MBA Advocacy Update June 7, 2021

Bill Killmer; Pete Mills

Last Friday, President Biden’s full fiscal year 2022 budget proposal was released, along with the Treasury Department’s “Green Book” itemizing the revenue implications of various tax proposals. Additionally, MBA recently submitted a comment letter in response to the CSBS’s proposed “network licensing” model for all entities in the Nationwide Multistate Licensing System.

Also last week, The MBA Mortgage Action Alliance issued a call to action to its members in New York to respond to, and prevent passage of, a bill before the New York Senate that would impose state Community Reinvestment Act requirements for independent mortgage banks.

1. President Biden Unveils Budget Proposal; Outlines Broad Spending and Revenue Projections for FY 2022

On May 28, President Joe Biden formally introduced his fiscal year 2022 budget proposal – supplemented by the Treasury Department’s “Green Book” regarding tax measures – to offer a full accounting of the administration’s previously disclosed plans for trillions of dollars in new taxes and government spending. The move also revealed for the first time how the administration believes inflation, employment and economic growth would be affected by enacting its agenda. The release of the budget proposal typically marks the opening of appropriations season on Capitol Hill. MBA prepared a summary of the president’s budget and tax proposals, which can be found here and here.

  • Why it matters: Delivery of the president’s budget clears the way for the House and Senate to begin working on a congressional FY 2022 budget resolution outline. That, in turn, will unlock a fast-track process that could potentially allow Democrats to pass large portions of Biden’s infrastructure/tax plan and social spending along party lines. With committees expected to act this summer, congressional budget “reconciliation” legislation would contain detailed instructions for one or more follow-on bills implementing tax increases, tax credits and spending increases.
  • What’s next: The House and Senate appropriations committees can begin writing and voting on the 12 annual spending bills needed to keep the government open after the October 1 start of the new fiscal year. Both the budget and appropriations processes will be colored by the political debate over taxes and federal spending, kicking off a familiar cycle of Democrats highlighting ways in which new government programs and tax changes can promote economic growth and equity, while Republicans warn of the dangers of the mounting federal debt.

For more information, please contact Pete Mills at (202) 557-2878 or Bill Killmer at (202) 557-2736.

2. MBA Submits Response to NMLS Modernization Proposal

Late last week, MBA submitted a comment letter in response to the Conference of State Bank Supervisors’ Networked Licensing Model, Requirements Framework, Core Requirements and Identity Verification proposal. The goal of the proposal is to modernize the Nationwide Multistate Licensing System and develop the next generation of supervisory technology. The rollout of the modernized approach to licensing will begin with the Money Services Businesses industry before eventually becoming the basis for licensing all industries, including mortgage, debt, and consumer finance.

  • Why it matters: In the letter, MBA expressed concerns about ensuring uniform state regulator adoption and implementation, the proper integration of temporary authority for mortgage loan officers mandated by federal law, and the ability of a licensed company to view and edit an MLO’s application to ensure it is complete and accurate. Moreover, MBA urged CSBS to consider a 60-day pause after the modernization approach is implemented for MSBs to evaluate its effectiveness and repropose the modernization plan for mortgage lenders and MLOs in a manner that addresses industry concerns.
  • What’s next: MBA will continue to work with CSBS to further modernize NMLS.

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

3. House Agriculture Committee Chairman David Scott Objects to Biden’s Capital Gains Tax Increases

On Wednesday, House Agriculture Committee Chairman David Scott (D-GA) sent a letter opposing President Biden’s proposal that would eliminate stepped-up basis and tax capital gains at death. He argued this proposed tax change could hurt farmers and promoted the stepped-up basis as a “critical tool enabling family farming operations to continue from generation to generation.”

  • Why it matters: Scott’s letter follows similar efforts from over a dozen rural Democrats who last month appealed to congressional leaders, cautioning that altering the stepped-up basis for capital gains could result in taxes that long-standing family farms could not afford. These actions demonstrate the growing opposition among moderate Democrats to one of many tax changes that the administration hoped would help pay for some of the ambitious spending proposals contained in the American Jobs Plan and the American Families Plan.
  • What’s next: Action on infrastructure and tax legislation will begin in earnest later this summer and continue well into the fall. MBA will continue to advocate with the administration and on Capitol Hill against any possible threat to real estate finance markets (e.g., agriculture sector specific carveouts) 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. MLO Remote Work Flexibility Developments in Vermont and Nevada

Recently, Vermont enacted a law (SB 88) that makes permanent the state’s guidance to allow mortgage loan originators to work from a location other than a licensed branch. SB 88 includes a provision allowing MLOs to work remotely, provided they are assigned to a licensed location and are adequately supervised by their company. To provide greater clarity, the law also allows the Commissioner of the Department of Financial Regulation to set other requirements, which are likely to mirror its temporary guidance.

