MBA Advocacy Update Dec. 6, 2021

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

House and Senate lawmakers passed a continuing resolution ahead of the December 3 government funding deadline. President Joe Biden signed the bill Friday to avert a shutdown. Fed Chairman Jay Powell and Treasury Secretary Janet Yellen testified together twice earlier this week in both the House and Senate. And on Tuesday, the Federal Housing Finance Agency announced it raised conforming loan limits for 2022. 

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. Congress Passes Stopgap Funding Bill to Avert Government Shutdown 

On Thursday, House and Senate lawmakers passed a continuing resolution ahead of the December 3 government funding deadline. President Joe Biden signed the bill Friday to avert a shutdown. The stopgap funding bill punts fiscal year 2021 funding to February 18, 2022.

• Why it matters: The stopgap measure extends several expiring authorizations that were addressed in the previous CR, including the National Flood Insurance Program.
• What’s next: Congressional leadership continues its closed-door negotiations on the next fiscal cliff tied to the debt ceiling. Treasury Secretary Janet Yellen has said Congress has until December 15 to raise the nation’s borrowing limit or risk a catastrophic default that would have widespread ramifications for the global economy. MBA will provide members with relevant updates as necessary.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

2. GSE, FHA Loan Limits Set for Large Increases in 2022

Last week, the Federal Housing Finance Agency published the 2022 maximum conforming loan limits for mortgages eligible to be acquired by Fannie Mae and Freddie Mac. The loan limits increased significantly compared to those of prior years due to historic house-price appreciation in 2021. The baseline maximum conforming loan limit for one-unit properties will increase 18.05% from $548,250 to $647,200. The maximum conforming loan limit for one-unit properties in high-cost areas will increase to $970,800, or 150% of the baseline limit, which is the “ceiling” set by Congress for high-cost area loan limits.

Shortly thereafter, HUD published its Federal Housing Administration 2022 forward mortgage limits and maximum claim amount limits for reverse mortgages. For FHA-insured forward mortgages, the “floor” for maximum loan limits in low-cost areas will increase from $356,362 to $420,680 and the “ceiling” for maximum loan limits in high-cost areas will be $970,800 – matching the GSE limits in high-cost areas. The maximum claim amount for FHA-insured reverse mortgages will be $970,800 as well.

• Why it matters: This will be the sixth consecutive annual increase in maximum conforming loan limits after these limits remained unchanged from 2006 through 2016. The loan limits for the GSEs are calculated by FHFA according to a formula established by Congress in the Housing and Economic Recovery Act of 2008 (HERA). FHA maximum loan limits are then calculated by reference to the conforming loan limits. The large nationwide increases in house prices in 2021 resulted in similarly large increases in GSE and FHA loan limits for the coming year.
• What’s next: FHFA noted that it is assessing the relationship between house-price growth and conforming loan limits, particularly as it relates to creating affordable and sustainable homeownership opportunities across all communities. MBA will continue to work with FHFA, the GSEs, and FHA on ways to balance taxpayer support of the mortgage market with the need to ensure broad access to affordable, sustainable credit.

For more information, please contact Sasha Hewlett at (202) 557-2805 or Hanna Pitz at (202) 557-2796.

3. MBA Letter Requests Proposed FHA Handbook Origination Amendments 

On Thursday, MBA sent a letter to senior leadership at FHA listing proposed Single-Family Housing Policy Handbook origination-related amendments. The list of suggested revisions represents a months-long effort of obtaining industry feedback from MBA members, socializing the suggested changes, and evaluating them against MBA policy priorities.

• Why it matters: The FHA Single-Family Housing Policy Handbook provides guidance to lenders in the execution of FHA-insured mortgages – a crucial program for low- to moderate-income households, first-time homebuyers, and historically underserved borrowers nationwide. 
• What’s next: MBA will continue to stay in contact with FHA leadership, advocating for these and other improvements to its mortgage insurance program.

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

4. Fed Chief, Treasury Secretary Testify on Capitol Hill, Address Inflation, Supply Snarls

Earlier this week, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen testified before both the Senate Banking and House Financial Services committees, stating they underestimated how quickly the U.S. economy would rebound from the COVID-19 recession and strained supply chains. Both Yellen and Powell said substantial fiscal and monetary stimulus played a role in stoking the higher demand that fueled inflation, referring to the phenomenon as a challenging side effect of an otherwise fast recovery. Lawmakers in both the House and the Senate engaged the two top U.S. economic policymakers on a variety of other topics, such as the federal debt limit, bank reporting proposals, rental assistance implementation, and the proposed Build Back Better Act (BBBA) tax and social infrastructure proposal. A summary of both hearings can be found here.

• Why it matters: During the Tuesday hearing before the Senate Banking Committee, Chairman Powell indicated that the central bank could accelerate a removal of its “quantitative easing” efforts to boost the economy. Powell also said he thinks reducing the pace of monthly bond buys can move more quickly than the $15 billion-a-month schedule announced last month.
• What’s next: If the Federal Open Market Committee chooses to accelerate its plans, that could mean a “tapering” earlier in the spring next year, giving the Fed leeway to raise interest rates. Powell said he expects the issue to be discussed at the December FOMC meeting. And Secretary Yellen will continue to call on Congress to raise the statutory federal debt limit and pass President Biden’s BBBA proposal as soon as possible (prior to year’s end). 

