MBA Advocacy Update Dec. 24, 2021

Bill Killmer; Pete Mills

As negotiations with a key senator stalled earlier this week, any final action on President Biden’s Build Back Better Act proposal will have to wait until next year. Also this week, MBA submitted comments to the Federal Housing Finance Agency in response to its notice of proposed rulemaking introducing additional public disclosure requirements in the regulatory capital framework applicable to Fannie Mae and Freddie Mac.

Join the 100+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting minority homeownership; affordable rental housing; and company diversity, equity and inclusion. One senior executive (e.g., CEO, COO, President) is encouraged to sign this online form on behalf of your organization.  

1. Senator’s Concerns Postpone Action on Tax/Reconciliation Plan

On Sunday, as widely covered, Senator Joe Manchin (D-WV) announced his public opposition to an emerging Senate version of President Joe Biden’s Build Back Better Act proposal under negotiation with the White House. Those discussions among Manchin, congressional leaders and the White House had been geared towards reaching consensus to potentially move a tax and social infrastructure reconciliation bill – similar (but not identical to) a BBBA package (H.R. 5376) passed narrowly by the full House in November – to the Senate floor for a vote prior to Christmas.

  • Why it matters: The House-passed BBBA contains authorizing provisions geared towards affordable housing, including a $10 billion first generation, first-time home buyer down payment assistance grant program and substantial improvements to the Low-Income Housing Tax Credit program. Those investments, and others geared towards sweeping social policy and climate-related changes, are offset and paid for by broad amendments to the tax code that would impact our residential and commercial/multifamily members.
  • Throughout discussions this past year with key policymakers in Congress, the White House and the Treasury, MBA has lobbied in support of recommendations prioritized by our association’s Board-approved Tax Task Force, e.g., protecting the current law status of Section 1031 Like Kind Exchanges, preserving current law capital gains treatment on the gain on sale of a home, mitigating attempts to curtail the current law small business/“pass through” 20% Qualified Business Income deduction, and preserving the deferred tax treatment afforded the Mortgage Servicing Right asset to ensure against pricing volatility that would negatively impact consumers, etc.  
  • What’s next: Both the White House and Senate Majority Leader Chuck Schumer (D-NY) have indicated that – despite the Manchin roadblock – votes will be taken on a Senate version of the BBBA early in 2022. MBA will remain closely engaged with key lawmakers concerning our industry priorities as these discussions continue.

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

2. FHFA Reports Continued G-Fee Parity Across Lenders of Varying Sizes

On Tuesday, the Federal Housing Finance Agency released its annual report on single-family guarantee fees charged by the GSEs. The report, which covers 2020 loan acquisitions, shows average g-fees across product types, loan purposes, loan-to-value ratios, credit scores and lender sizes. The average g-fee across all loans was 54 basis points in 2020 – down 2 basis points from 2019. Average g-fees also exhibited parity across lenders of varying sizes. For mortgage-backed security swaps, average g-fees were 55 basis points for large and medium lenders and 53 basis points for small lenders. With respect to the cash windows, average g-fees were 53 basis points for large lenders and 54 basis points for small and medium lenders.

  • Why it matters: The annual report on g-fees is required by law and is a key component of long-running efforts championed by MBA to promote greater transparency in GSE pricing. Throughout its GSE reform advocacy campaign, MBA has pursued elimination of “volume discounts” or other g-fee adjustments based on a lender’s size, business model or charter type.
  • What’s next: MBA will continue to work with FHFA and the GSEs as they re-examine the GSEs’ pricing structure in the coming months.

For more information, please contact Dan Fichtler at (202) 557-2780 or Sasha Hewlett at (202) 557-2712.

3. MBA Supports FHFA Proposed Rule Expanding Disclosures in GSE Capital Framework  

This week, MBA submitted comments to FHFA in response to its notice of proposed rulemaking introducing additional public disclosure requirements in the regulatory capital framework applicable to Fannie Mae and Freddie Mac. MBA was supportive of the proposal, which aims to generally align the GSEs’ disclosure requirements with those in place for large banking organizations. Under this approach, the proposed rule would require additional disclosures related to risk management, corporate governance, and regulatory capital, including risk-weighted assets, statutory capital requirements, supplemental capital requirements, and capital buffers. The NPR also addressed ways to maximize efficiency, minimize costs, and protect proprietary and confidential information.

