MBA Advocacy Update June 14, 2021

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

Last week on Capitol Hill, the House Transportation & Infrastructure Committee held a markup on the INVEST in America Act, and HUD Secretary Marcia Fudge appeared before the Senate T-HUD Appropriations subcommittee to discuss the FY 2022 budget. On Monday, Freddie Mac issued a bulletin providing further details regarding its implementation of recently-adopted limits on deliveries of loans secured by second homes and investor properties.

1. MBA Leads Joint Trades Letter in Response to Credit Risk Retention Review

Last week, MBA and five other organizations submitted recommendations to the Federal Reserve, Office of Comptroller of the Currency, Federal Deposit Insurance Corp., Securities and Exchange Commission, Federal Housing Finance Agency and HUD in response to their review of credit risk retention requirements for residential mortgage-backed securities. The letter strongly supports the continued alignment of the Qualified Residential Mortgage and Qualified Mortgage standards, citing the parameters of the recently finalized QM definition and the track record of high-quality lending since QRM and QM have been equivalent. The letter also cautions against narrowing the QRM standard relative to that of QM, which could cause a sharp reduction in borrower access to credit.

• Why it matters: Sponsors of RMBS comprised of QRM loans are exempt from the requirement to retain at least 5 percent of the credit risk associated with these securities. Alignment between the QRM and QM frameworks facilitates liquidity in the 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.
• What’s next: MBA continues to engage with the agencies as they finalize their review of the QRM rule and will provide support and resources as work on this issue continues.

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

2. Senate Votes on Key Treasury & HUD Nominees

Last week the Senate Finance Committee voted 24-4 in favor of Nellie Liang, President Joe Biden’s nominee to head domestic finance operations at the Treasury Department. The Senate also confirmed by a voice vote Adrianne Todman to serve as Deputy Secretary of HUD. MBA wrote a letter of support for each nominee.

• Why it matters: The HUD Deputy Secretary and the Treasury Under Secretary for Domestic Finance both play key roles in the federal oversight of housing finance. Once confirmed, Nellie Liang will oversee the $21 trillion market for Treasury securities. She has signaled that one of her top priorities will be to scrutinize the market following last year’s brief investor panic, and consider changes that will help it better withstand turmoil. Adrianne Todman has extensive background in housing, having served as the CEO of the National Association of Housing and Redevelopment Officials since 2017.
• What’s next: Liang’s nomination now awaits a vote by the full Senate, along with others awaiting action, including Rohit Chopra, nominated to be the Director of the Consumer Financial Protection Bureau.

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

3. House Committee on Transportation and Infrastructure Advances Legislation during Markup

On Thursday, the House Committee on Transportation and Infrastructure advanced its five-year, $547 billion surface transportation bill on a bipartisan basis during a 19-hour markup. This legislation will be part of a larger transportation and infrastructure package that will be merged with the highway authorization, which expires September 30. MBA’s letter on certain housing provisions included in the legislation can be found here.

• Why it matters: This markup kicks off action on infrastructure and tax legislation that will pick up in earnest later this summer and into the fall. The House Ways and Means Committee will be tasked with coming up with the revenue stream to pay for many of these and future proposals tied to the broader infrastructure debate. Thus far, there is no firm plan, as bipartisan negotiations between House and Senate leaders and the administration continue.
• What’s next: House leadership has already announced a full floor vote on this surface transportation bill before the end of the month. MBA will continue to advocate with the administration and on Capitol Hill against any possible threat to real estate finance markets as the congressional debate on tax and infrastructure advances.

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

4. HUD Secretary Appears Before Senate Committee To Discuss FY 2022 Budget Submission

On Thursday, HUD Secretary Marcia Fudge faced questions from both parties about the Department’s FY 2022 budget proposal. Appearing before the Senate Transportation-HUD Appropriations Subcommittee, Fudge and senators discussed HUD’s personnel gap, emergency rental assistance, and technology and credit availability at the Federal Housing Administration. President Biden requested $68.7 billion in discretionary funding for the department in FY 2022, a 15.1 percent increase from enacted funding for FY 2021. A summary of the hearing can be found here.

• Why it matters: Following advocacy efforts from MBA, senators questioned Fudge on FHA’s aging technology and whether regulatory clarity for lenders would promote improved access to credit. In response to a question from Senator John Boozman’s (R-Ark.), Fudge said improving access to credit was a major impediment to homeownership and that HUD is looking at ways to improve credit availability.
• What’s next: As both the House and Senate conduct appropriations hearings in the coming months, Congress will begin drafting its FY 2022 funding bill prior to the end of the fiscal year. With Congress unlikely to reach agreement to move all 12 appropriations bills before September 30, legislators must pass a stop-gap continuing resolution to keep the government operating beyond October 1.

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

5. MBA, Coalition Applauds Biden Administration for Recovery Efforts; Calls for an End to Nationwide Eviction Moratorium on June 30 

Earlier today, MBA and a broad real estate coalition sent a letter to President Joe Biden applauding the administration for helping to stabilize the housing sector during the COVID-19 pandemic. Citing the broad financial assistance to households, significantly improving job market, successful vaccination efforts, and dwindling COVID-19 cases, the letter also urged the administration to sunset the federal moratorium on evictions on June 30.

• Why it matters: The coalition said the broad financial assistance provided through COVID-19 relief bills, including Emergency Rental Assistance Program funds, expanded unemployment insurance and direct stimulus checks, helped avoid a financial catastrophe and provided a path to recovery for individuals, households and businesses alike.
• What’s next: The Centers for Disease Control and Prevention nationwide eviction moratorium is currently set to expire on June 30. MBA will continue to follow developments, work with policymakers at all levels, and continue to advocate for the quick and efficient distribution of rental assistance to assist tenants and landlords.

