MBA Advocacy Update June 28 2021

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

On Wednesday, President Biden replaced FHFA Director Mark Calabria with Sandra L. Thompson, naming her Acting Director effective immediately. On Thursday, President Biden announced his intention to nominate Julia Gordon as the next FHA Commissioner.

The White House Thursday also announced HUD, FHFA, VA, and USDA will extend their foreclosure moratoriums for one month, now to July 31. And late last week, MBA endorsed the 7-Point Plan – a solutions-based initiative to increase Black homeownership by 3 million net new households by 2030.

1. FHFA Director Calabria Replaced Following Supreme Court Decision  

On Wednesday, the Biden administration replaced Federal Housing Finance Agency Director Mark Calabria with Sandra L. Thompson, naming her Acting Director effective immediately. Since 2013, Thompson has served as Deputy Director of the Division of Housing Mission and Goals, overseeing 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.

The leadership change followed the Supreme Court’s decision on Wednesday in Collins v. Yellen, a 7-2 decision that held that the FHFA’s structure, with a single director removable only for cause, violates the Constitution’s separation of powers scheme. A president can thus remove the FHFA Director before the end of his or her statutory five-year term. Read MBA President and CEO Bob Broeksmit’s, CMB, press statement following the Supreme Court decision, and his press statement in support of FHFA Acting Director Thompson. 

• Why it matters: FHFA plays a critical role regulating entities that ensure liquid markets for single-family and multifamily mortgages, and Wednesday’s Supreme Court decision will have a significant impact. Other aspects of the decision addressed challenges by certain GSE investors to the “net worth” sweep instituted by FHFA in 2012. The court also denied claims for relief on the shareholders’ statutory claims and remanded the case to the lower court to determine whether the unconstitutional removal provision inflicted compensable harm. A summary of the decision can be found here.
• What’s next: MBA looks forward to working collaboratively with the administration, FHFA, and other stakeholders to ensure the single-family and multifamily markets function well for lenders and the American consumers and businesses they serve.

For more information, please contact Justin Wiseman at (202) 557-2854; Blake Chavis at (202) 557-2930; or Lucia Jacangelo at (202) 557-2941.

2. FHA Adopts MBA Recommendations on Treatment of Student Loan Debt 

Late last week and in alignment with longstanding MBA recommendations, the U.S. Department of Housing and Urban Development (HUD) amended the Federal Housing Administration’s treatment of student loan debt in the underwriting process. The updated policy requires lenders to use the payment amount reported on the credit report or the actual documented payment when it is greater than zero. If the monthly payment shown on the credit report is zero, the lender must assume a payment equal to 0.5% of the outstanding student loan balance. This update improves upon the prior FHA policy, which required lenders to assume a monthly payment equal to at least 1% of the outstanding student loan balance for non-fully amortizing student loans.

• Why it matters: MBA identified FHA’s previous student loan debt guidance as misaligned with that of the other government housing finance programs or the government-sponsored enterprises. The often-inflated FHA assumptions regarding student loan debt payments represented a barrier to otherwise qualified borrowers. The new FHA policy mirrors MBA’s recommended policy revisions and is a win for lenders and borrowers alike.  
• What’s next: This guidance is effective for all case numbers assigned on or after August 16, though lenders can begin using it immediately.

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

3. President Biden Nominates Julia Gordon to Lead FHA

On Thursday evening, President Biden announced he intends to nominate Julia Gordon, currently President of the National Community Stabilization Trust, to be the next Commissioner of the Federal Housing Administration at HUD.  

• Why It matters: If confirmed by the Senate, Gordon would oversee FHA’s single-family and multifamily mortgage market programs. In a press statement, MBA President and CEO Bob Broeksmit, CMB, applauded Gordon’s nomination and highlighted her unique perspective on the issues facing our nation’s housing and mortgage markets. MBA has previously recommended Gordon for consideration as the nominee for FHA Commissioner.
• What’s next: The U.S. Senate Committee on Banking, Housing and Urban Affairs will schedule a confirmation hearing for Gordon prior to voting on her nomination – in advance of any eventual action by the full Senate. Timing for any movement on her nomination is still to be determined. 

