MBA Advocacy Update June 21, 2021

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

On Tuesday, the Federal Housing Finance Agency published its yearly Report to Congress, which provides details on the Agency’s activities over the course of the past year, including its actions as conservator of Fannie Mae and Freddie Mac. On Wednesday, the House Financial Services Committee passed a package of bills that would establish a new series of environmental, social and corporate governance reporting requirements for publicly traded companies.

Also on Wednesday, bipartisan House legislation to create a federal standard for Remote Online Notarization transactions was introduced. And recently, several states acted to promote remote work flexibilities that are consistent with the MBA model.

1. FHFA Issues 2020 Report to Congress

On Tuesday, the Federal Housing Finance Agency published its yearly Report to Congress, which provides details on the Agency’s activities over the course of the past year, including its actions as conservator of Fannie Mae and Freddie Mac. This year the report highlighted FHFA’s response to COVID-19, changes allowing the GSEs to retain capital and also included a list of legislative recommendations to Congress that had remained largely unchanged from the prior year.

• Why it matters: Some of the legislative recommendations in the report echo long-standing MBA priorities, including chartering authority for new guarantors and steps to foster a competitive national housing finance market. Recommendations related to examination authority over third-party service providers include references to IMB servicers – a topic on which MBA remains engaged, including through detailed work with FHFA and the GSEs regarding updates to IMB liquidity requirements. The report also highlights recent steps taken to create a roadmap for the end of conservatorship.
• What’s next: MBA will advocate for FHFA to lock in administrative GSE reforms put in place over the last decade, and will continue to work with Congress on potential legislative actions to address the remaining elements of long-term housing finance reform. MBA also opposes the FHFA’s request for exam authority over GSE seller/servicers.

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

2. Treasury Secretary Testifies on Capitol Hill; Discusses Retroactive Capital Gains Proposal

On Wednesday, Treasury Secretary Janet Yellen suggested in remarks before a Senate panel that if Congress were to pass a capital-gains tax hike starting in April 2021, that would not count as a retroactive increase. “I don’t see a prospective change in rules pertaining to the taxation of future realization of capital gains as being a retroactive feature,” Secretary Yellen told the Senate Finance Committee, when asked about the Biden administration’s tax proposal. A summary of the full hearing can be found here.

• Why it matters: President Joe Biden’s proposal to raise the capital-gains tax rate to 39.6% from 20% for those earning $1 million or more was first announced April 28, as part of the administration’s American Families Plan. Secretary Yellen’s comment suggests that the White House continues to push for capital-gains increases to be effective before the date Congress passes any potential law.
• What’s next: President Biden’s proposal to tax capital-gains income at the same rates as wages and salaries for high earners would be one of the biggest changes to investment taxation in roughly a century. Debate over the start date of any capital-gains tax changes is likely to be a source of tension as the issue is debated in Congress during the coming months.

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

3. House Advances Legislation for New ESG Reporting Requirements

On Wednesday, on a party-line vote, the House Financial Services Committee considered and passed a package of bills that would establish a new series of environmental, social, and corporate governance reporting requirements for publicly traded companies.  

• Why It matters: Specifically, the Corporate Governance Improvement and Investor Protection Act would: (1) require public companies to disclose certain ESG matters in annual filings with the Securities and Exchange Commission (H.R. 1187); (2) mandate the reporting of expenditures for certain political activities (H.R. 1087); (3) compel issuers to disclose information on pay raises made to executives and non-executive employees (H.R. 1188); (4) require certain disclosures relating to climate change (H.R. 2570); and (5) force public corporations to disclose their financial reporting on a country-by-country basis (H.R. 3007).
• What’s next: The sweeping ESG measure is unlikely to clear a filibuster in the 50-50 Senate, given GOP opposition to these new requirements. Absent legislation, a slew of regulatory actions is expected on the ESG front, with a major focus on the financial services industry. 

For more information, please contact Borden Hoskins at (202) 557-2912 or Alden Knowlton at (202) 557-2741.

4. House Committee Holds Hearing Focused on Evictions

On Monday, a House Judiciary Committee Subpanel held a hearing, “Potential Remedies for Unlawful Evictions in Federal Emergency Areas.” Members on both sides of the aisle discussed the best course of action on how to address the backlog of housing payments that resulted from the pandemic and the subsequent federal policies that are currently set to expire in the next week. Democrats often stressed the need for more robust housing protections, while Republicans argued for a targeted response that should be largely determined by individual states. 

• Why it matters: Democrats and Republicans have introduced separate proposals as a potential path forward to address backdated rental and mortgage payments, but legislation is unlikely to advance through both chambers of Congress. 
• What’s next: The Centers for Disease Control and Prevention and additional agencies are currently weighing administrative actions to extend or reform current housing protections. 

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

5. Representatives Introduce SECURE Notarization Act

On Wednesday, Reps. Madeleine Dean (D-PA) and Kelly Armstrong (R-ND) introduced H.R. 3962, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act of 2021, which would create a federal standard for Remote Online Notarization transactions. Like the companion legislation in the Senate (S. 1625), the SECURE Notarization Act of 2021 requires tamper-evident technology in electronic notarizations and provides fraud prevention through the use of multifactor authentication for identity proofing and audiovisual recording of the notarial act. The legislation would complement existing state laws, while providing states the flexibility and freedom to implement their own RON standards.