  • Why it matters: Enhancing disclosure requirements and allowing all market participants to evaluate these important details about the GSEs’ risk profiles and capital levels should promote market discipline (particularly from investors in GSE equity and debt upon their exit from conservatorship) and thereby bolster their safety and soundness.
  • What’s next: FHFA will consider public input on its proposal and release a final rule in the coming months. MBA will continue to engage with FHFA on this and other critically important housing finance issues.

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

4. FHFA Finalizes 2022-2024 GSE Affordable Housing Goals

On Wednesday, FHFA released a final rule modifying the GSEs’ single-family affordable housing goals for the years 2022-2024, as well as the multifamily goals for 2022. MBA previously commented on the proposed rule, supporting reasonable increases to the single-family benchmark levels and the proposed reconfiguration of the minority census track benchmark to allow for a more targeted approach to addressing the minority homeownership gap.

  • Why it matters: MBA strongly supports efforts to ensure sustainable and affordable housing for low-income and very low-income households, both through homeownership and rental housing. The housing goals are one plank in the GSEs’ broader efforts to achieve this objective.
  • What’s next: FHFA will implement the adjusted benchmarks for the GSE housing goals beginning in 2022.

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

5. Sixth Circuit Restores OSHA Employer Vaccine Mandate…for Now 

On December 17, the 6th Circuit lifted the 5th Circuit’s stay of the OSHA Emergency Temporary Standard requiring certain large employers to require employees to get vaccinated for COVID-19 or tested weekly. As explained in detail in this client alert from Ballard Spahr, the 6th Circuit “found that the ETS is within the bounds of OSHA’s statutory authority. Under the Occupational Safety and Health Act, OSHA can issue emergency standards if necessary to protect workers from a “grave danger.” The Court found that “[g]iven OSHA’s clear and exercised authority to regulate viruses, OSHA necessarily has the authority to regulate infectious diseases that are not unique to the workplace…” 

Why it matters: Given the judicial uncertainty and short time period for compliance, employers should consult with counsel in order to have an implementation plan “at-the-ready” in early 2022. While it is certainly possible that the Supreme Court could step in to once again delay the mandate, this Morgan Lewis client alert makes clear: 

  • “The Occupational Safety and Health Administration announced that it will not enforce the ETS until January 10, 2022, (previously December 6) for all requirements except regular testing and February 9, 2022 (previously January 4) for weekly testing of unvaccinated employees, so long as employers are making a good faith effort toward compliance in the interim.” 
  • “While uncertainty remains with respect to how the Supreme Court will rule and how quickly it will do so, prudent employers will take steps to comply with the ETS before OSHA’s newly announced deadlines. Critically, OSHA’s delay of the compliance deadlines is predicated on an employer exercising reasonable, good faith efforts to come into compliance with the ETS. Thus, to mitigate OSHA enforcement risk, employers who cannot achieve full compliance by the new deadlines will need to show that they were taking meaningful steps to implement the requirements of the ETS shortly after the Sixth Circuit dissolved the stay.” 

MBA held a webinar explaining the OSHA ETS and how to comply. A recording is available here.

What’s next: We will continue to monitor the progress of this litigation and will alert members should the Supreme Court intervene. 

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

6. 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:

  • Ten Things Your Company Must Do in 2022 – January 12
  • The Climate Change Imperative: Exploring the Role of Residential Lenders and Servicers – January 18
  • DUS Multifamily Asset Management Perspectives – January 19
  • Winning Game Plan for Improving “B” Originators – January 25
  • Fair Lending and Redlining, Part I – Overview of Regulations and 7Enforcement – February 7
  • Successful Recruiting in a Changing Marketplace – February 10
  • Combating Multifamily Real Estate Financial Crimes and Fraud – March 10

MBA members can register for any of the above events and view recent webinar recordings .For more information, please contact David Upbin at (202) 557-2931