By contrast, in a setback to MBA’s campaign, the Nevada regulator declined the combined MBA and Nevada Mortgage Lenders Association request to extend their current remote work guidance through the end of 2021. The Department of Business and Industry had announced that it would end an MLO’s ability to work from other than a licensed location on June 30, 2021. Both associations had urged that the flexibilities be extended to give lenders time to adequately prepare for a return to branch/location focused work.

  • Why it matters: The welcome developments in Vermont, and less-than-welcome news in Nevada, both 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: Working with its state and local association partners, MBA will continue 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.

5. Colorado Passes Bill Subjecting Nonbank Servicers to Attorney General Oversight

On Wednesday, the Colorado Legislature completed approval of HB 12-182, which, if signed by Gov. Jared Polis, would subject mortgage servicers to regulation by an assistant attorney general and includes several other requirements, including notifications, record keeping, reporting, examinations, inspections and enforcement. The bill was the subject of robust negotiation for several months. The Colorado Mortgage Lenders Association, with the support of MBA, worked with the bill sponsor to mitigate many of the most harmful provisions of the original drafts and to align requirements as best as possible with those of the Consumer Financial Protection Bureau. For example, the provision to license servicers was amended to a notification requirement, the bill’s small servicer exemption aligns with federal regulation, and the language does not include a private right of action. The bill also exempts loans held for sale for up to a year from the bill’s provisions.

  • Why it matters: The improvements in this legislation are the direct result of coordinated and sustained industry advocacy.
  • What’s next: The bill now goes to Polis for consideration.

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

6. New York Assembly CRA Requirement for Nonbanks Poised for Full Assembly Vote; MAA Issues Call to Action to Oppose

On Wednesday, a bill (A.6247-A) that would create a new state Community Reinvestment Act for New York-licensed nonbank mortgage lenders was approved by the New York Assembly’s Rules Committee and is now awaiting consideration of the full chamber. With only four scheduled legislative days remaining in the 2021 legislative session, it is important to note that the bill is sponsored by the Assembly Majority Leader, who organizes the daily legislative calendar.

The legislation would establish guidelines for assessing lenders’ record of performance through factors including: activities conducted to ascertain credit needs of the community; the extent to which marketing and promotions make the community aware of services offered; the extent of participation by the mortgage banker’s leadership bodies in formulating policies and reviewing performance; participation in community outreach, development, redevelopment and educational programs; any practices intended to discourage applications for types of credit; geographical distribution of credit offers; evidence of prohibited discriminatory or other illegal credit practices; the record of opening and closing offices; participation in government -insured, -guaranteed or subsidized loan programs for housing; ability to meet community credit needs; and other factors that bear upon the extent to which the mortgage banker is meeting the community’s credit needs. MBA and the New York MBA opposed this legislation and ahead of the Rules Committee vote provided MBA’s CRA policy brief to assembly members.

  • Why it matters: The application of the CRA to nonbanks would be an ineffective and misguided policy choice, and it would unnecessarily increase the compliance costs of originating mortgages to LMI borrowers in New York.
  • What’s next: The Mortgage Action Alliance (MAA) issued a call to action to its members in New York, and real estate finance professionals in the state are urged to respond to prevent passage of the bill.

For more information, please contact William Kooper at (202) 557-2737 or Rosie Sheehan at (202) 557-2933.

7. MBA, Coalition of Trade Associations File Hunstein Amicus Brief 

On Tuesday, MBA and a broad coalition of financial services trade associations filed an amicus brief in support of Preferred Collection’s petition seeking a rehearing en banc of the 11th Circuit’s decision in Hunstein v. Preferred Collection and Management Services Inc. The amicus brief explains that the Hunstein decision will have dire consequences for consumers and financial institutions, particularly mortgage servicers. The brief argues that the Fair Debt Collections Practice Act (FDCPA) issues in Hunstein are thus of exceptional importance and review by the full 11th Circuit is warranted.

  • Why it matters: The Hunstein decision, which held that the use of a letter vendor violates the bar on contacting third parties regarding a debt in the FDCPA, could impair the ability of servicers to work effectively with vendors that often perform necessary or pro-consumer services.  
  • What’s next: MBA will monitor the ongoing appeal and simultaneously seek to address the 11th Circuit’s problematic FDCPA interpretation through legislative and regulatory channels. 

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

8. White House Releases Memo on Ransomware Attacks

On Wednesday, the White House released a memo highlighting the rise of ransomware attacks and what companies can do to protect themselves against such attacks.

  • Why it matters: The Biden administration provided several solutions to help companies, which include backing up company data and updating patch systems.
  • What’s next: To read the memo, click here.

For more information, please contact Rick Hill at (202) 557-2718.

9. 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 at (202) 557-2817.

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
  • 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.