MBA Advocacy Update, Jan. 25, 2021

Bill Killmer; Pete Mills

On Wednesday, Joe Biden and Kamala Harris were sworn in as President and Vice President. MBA released a statement congratulating them on their historic inauguration.

Also on Wednesday, HUD issued a waiver allowing FHA to insure loans to borrowers with residency under the DACA program. And on Tuesday, FHFA issued an RFI on risks posed by climate change and natural disasters to Fannie Mae, Freddie Mac, the Federal Home Loan Banks and the broader housing finance system.

1. Senate Poised to Confirm Former Fed Chair Yellen to be Secretary of the Treasury

On Friday, the Senate Finance Committee voted to confirm Janet Yellen to be Secretary of the Treasury, following her nomination hearing earlier this week. During the Tuesday hearing, Yellen was asked numerous questions on the macroeconomy, ranging from COVID-19-related relief, trade with China and climate change. Senator Pat Toomey (R-PA) raised the issue of GSE reform and the recent changes to the Preferred Stock Purchase Agreements with Yellen, who responded, “Nothing is more important to the future of housing in the United States than what we do with Fannie and Freddie. And I need to look carefully at what’s been put in place, and ultimately we need to find a solution that has bipartisan support, and to work with Congress to craft an approach.” She also encouraged bipartisan support for additional affordable housing initiatives by highlighting the importance of the Low-Income Housing Tax Credit and the need for other innovative strategies. Importantly, the hearing also focused on tax policy with changes to the treatment of capital gains, corporate tax rates and allowable individual deductions all raised as potential reforms.

  • Why it matters: When voted on by the full Senate, Yellen will be the first Biden cabinet member confirmed with a domestic policy portfolio, the first woman to ever serve in her position, and an official with substantial influence over decisions related to the future of the GSEs (including through her role as chair of the Financial Stability Oversight Council.
  • What’s next: The full vote of the Senate to confirm Yellen could come as early as today. She will work to get the rest of her political team confirmed and in place at Treasury, while leading the Biden administration’s efforts to implement existing COVID-19 emergency relief measures, such as rental assistance, and negotiate with Congress for the next $1.9 trillion of economic relief proposed by President Biden.

For more information, please contactEthan Saxon at (202) 557-2913 and Tallman Johnson at (202) 557-2866.

2. HUD Issues FHA Waiver to Permit Insurance of Loans to DACA Recipients

On Wednesday, HUD issued a waiver allowing the Federal Housing Administration to insure loans to borrowers with residency under the Deferred Action for Childhood Arrivals program. The waiver, effective immediately and with no rescission date, removes language in the FHA Handbook requiring “lawful residency” of a borrower for FHA mortgage insurance eligibility.

  • Why it matters: The eliminated phrase, “lawful residency,” previously had sparked debate in interpretation for borrowers who did not lawfully enter the United States but are now considered lawfully present in the nation under special immigration programs such as DACA.
  • What’s next: MBA will work with industry and FHA representatives to ensure a smooth implementation of the waiver, including requesting additional guidance as necessary. MBA also looks forward to working with the Biden administration to make this policy permanent.

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

3. Dave Uejio Named Acting Director of the Consumer Financial Protection Bureau

On Wednesday, Kathy Kraninger, at the request of President Joe Biden, resigned as director of the Consumer Financial Protection Bureau. Kraninger had led the CFPB since December 2018. Dave Uejio, who has been at the CPFB since 2012, will serve as acting director.

  • Why it matters: The departure of Kraninger was widely expected following the inauguration of President Biden. It is common for current agency officials to serve in an acting capacity until a new leader is confirmed.
  • What’s next: President Biden nominated Rohit Chopra, most recently a member of the Federal Trade Commission (FTC), to be the next CFPB Director. Uejio will serve as acting director until Chopra is confirmed. Chopra’s confirmation hearing is expected in the coming weeks. Chopra previously served as the CFPB’s assistant director focusing on student loan issues during the Obama administration. 