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

4. MBA Endorses 7-Point Plan to Significantly Increase Black Homeownership by 2030 

Last Friday, MBA endorsed the “7-Point Plan” – a solutions-based initiative to increase Black homeownership by 3 million net new households by 2030. The plan was announced by the Black Homeownership Collaborative – a group of organizations that are committed to addressing affordable housing challenges facing Black communities. 

The announcement of the 7-Point Plan was made at a BHC-hosted event last week in Cleveland. The noteworthy list of guest speakers at the event included HUD Secretary Marcia Fudge, U.S. Senator Sherrod Brown (D-OH), Cleveland State University President Harlan Sands, MBA President and CEO Bob Broeksmit, CMB, and several other housing industry leaders.

• Why it matters: The 7-Point Plan consists of the following components: homeownership counseling, down payment assistance, housing production, credit and lending, civil and consumer rights, homeownership sustainability, and marketing and outreach.
• What’s next: To learn more about the 7-Point Plan, click here.  

For more information, please contact Steve O’Connor at (202) 557-2867.

5. HUD Delays Implementation Date of Portions of FHA Handbook

On Thursday, HUD announced it would delay the effective implementation date for select portions of recently released updates to FHA’s Single-Family Housing Policy Handbook. Portions delayed include:

• Section III – Servicing and Loss Mitigation;
• Appendix 4.0 – FHA-Home Affordable Modification Program (FHA-HAMP) Calculations; and
• Appendix 5.0 – HUD Schedule of Standard Possessory Action and Deed-In-Lieu of Foreclosure Attorney Fees

Why it matters: These updates will now have a mandatory implementation date of March 31, 2022. All other updates to the Handbook will still take effect on August 17. The delay provides servicers with additional time to make critical system and process changes as they prepare for borrowers to exit COVID-19 forbearance. 

For more information, please contact Darnell Peterson at (202) 557-2922.

6. White House Announces Foreclosure Moratorium Extension 

On Thursday, the White House announced HUD, FHFA, the Department of Veterans Affairs and the Department of Agriculture will extend their foreclosure moratoriums that had been set to expire on June 30. The moratoriums will now expire on July 31. In addition to the moratorium extensions, the Biden-Harris administration also announced HUD, VA and USDA will allow borrowers who have not already requested an initial COVID-19 forbearance to do so until September 30. 

• Why it matters: The extension provides additional short-term protection to borrowers impacted by the COVID-19 pandemic while the Consumer Financial Protection Bureau completes its final rule on the foreclosure review period.
• What’s next: MBA will continue to monitor additional updates, including issuance of the CFPB rule expected in July. 

For more information, please contact Darnell Patterson at (202) 557-2922.

7. HUD Secretary Fudge Makes First Appearance Before House Budget Committee

On Wednesday, HUD Secretary Marcia Fudge appeared before the House Budget Committee to justify her agency’s FY 2022 budget requests. Included in her testimony was a reference to the new tax credit in the American Jobs Plan, based on H.R. 2143, the Neighborhood Homes Investment Act. A key priority in MBA’s advocacy efforts, this bipartisan legislation would encourage rehabilitation of single-family homes and attract $100 billion in development activity to underserved rural and urban communities across the country.

• Why it matters: The tax credit supports development of homes in rural communities struggling with the costs of new construction, as well as the rehabilitation of homes in blighted urban communities, where vacant homes depress property values and thwart broader revitalization efforts.
• What’s next: MBA staff will continue to engage with the administration and key congressional leaders and staff to advocate for the industry’s key tax priorities identified by RESBOG and the MBA Board-approved Tax Task Force.

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

8. Senate Panel Explores Housing Measures

On Thursday, the Senate Banking Committee held a hearing, “Examining Bipartisan Bills to Increase Access to Housing.” The hearing focused on nine pieces of housing legislation, including two bills supported by MBA: S. 1614, the Yes In My Backyard Act, and S. 2131, the Improving FHA Support for Small-Dollar Mortgages Act of 2021. Both bills were supported by all three witnesses during the hearing. A summary of the proceedings can be found here.

