MBA Advocacy Update Dec. 20, 2021

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

On Tuesday, President Joe Biden nominated Acting Director Sandra L. Thompson to permanently lead the Federal Housing Finance Agency, and the Senate confirmed Alanna McCargo to serve as President of Ginnie Mae. Also on Tuesday, both the House and the Senate passed legislation to increase the debt ceiling, enabling the president to sign the measure into law.

And Thursday, President Biden publicly acknowledged that Senate Democrats are still weeks away from being able to finalize the details of their companion version of a tax and reconciliation package, quelling the prospect of enactment of a renegotiated Build Back Better Act prior to year’s end. 

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1. Biden Administration to Nominate Sandra Thompson for FHFA Director 

Last week, the Biden Administration announced its nomination of Sandra Thompson to be the next Director of the Federal Housing Finance Agency. Thompson assumed the role of Acting Director at FHFA in June and previously served as Deputy Director of the Division of Housing Mission and Goals, which oversees FHFA’s housing and regulatory policy, capital policy, financial analysis, fair lending and all mission activities for Fannie Mae, Freddie Mac and the Federal Home Loan Banks. Prior to joining FHFA, Thompson worked at the Federal Deposit Insurance Corp. for more than 23 years in a variety of leadership positions, most recently as Director of the Division of Risk Management Supervision. 

• Why it matters: In response to the White House announcement, MBA President and CEO Bob Broeksmit, CMB, stated: “Thompson’s in-depth expertise as a regulator and her experience in real estate finance makes her a great choice to lead FHFA. Since assuming the position of Acting Director in June, Thompson has addressed several topline issues, including reversing the adverse market refinance fee, calling for the continuation of pandemic-related flexibilities, enhancing the GSEs’ new refinance programs for low-income borrowers, and overseeing the GSEs’ mission of creating equitable and sustainable solutions for affordable housing and rental opportunities.”
• What’s next: As the Senate considers Thompson’s nomination in the coming months, MBA looks forward to our continued work with FHFA to ensure a stable and robust secondary mortgage market for a wide variety of single-family and multifamily lenders.

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

2. Alanna McCargo Confirmed as Ginnie Mae President

Also last week, the Senate confirmed Alanna McCargo to serve as President of Ginnie Mae. MBA had supported McCargo’s nomination, and upon her confirmation, MBA President and CEO Bob Broeksmit, CMB, released a statement applauding the Senate’s action and noting McCargo’s “experience, knowledge of housing issues and strong working relationships with a wide array of stakeholders.”

• Why it matters: McCargo, who has held prior roles at HUD, the Urban Institute, CoreLogic, JPMorgan Chase and Fannie Mae, is a well-respected industry leader. She will be the first confirmed Ginnie Mae President in several years and will lead the agency’s efforts to facilitate a vibrant secondary market for government-backed loans.
• What’s next: MBA will continue its strong relationship with Ginnie Mae, advocating on issues related to mortgage servicing right liquidity, issuer capital and liquidity requirements and the agency’s modernization initiatives.

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

3. Congress Passes Legislation to Increase the Debt Ceiling  

Last week, the House and the Senate passed (and President Joe Biden signed) a one-time-only procedural bill that allowed for the Senate to subsequently pass a motion to proceed to the actual debt limit increase proposal (as well as final passage) by a simple majority threshold. On Tuesday, the House and Senate along party lines passed a $2.5 trillion debt ceiling increase, which congressional Democrats hope will “punt” the issue until 2023 and spare them from revisiting the topic ahead of the 2022 midterm elections. Treasury Secretary Janet Yellen had previously provided a December 15 deadline before her agency could no longer take “extraordinary measures” to continue meeting U.S. debt obligations.

• Why it matters: Given the more than $8.6 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae and other federal agencies, the housing and real estate markets are particularly susceptible to any instability stemming from concern about the United States meeting its financial obligations. MBA previously led an industry coalition letter to support an increase in the debt ceiling.
• What’s next: The Build Back Better Act remains the principal major unresolved issue Congress has yet to address prior to the end of the year. On Thursday, President Biden publicly acknowledged Senate negotiations on the BBBA proposal would “take weeks” and extend into next year.

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

4. Federal Regulators Maintain QRM, QM Alignment

This week, a group of six federal regulators released results of their review of the Credit Risk Retention rule and the Qualified Residential Mortgage definition. In June, MBA along with five other industry organizations submitted recommendations strongly supporting the continued alignment of the QRM and Qualified Mortgage standards, citing the well-reasoned parameters of the recently finalized QM definition and the track record of high-quality lending while QRM and QM have been equivalent. As recommended by MBA and its coalition partners, the agencies are maintaining the current framework in which the QRM definition and the QM definition are largely aligned.

• Why it matters: Sponsors of residential mortgage-backed securities that are comprised exclusively of QRM loans are exempt from the requirement to retain at least 5% of the credit risk associated with these securities. Alignment between the QRM and QM frameworks facilitates a stable housing market and ensures access to conventional mortgage credit for borrowers across the country, including low‐ and moderate‐income borrowers, underserved households, and first‐time homebuyers. Alignment also will preserve high-quality, empirically sound underwriting, borrower-friendly product features, and robust investor confidence.
• What’s next: MBA will continue to engage with federal regulators and serve as a resource as they continue their work on critical housing issues.

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

5. OCC Rescinds June 2020 CRA Rule, Adopts 1995 CRA Rules

On Tuesday, the Office of the Comptroller of the Currency finalized its proposal to rescind its June 2020 Community Reinvestment Act rule and adopt a CRA rule that “is largely based on the 1995 CRA rules.” The OCC’s final rule takes into account feedback provided by stakeholders (including MBA recommendations jointly submitted with several other trade associations) in response to the agency’s request for comments in November. The OCC had proposed to rescind the June 2020 CRA rule and return to the 1995 CRA rules with a few modifications that address topics including performance tests and standards for banks of different sizes and structures, data collection and reporting requirements, and bank identification of one or more assessment areas.   