For more information, please contact Grant Carlson at (202) 557-2765.

6. Freddie Mac Updates Guidance on Second Homes and Investor Properties

On Monday, Freddie Mac issued a bulletin providing further details regarding its implementation of recently adopted limits on deliveries of loans secured by second homes and investor properties. The bulletin institutes requirements that, for July, lenders limit their deliveries of these loans to 6.5 percent (measured by UPB) of their total deliveries for the month. Beginning in August, the monthly limit will drop to 6 percent of total deliveries. Freddie Mac is, however, exempting lenders that deliver five or fewer such loans each month from these limits.

• Why it matters: The recent amendments to the Senior Preferred Stock Purchase Agreements (PSPAs), which govern the U.S. Treasury’s capital support of Freddie Mac and Fannie Mae, limit GSE purchases of loans secured by second homes and investor properties to 7 percent of total purchases over a rolling 52-week period. While the five-loans-per-month exemption provides needed relief to small lenders that serve narrower geographic areas, the application of the PSPA caps continues to cause unnecessary market disruptions.
• What’s next: MBA continues to advocate on behalf of the industry to alleviate the disruptions caused by the PSPA limits. In the near term, this advocacy is focused on providing the GSEs with more flexibility to implement these policies in a manner that does not require per-lender limits. In the longer term, it is focused on eliminating or modifying these limits through revisions to the PSPAs.

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

7. CFPB Releases FAQs to Clarify Escrow Rules

Last week, the CFPB released FAQs to provide mortgage servicers with clarity on Regulation X, escrow rules. These FAQs were published in response to MBA’s November 2020 letter requesting that the CFPB provide guidance to servicers that confirms they are able to offer borrowers a lump sum payment option to cure escrow shortages. The CFPB notes that while Regulation X prohibits requiring or even offering the option of lump sum payments in an annual escrow statement, it is permissible for servicers to accept a voluntary lump sum payment, as well as communicate to borrowers that a lump sum payment is an option through other materials, such as a statement stuffer, or a separate general communication about escrows.

• Why it matters: The FAQs provides servicers with clearer guidance on how to communicate with borrowers about their options for curing escrow shortages. 
• What’s next: MBA will continue to engage with the CFPB to clarify servicing rules and regulations.

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

8. MBA Remote Work Campaign Update and Resource Development 

Building on its state remote work campaign, MBA is developing a resource to track state legislative and regulatory actions that would allow mortgage loan originators to work from a remote location. This effort 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 . This will be a timely resource as four states (CT, KS, NV, OK) are scheduled to allow their temporary remote work guidance to expire this month. In particular, the Nevada regulator declined a combined request by MBA and the Nevada Mortgage Lenders Association to extend their current remote work guidance through the end of the year.

• Why it matters: The asynchronous state-to-state reopening of the economy and ending of remote work guidance in some states highlights the need for consistency in location requirements for MLOs who often reside in one state but are licensed in multiple states.
• What’s next: 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. 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 (202) 557-2870.

9. New York Legislature Adjourns; RON and CRA Bills Pass while CREF Mezzanine Debt Tax and “Anti-Engel” Bill Fail

On Thursday, after a capricious pace in which hundreds of separate pieces of legislation received votes with little or no debate, the New York State Legislature completed its work for the year. In a victory for the industry, companion bills to require the recording of mezzanine debt and preferred equity investments were not considered after almost being included in the state budget in April. Additionally, New York becomes the 35th state to enact a remote online notarization law. The bill mostly conforms with the MBA-ALTA model RON legislation, and there will be an opportunity to address these differences in a rule making. Another bill failed to pass both chambers that would have overturned a well-reasoned and persuasive ruling recently by the New York Court of Appeals in Freedom Mortgage Corporation v. Engel. Unfortunately, and despite a significant effort that included a Mortgage Action Alliance Call to Action, companion bills to create a state Community Reinvestment Act for non-banks was passed in the final hours of the session and will be sent to Governor Cuomo.

• Why it matters: Defeating the “Anti-Engel” and mezzanine debt bills and passing the RON bills are significant industry victories. For example, the estimated annual cost to MBA commercial members of the mezzanine debt proposal was $170 million. Unfortunately, the passage of the CRA bill represents a setback. Independent mortgage bankers do not take deposits to reinvest, do not have access to direct government support, and engage in sustainable lending to low- and moderate-income consumers.
• What’s next: MBA and the New York MBA will collaborate on messages to Governor Cuomo urging him to veto the CRA bill, and to the Secretary of State to ensure key minimum standards, such as credential analysis, are included in their forthcoming RON regulations to implement the new law once signed.

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

10. 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.

11. 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. Prior to getting started, please review helpful application tips to help you prepare your entry.

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

12. [VIDEO]: mPower Moments: Virtual Communication Tips with Ruth Sherman, Executive Speech Coach and Media Trainer 

In this episode of mPower Moments, MBA COO and mPower Founder Marcia Davies chats with Ruth Sherman, Executive Speech Coach and Media Trainer, about the tools, tips, and tricks to impress in a virtual environment.

• Why it matters: Sherman also gives compelling advice on being a good storyteller and why “reading the room” should not be attempted. She also reinforces the feelings on which many of us can agree: the need for in-person communication is essential to strong networking and building relationships.
• What’s next: To watch more mPower Moments, click here.

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

13. 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
• MISMO API Toolkit for Technical Audience – July 8
• Do Commercial Servicer Ratings Matter? – July 14

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.