• Why it matters: A direct result of MBA’s advocacy, the bills’ minimum standards for RON are consistent with those provided in the MBA-ALTA model state RON bill and the Mortgage Industry Standards Maintenance Organization (MISMO) RON Standards.
• What’s next: MBA will continue its educational and advocacy campaign in tandem with coalition partners to move the bill through the legislative process. 

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

6. Remote Work Flexibility Developments in Multiple States

Recently, several states acted to promote remote work flexibilities that are consistent with the MBA model. The Kansas Office of the State Bank Commissioner announced on its website that it would extend its current remote work guidance to July 1, 2022, and that it will work with the Kansas legislature to introduce legislation that would codify the guidance into Kansas law. In Rhode Island, the House Corporations Committee voted to recommend passage of legislation (H5778) that would enable a licensed loan officer to work away from a licensed branch location. H5778 was placed on the legislative calendar for full consideration by the House.

Pennsylvania legislators introduced a bill (HB1588) that would provide remote work flexibility and was referred to the Committee on Commerce. Lastly, the Connecticut legislature introduced language (Sec. 205) in the state omnibus bill (SB1202) that would allow MLOs to work remotely. The provision, which is located on page 304 of the bill, orders the Banking Commissioner to establish a process that permits individuals engaging in an activity pursuant to a license or registration issued by the commissioner to work away from a licensed location.

• Why it matters: The welcome developments in Kansas, Rhode Island, Pennsylvania and Connecticut signify the need for consistent requirements in location requirements for MLOs who often reside in one state but are licensed in multiple other states.
• What’s next: MBA will continue to work with state and local association partners to push for its model legislation and regulation for remote work flexibility for licensed activity. See MBA’s Licensing Flexibility resource page to get involved with our efforts. MBA is also developing a resource to track recent state legislative and regulatory actions that would allow MLOs to work from a remote location. The resource will provide an up-to-date view of which states have acted to allow remote work, and will be available on MBA’s Licensing Flexibility website. Prior to posting the tracker, MBA is asking members to provide any information on legislative or regulatory efforts in their state that would allow remote work by contributing to a Google spreadsheet that will be used to update the resource. If you do not have access to a Google account, please contact Kobie Pruitt and he will provide you with a digital copy of the spreadsheet for you to fill out.

For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

7. Fannie Mae Clarifies Impact of COVID-19 Forbearance on RefiNow Option

This week, Fannie Mae issued an update to its Lender Letter that expands the eligibility parameters of its RefiNow option. The new refinance option, which is designed to offer expanded underwriting and lower costs to borrowers at or below 80% of area median income, is available to those borrowers who meet minimum payment history requirements (no 30-day delinquencies in the past six months and no more than one 30-day delinquency in the past 12 months). The new guidance issued this week clarifies that borrowers who missed payments due to a COVID-19 forbearance will remain eligible for RefiNow, provided they resolve the missed payments in accordance with Fannie Mae guidelines (for most borrowers, this will require three successful monthly payments after entering into a loss mitigation option).

• Why it matters: MBA had raised questions regarding the impact of COVID-19 forbearances on borrower eligibility for RefiNow – arguing that it would be inconsistent for Fannie Mae to disqualify borrowers due to a COVID-19 hardship. This updated guidance from Fannie Mae is directly responsive to these inquiries and this advocacy.
• What’s next: The Fannie Mae RefiNow option became available on June 5. A similar offering from Freddie Mac – Refi Possible – will become available on August 30.

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

8. MBA Single-Family Research Showcase: June 23-24

On June 23-24, join MBA’s Research and Economics Team for their first-ever, two-day MBA Single-Family Research and Economics Showcase. Led by MBA SVP and Chief Economist Mike Fratantoni, analysts will detail the most current results and insights from their residential surveys, forecasts, and reports.

• Why it matters: Session topics include: A Keynote on the Economy and the Mortgage Market; Latest Performance Benchmarking Data for Production and Servicing; Industry Volume and Demand; Demographics, Market Profiles and Players; Forbearance and Delinquency; Technology and Innovation; Staffing Issues; and Views on the Future of the Mortgage Industry. CPE credit is available. 
• What’s next: Register to attend.

For more information, please contact Marina Walsh, CMB, at (202) 557-2817.

9. Are you a Diversity Champion? Apply for MBA’s DEI Leadership Awards

MBA’s Diversity, Equity & Inclusion (DEI) Leadership Awards are back! Now in its sixth year of recognizing MBA member companies, this initiative acknowledges the dedication and creativity that increase DEI efforts within a company’s leadership and employee base. If your organization is a champion for diversity, share how you are inspiring change and highlight your success by applying today.

• What’s next: Applications are due August 13, 2021. Prior to getting started, please review helpful application tips to help you prepare your entry.

For more information, please contact MBA’s DEI Team.

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:

• Fair Lending: Things You Might Not Be Thinking Of – June 22
• Lending to the LGBTQ Community: Opportunities and Considerations – June 28
• Benchmarking for Performance and the Performance Ratios Every Mortgage Banker Must Know – June 29
• Transformation Impact of Blockchain in Mortgage Industry and Realized Economic Benefits – June 29
• Today’s Cybersecurity Issues and How to Plan Your Response – June 30

MBA members can register for any of the above events and view recent webinar recordings. For more information, please contact David Upbin at (202) 557-2890.