For more information, please contact Michael Fratantoni at (202) 557-2935.

5. HUD Releases Updated Single-Family Housing Policy Handbook 

On Monday, HUD released its long-awaited update to the Servicing and Loss Mitigation section of the FHA Single-Family Housing Policy Handbook 4000.1. Some of the changes include revisions to the FHA’s loss mitigation waterfall and reduced documentation requirements for loss mitigation options. The updates also consist of the COVID-19 home retention options and updates to the Claims Without Conveyance of Title program released last year.

Click here to view a redline comparison of the Handbook provided by Buckley LLP.

• Why it matters: The FHA Single-Family Housing Policy Handbook provides loss mitigation guidance to servicers handling FHA-insured mortgages. The latest update incorporates a number of MBA recommendations for improving FHA servicing standards. 
• What next: The MBA Government Loan Servicing Subcommittee will be scheduling a call to review the Handbook revisions in detail. The effective date for the Handbook changes will be August 17. To be added to the committee, please reach out to Darnell Peterson.

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

6. FHFA Extends Certain COVID-19-Related Loan Flexibilities; Plans to Retire All Next Month 

This week, FHFA announced it would extend certain Fannie Mae and Freddie Mac origination flexibilities through May 31. This includes temporary policies related to alternative appraisals on purchase and rate-term refinance loans. Temporary flexibilities related to employment verification, power of attorney, and condo project reviews will expire as planned on April 30, 2021. FHFA stated that due to “low usage,” it expects to retire all temporary flexibilities on May 31, and also noted that these flexibilities are no longer needed to ensure smooth market functioning. 

• Why it matters: These origination flexibilities helped to temporarily relieve uncertainty for market participants and brought additional stability to the housing market during the COVID-19 pandemic.
• What’s next: MBA will monitor the impacts of the elimination of these flexibilities for the duration of the pandemic and will work with FHFA to evaluate any flexibilities that have improved the housing market and potentially could be made permanent post-pandemic.

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

7. Kansas Governor Signs RON Legislation Consistent with National Models

On Thursday, Kansas Gov. Laura Kelley signed legislation (SB 106) that enables the use of Remote Online Notarization in the state. SB 106 adopts the nonpartisan Uniform Law Commission’s Revised Uniform Law on Notarial Acts and is consistent with MBA’s model for state RON legislation.

• Why it matters: By signing SB 106, Kelley made Kansas the 32nd state to adopt RON legislation consistent with the minimum standards necessary for safe and secure real estate finance transactions.
• What’s next: MBA will continue to work to enact RON laws in all remaining states as well as develop a federal RON law.

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

8. CSBS Announces Town Hall to Discuss NMLS Modernization Proposal

The Conference of State Bank Supervisors announced that it scheduled an NMLS Modernization Town Hall on May 13 at 3:00 p.m. ET, to provide an overview of its Networked Licensing Model, Requirements Framework, Core Requirements & Identity Verification proposal.

• Why it matters: The proposal is part of CSBS’ effort to develop a next-generation, nationwide multistate licensing and supervisory technology system to address the evolving needs of state financial regulation. Recently, Charlie Clark, Director of the Washington State Department of Financial Institutions, and John Ryan, President and CEO of CSBS, sat down with Banking with Interest podcast host Rob Blackwell to talk about the latest on Networked Supervision and other issues related to state regulation. 
• What’s next: MBA will be convening a group of interested members to discuss the proposal and develop an industry comment letter based on feedback received. The group will meet on April 29, at 2:00 p.m. ET, to discuss the proposal, and once again in May to review a draft of the comment letter. Comments are due May 31.

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

9. Sign Up for the Sixth Annual MAA Action Week 

The Mortgage Action Alliance, MBA’s free grassroots advocacy network, will hold 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 in an industry of more than 330,000 employees.  

• 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 80 participating companies and receive further information. For more information, please contact Rosie Sheehan at (202) 557-2933.

10. Speaker Highlights: MBA’s National Advocacy Conference – May 11-12

Register for MBA’s National Advocacy Conference today to hear from Chairman Sherrod Brown (D-OH) and Ranking Member Pat Toomey (R-PA).

• Why it matters: Senators Brown and Toomey are the top-ranking officials of the Senate Banking Committee and will each share insights on their 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. 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 .

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

11. 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.

12. 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
• Commercial/Multifamily: Self-Insurance, Captives, and Fronting – 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.