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

4. GSEs, Housing Agencies Extend Foreclosure and Eviction Moratoria

Throughout the week, several existing foreclosure and eviction moratoria were extended in line with recommendations issued by the incoming Biden administration. On Tuesday, the Federal Housing Finance Agency announced that its moratorium on single-family foreclosures and real estate-owned evictions will continue until February 28. Meanwhile, HUD extended the foreclosure and eviction moratorium on Federal Housing Administration-insured loans through March 31. The Department of Agriculture undertook a similar extension of its foreclosure and eviction moratorium on single-family direct and guaranteed home loans through March 31.

  • Why it matters: These foreclosure and eviction moratoria are part of a broader set of policies aimed at providing relief to borrowers who may have been impacted by the effects of the COVID-19 pandemic.
  • What’s next: The Biden administration will review the existing pandemic relief measures in place at the various federal housing agencies, while also advocating for legislation to extend foreclosure and eviction moratoria, continue the availability of new forbearance requests, and provide direct financial support to consumers.

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

5. FHFA Seeks Input on Climate and Natural Disaster Risks

On Tuesday, FHFA issued a request for input on risks posed by climate change and natural disasters to Fannie Mae, Freddie Mac, the Federal Home Loan Banks, and the broader housing finance system. FHFA is soliciting public feedback in several areas, including identification and assessment of climate and natural disaster risks and potential enhancements to FHFA supervision and regulation as it relates to these risks.

  • Why it matters: FHFA is one of several financial regulators – at both the federal and state levels – that is increasing its focus on risk management associated with climate change and natural disasters. This request for input follows a recent memorandum by the New York Department of Financial Services that articulates expectations for regulated institutions to integrate climate change risks into their governance frameworks, risk management processes, and business strategies. Notably, MBA and the New York MBA urged the Department to engage with FHFA and the GSEs to ensure that state-level requirements recognize the important role of standards set at the federal level.
  • What’s next: MBA will review the questions posed by FHFA in the request for input and continue to analyze how any new supervisory expectations or regulatory actions will impact the industry.

For more information, please contact Dan Fichtler at (202) 557-2780, Sara Singhas at (202) 557-2826, or William Kooper at (202) 557-2737.

6. New York Governor Signals Support for LIBOR Transition Safe Harbors in Proposed Budget

Following last week’s State of the State address, on Tuesday, New York Governor Andrew Cuomo released his proposed budget for the state’s 2022 fiscal year. The budget documents include the language for legislation (see page 233) from companion bills ( S.0297/A.0164) introduced earlier this month to facilitate the transition away from LIBOR. Most tenors of U.S. Dollar LIBOR are now expected to expire on June 30, 2023, and the legislation would transition any contracts (including adjustable-rate mortgages) without robust fallback options to a recommended index – likely the Secured Overnight Financing Rate. The legislation also would provide safe harbors in certain situations when contracts are transitioned from LIBOR to the recommended index. Similar legislation was introduced during the previous Congress, and the New York legislation is viewed as a helpful step to provide certainty should Congress not pass a bill before the discontinuation of LIBOR. Support from the Governor’s office will be helpful in enacting the legislation, whether it is done as part of the budget or separately.

  • Why it matters: MBA has been actively engaged in the official efforts to transition the mortgage market away from LIBOR. MBA advocacy has focused on minimizing the potential for market disruption as well as litigation risk for market participants.
  • What’s next: MBA will work with the New York MBA to secure passage of the LIBOR transition language.

For more information, please contact William Kooper at (202) 557-2737 or Dan Fichtler at (202) 557-2780.

7. Upcoming and Recent 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 and recent webinars – which are complimentary to MBA members:

  • Best Execution Analysis in the Secondary Mortgage Market – January 26
  • MISMO Data Governance and Management Charter Template – January 26
  • The State of the Mortgage Industry: Building a Sustainable Operating Model for 2021 and Beyond – January 28
  • The State of the Non-QM Market – February 2
  • Introduction to the MISMO API Toolkit for General Audiences – February 8
  • Top 5 Areas of LO Litigation and Ways to Avoid Them – February 9

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.