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

5. Ginnie Mae Nominee Advances; Heads to Senate Floor for Consideration

Thursday, the Senate Banking Committee approved by voice vote the nomination of Alanna McCargo to be President of Ginnie Mae. Her nomination now heads to the floor for consideration by the full Senate. During her nomination hearing in October, McCargo pledged that, if confirmed, she would use her new position to ensure the program stays focused on its critical mission, keeps pace with a rapidly changing market, attracts global capital into America’s housing finance system, and protects American taxpayers. MBA submitted a letter of support for McCargo’s nomination, which can be found here.

• Why it matters: Over the last several years, Ginnie Mae’s mortgage-backed securities (MBS) issuances have continued to rise significantly based on market demand and there has been a corresponding increased demand for commitment authority. This increase in issuer demand was driven largely by the general decline in interest rates and commensurate increase in refinance activity. Ginnie Mae anticipates that some number of loans, more than in historical experience, will be bought out of pools at the expiration of the forbearance period, modified, and then re-pooled into a Ginnie Mae MBS – further fueling an increased demand for commitment authority.
• What’s next: Ginnie Mae has been without a confirmed President for four years. Approving McCargo’s nomination in Committee by voice vote will ease her path to confirmation by the full Senate. However, a backlog of other Biden nominees may delay her full Senate vote until after the new year.

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

6. MBA Meets with FHFA on Appraisals, Advancing Minority Homeownership

On Monday, MBA staff and the members of the Joint Task Force on Minority Homeownership met with FHFA staff to begin discussions on how the GSEs could improve the appraisal process, reduce the cost of appraisals, and minimize racial bias in valuations. MBA raised issues of the GSEs providing more access to their data, expanding the use of automated valuation tools, and supporting workforce diversity in the appraisal field.

• Why it matters: The cost of appraisals has increased significantly for all consumers, but it especially impacts first-time and minority homebuyers. Additionally, racial bias in property valuations is unfair, hinders wealth appreciation for current homeowners, and suppresses community development. MBA has created a valuation working group to consider advancing equity in the home valuation process. Additionally, improving appraisal quality and processes are a top priority for RESBOG this year. These efforts support MBA’s Building Generational Wealth through Homeownership initiative and CONVERGENCE.
• What’s next: MBA will continue dialogue with FHFA and share results from its valuation group and RESBOG recommendations.

For more information, please contact Tamara King at (202) 557-2758 or Katelynn Harris Walker at (202) 557-2734.

7. RIHA Study: U.S. Household Net Worth Between 2016 and 2019 Increased 17.6% to $127,000   

The median net worth of U.S. households increased from $103,000 in 2016 to $127,000 in 2019 – a gain of 17.6% and the highest amount since 2007. This is according to The Distribution of Wealth in America Since 2016, a new report released Thursday by the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA).

• What it says: “After nearly a decade of rising inequality during the Great Recession and its aftermath, the distribution of wealth in the United States became somewhat more equal between 2016 and 2019. Americans became richer, with middle-class households on the receiving end of a bigger slice of the wealth gains,” said John C. Weicher, author of the report and Director for the Center for Housing and Financial Markets at the Hudson Institute. 
• Edward Seiler, RIHA Executive Director, and MBA’s Associate Vice President, Housing Economics, said, “Fast-forward to 2021, and the significant demand for home buying amidst low inventory levels has further fueled gains in home prices and most homeowners’ equity. However, there are still wealth disparities by race. Among middle-wealth households, white households have higher homeownership rates and have more home equity.”

For more information, please contact Eddie Seiler at (202) 557-2739.

8. MBA Staff Attend AARMR Conference, Participate on Industry Panel   

This week, MBA staff attended the annual conference for the American Association of Residential Mortgage Regulators in Savannah, Ga. This was the first in-person AARMR conference since the beginning of the COVID-19 pandemic. On Thursday, MBA’s Kobie Pruitt participated on an industry panel to discuss important member issues related to remote work, the expansion of Community Reinvestment Act laws to include independent mortgage bankers, and concerns with the Nationwide Multistate Licensing System.

• Why it matters: The Annual AARMR Conference provides the industry with a valuable opportunity to engage face-to-face with regulators that have oversight over licensed companies and individuals.
• What’s next: MBA will continue to engage with regulators to promote the adoption of remote work nationwide and encourage regulators to avoid implementing unnecessary CRA requirements on IMBs that would increase the cost of lending in their state.

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

9. mPact Fall Fundraiser Benefiting MBA Opens Doors Foundation 

mPact will host the first of three fundraising events benefiting the MBA Opens Doors Foundation on December 9. Join us for a fun cooking class on how to make dumplings with Top Chef Frontrunner Chef Nini Nguyen.

• Why it matters: Each fall, the mPact team takes on a series of fundraisers with the goal of raising funds to support ODF’s mission of providing mortgage and rental assistance grants to parents and guardians caring for a critically ill or injured child.
• What’s next: Help mPact support families in need while taking care of yourself! If you would like to register for multiple events, register here with a $25 donation for each event.

For more information, please contact Jacky Salazar at (202) 557-2746.

10. 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:

• MISMO Monthly Webinar: Introduction to Extensible Stylesheet Language Transformations (XSLT) – December 8
• DUS Multifamily Asset Management Perspectives – December 14
• 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
• Successful Recruiting in a Changing Marketplace – February 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.