• Why it matters: The final rule adopts the earlier OCC proposal with a compliance date of January 1, 2022, for most provisions. A delayed compliance date of April 1, 2022, however, would apply to the public file and public notice provisions. The OCC also noted that, under the final rule, it will retain the following MBA-supported June 2020 CRA rule provisions: (1) maintain an illustrative list of examples of CRA-qualifying activities on the agency’s website; and (2) establish a process that permits banks and other interested parties to request OCC confirmation that an activity is CRA-eligible prior to engaging in such activity. Finally, the OCC clarified that the treatment of affiliate activity would be subject to the 1995 CRA rules, which is in line with MBA’s position. 
• What’s next: On Thursday, the OCC issued a request for comments on its revision of the form to be used to effect the qualifying activity confirmation process under the final rule. These comments will be due on February 14, 2022. MBA will remain deeply engaged with all of the federal banking agencies as they develop a modified CRA regulatory framework. 

For more information, or to join MBA’s CRA working group, please contact Fran Mordi at 202 557-2860.

6. OCC Announces Principles for Climate-Related Financial Risk Management    

On Thursday, the OCC announced draft principles to support identification and management of climate-related financial risks for banks with more than $100 billion in consolidated assets. The principles are intended “to support banks’ efforts to focus on key aspects of climate-related financial risk management and provide a high-level framework for climate-related financial risk management consistent with existing OCC rules and guidance.”

• Why it matters: This release is one of many steps federal and state financial regulators will take in the coming months and years to analyze climate-related risks, and it likely is a precursor to updated regulations or supervisory expectations.
• What’s next: Comments on the draft principles are due to the OCC by February 14, 2022. MBA staff will review these principles to determine potential impacts on the industry and the mortgage market.

For more information, please contact Fran Mordi at (202) 557-2860 or Hanna Pitz at (202) 557-2796.

7. MBA, Illinois MBA Submit Comments Regarding State’s CRA Rules

Last week, MBA and the Illinois MBA submitted comments to the Illinois Department of Financial Protection and Professional Regulation on its August Advance Notice of Proposed Rulemaking to implement the state’s CRA. The letter repeated a core industry view detailed in August testimony to IDFPR regarding the incompatibility of CRA to the independent mortgage bank (IMB) business model. The associations also noted important aspects of the Illinois Administrative Procedures Act that should be emphasized in any CRA rule for IMBs. Specifically, the Illinois APA requires the Department to “consider efforts to consolidate or simplify the rule’s compliance or reporting requirements and establish performance standards to replace design or operational standards.” Lastly, the letter urged the Department to develop performance-based metrics and standards that are readily available from federal Home Mortgage Disclosure Act data and to prioritize CRA examinations in Illinois in a manner that devotes examination resources to those institutions that do not meet those clearly verifiable performance benchmarks.

• Why it matters: If other states enact similar ill-informed CRA laws for IMBs, the arguments advanced in this comment letter could serve as a model for significantly mitigating the compliance challenge for MBA members.  
• What’s next: MBA and the IMBA will respond to the IDFPR when it proposes final regulations.

For more information, please visit MBA’s State CRA resource center or contact Pete Mills at (202) 557-2878 or William Kooper at (202) 557-2737.

8. FHFA Releases Proposal on GSE Capital Planning

On Thursday, the Federal Housing Finance Agency published a proposed rule requiring Fannie Mae and Freddie Mac to “develop, maintain and submit annual capital plans.” The proposal addresses several actions the GSEs must take to assess and report on their capital adequacy, including projections of revenues, expenses, losses, reserves, and capital levels under a range of scenarios.

• Why it matters: This proposed rule follows a series of steps FHFA has taken in recent years – under varying leadership teams – to increase the quantity and improve the quality of the GSEs’ capital buffers. An improved capital framework is one of the many steps MBA and other stakeholders have recommended prior to the GSEs being permitted to exit their conservatorships.
• What’s next: Comments on the proposed rule will be due to FHFA 60 days after publication in the Federal Register.

For more information, please contact Dan Fichtler at (202) 557-2780 or Sasha Hewlett at (202) 557-2805.

9. IRS Extends Form 4506-C Deviation Impact to Upcoming IVES Automation

On Tuesday, the Internal Revenue Service announced it extended the deadline to conform to the clean version of Form 4506-C until March 1, 2022.

• Why it matters: Beginning March 1, 2022, all Income Verification Express Service participants must update their Form 4506-C submissions to match the updated requirements for a clean version, which include identifying the transcripts, tax years, and/or taxpayers that need to be processed and listing the data on the assigned lines.
• What’s next: Failure to submit a clean version of Form 4506-C may result in increased rejections or additional authorized transcript receipts that will be chargeable to the IVES participant.

For more information, please contact Rick Hill at (202) 557-2718.

10. [WATCH]: mPower Moments: On Increasing Diversity, Calculated Risk with Teresa Bryce Bazemore of FHLB SF

In this episode of mPower Moments, mPower Founder Marcia M. Davies chats with Teresa Bryce Bazemore, President and CEO of the Federal Home Loan Bank of San Francisco.

• Why it matters: During the insightful interview, Bazemore explains why recruiting more women and people of color right out of college will improve diversity in the industry. She also shares why “putting yourself out there” and taking calculated risks will help you grow and advance in your career.

What’s next: To watch more mPower Moments, click here.

For more information, please contact Marcia Davies at (202) 557-2707.

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:

• 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
• 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.