• Why it matters: Congress is faced with a number of pieces of bipartisan legislation drafted to provide access to affordable housing, improve the safety conditions within current federally assisted housing, and target some of the nation’s existing housing resources to meet unaddressed needs of underserved markets.
• What’s next: While a Banking Committee markup of these items may be unlikely, legislators will seek to include these bipartisan supported bills in larger legislative efforts moving to the Senate floor in the coming months.

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

9. MBA, ALTA Urge National Association of Secretaries of State to Support Federal RON Bill

Last Thursday, MBA and the American Land Title Association (ALTA) sent a letter to the National Association of Secretaries of State urging it to support the Securing and Enabling Commerce Using Remote and Electronic Notarization Act (SECURE Act). If enacted, the SECURE Act would enable the use of remote online notarization nationwide.

• Why it matters: Passing the SECURE Act would permit states currently without RON laws to utilize remote notarization to facilitate financial transactions. The SECURE Act is consistent with the MBA model, the non-partisan Uniform Law Commission’s Revised Uniform Law on Notarial Acts (RULONA) and NASS’ guidance on remote notarization. 
• What’s next: In addition to advocating for the SECURE Act, MBA will also continue to work with state legislators to pass RON legislation consistent with national models for implementation. Thirty-five states have passed RON legislation since MBA initiated the 50-state campaign. 

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

10. Federal Reserve Chair Jerome Powell Testifies Before Special Panel on Coronavirus Crisis

On Wednesday, the House Select Subcommittee on the Coronavirus Crisis featured testimony by Federal Reserve Chair Jerome Powell. The hearing was intended to focus on the efficacy of the CARES Act’s newly created Main Street Lending Program and the Municipal Lending Facility. While members on both sides of the aisle were largely supportive of the Federal Reserve’s pandemic response efforts, Republicans advocated for discontinuance of enhanced unemployment benefits and cautioned against inflationary pressures. Democrats sought to highlight the need for continued federal support across multiple sectors of the economy.  

• Why it matters:  Under Section 13(3) of the Federal Reserve Act, the agency has immense authority and discretion in how to respond to economic emergencies.
• What’s next: Several factors will dictate how the Federal Reserve responds to the economy emerging from the pandemic, including congressional activity and a host of political pressures.  

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

11. HUD Confirms Expiration of Temporary COVID-19 Flexibilities for FHA Originations

On Tuesday, HUD announced FHA’s temporary guidance for reverification of employment and exterior-only appraisals will expire as enumerated on June 30. HUD cited limited usage of the policies in its decision not to grant further extensions. 

• Why it matters: The temporary guidance as outlined in Mortgagee Letter 2020-05 provided support for lenders in light of the challenges associated with the COVID-19 pandemic, including social distancing and business closures. These policies have been in effect since March 2020. 
• What’s next: MBA will continue to work with FHA and provide input on pandemic-related policies and programs. As a reminder, additional COVID-19 requirements related to verification of business operations for self-employed borrowers and restrictions on the use of rental income also are scheduled to expire on June 30. 

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

12. Remote Work Flexibility Progresses in Connecticut and Rhode Island

On Wednesday, Connecticut Governor Ned Lamont signed a state omnibus bill (SB1202), which includes language (Section 205) that will allow MLOs to work remotely. The provision 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. In Rhode Island, the House passed legislation (H5778) that would enable a licensed loan officer to work away from a licensed branch.

• Why it matters: The welcome developments in Connecticut and Rhode Island reiterate 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 continues to track recent state legislative and regulatory actions that would allow MLOs to work from a remote location. MBA is asking members to assist in the development of a tracking tool by providing any information on legislative or regulatory efforts in their state that would allow remote work. Members can contribute to this Google spreadsheet that will be used to update the tracker. If you do not have access to a Google account, please contact Kobie Pruitt and he will provide a digital copy of the spreadsheet for you to fill out. MBA will also continue to work with state and local association partners to push for its model legislation and regulation for licensing flexibility. 

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

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

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

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

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

14. 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 and recent webinars – which are complimentary to MBA members:

• 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
• A Strategy for Executing a Successful LIBOR Transition (Single-Family) – July 8

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.