MBA Advocacy Update–Mar. 15, 2021
On Thursday, President Biden signed a $1.9 trillion COVID-19 stimulus bill with provisions to provide additional direct assistance to renters, homeowners, and businesses affected by the pandemic. On Wednesday, the Senate confirmed Marcia Fudge on a bipartisan basis to be the first woman to lead HUD in more than 40 years (and the second Black woman confirmed as Secretary).
And on Tuesday, MBA submitted recommendations to the Federal Housing Finance Agency on two proposed rules – one that would institute new liquidity standards for the GSEs and another that would require the GSEs to develop resolution plans, or “living wills.”
1. President Biden Signs $1.9 Trillion COVID-19 Relief Bill
On Thursday, President Joe Biden signed the $1.9 trillion COVID-19 stimulus bill, the American Rescue Plan Act of 2021, into law. After the full House approved the Senate-passed version of the bill on Wednesday, MBA President and CEO Bob Broeksmit, CMB, said in a press statement, “MBA commends the passage of the American Rescue Plan Act of 2021 … which will deliver essential relief to millions of individuals and families affected by the COVID-19 pandemic.”
- Why it matters: Highlights of the legislation that affect the mortgage industry and housing include: nearly $10 billion in assistance for homeowners to help with reinstatements, loan modifications, unpaid taxes and utilities, and other pandemic-related hardships; $100 million for housing counseling services; direct payments of $1,400 to qualified individuals; and an extension of unemployment insurance of $300 per week through September 6, 2021. The new public law does not modify the CARES Act mortgage forbearance already in place since last March.
- What’s next: Federal agencies will now work to implement the housing assistance grants and direct payments allocated by Congress.
2. Senate Votes to Confirm Marcia Fudge as HUD Secretary
On Wednesday, the Senate voted 66-34 to confirm Rep. Marcia Fudge (D-OH) to serve as Secretary of Housing and Urban Development (HUD). MBA issued a letter of support for her nomination.
- Why it matters: Fudge will lead HUD and coordinate closely with other federal agencies to address important issues facing both homeowners and renters. She will continue the agency’s ongoing housing assistance programs during the COVID-19 emergency.
- What’s next: Following the successful Fudge confirmation, the Biden administration is expected to make nominations for leadership positions at the Federal Housing Administration (FHA) and Ginnie Mae.
3. MBA Comments on FHFA Proposals for GSE Liquidity, Living Will Requirements
On Tuesday, MBA submitted recommendations to the Federal Housing Finance Agency on two proposed rules – one that would institute new liquidity standards for Fannie Mae and Freddie Mac and another that would require the GSEs to develop resolution plans, or “living wills.” In its comments on the liquidity proposal, MBA recommended potential improvements related to the classification of agency mortgage-backed securities and treatment of independent mortgage bank counterparties, as well as the need for greater transparency regarding existing supervisory requirements under which the GSEs currently operate. In its comments on the resolution planning proposal, MBA focused on much-needed reforms, including utility-style regulation and a federal guarantee on GSE MBS, to minimize the likelihood of systemic impacts if a GSE were to fail.
- Why it matters: These proposals represent important planks of FHFA’s efforts to establish a comprehensive prudential framework for the GSEs. Such a framework is necessary to strengthen oversight of the GSEs before their eventual release from conservatorship.
- What’s next: MBA will continue to advocate for important reforms to the GSEs –both with FHFA and with Congress – prior to their release from conservatorship.
For more information, please contact Dan Fichtler at (202) 557-2780.
4. GSE Limits on Second Homes, Investor Properties Come Into Focus; MBA Registers Concerns
Last week, Fannie Mae and Freddie Mac began industrywide outreach regarding new limits on second homes and investor properties. On Wednesday, Fannie Mae issued a lender letter in which it announced that the vast majority of loans for second homes and investor properties must be underwritten with Desktop Underwriter, effective for deliveries beginning April 1. Similarly, Freddie Mac has communicated to many lenders that it will soon begin limiting deliveries of loans for second homes and investor properties, with more detailed, public guidance forthcoming. MBA has raised with FHFA and the GSEs several significant implementation concerns regarding lender-level (rather than aggregate GSE) limits on products, potential impacts on existing pipelines, and inconsistent communications on how these limits will be measured and implemented.
- Why it matters: These limits arose from the January 2021 amendments to the GSEs’ Senior Preferred Stock Purchase Amendments, put in place by the Treasury Department and FHFA. The revised PSPAs require each GSE to cap purchases of second homes and investor properties at 7 percent of total single-family acquisitions over a rolling 52-week period. The revised PSPAs also include limits on “risk-layered” loans (effective immediately, like the limits on second homes and investor properties), as well as limits on cash window deliveries that will take effect in 2022.
- What’s next: MBA is aware of the numerous operational challenges that these limits present, including challenges related to existing pipelines. MBA is in close communication with FHFA and the GSEs to develop approaches that will alleviate some of these challenges.
5. FHFA Extends GSE Origination Flexibilities; Some to Expire on April 30
Last week, the Federal Housing Finance Agency announced it would extend several COVID-19-related Fannie Mae and Freddie Mac origination flexibilities through April 30. The origination flexibilities include temporary policies related to appraisals, employment verification, and power of attorney, among others, which allow transactions to occur in a safer manner that avoids person-to-person contact. The announcement also confirmed that a portion of these temporary flexibilities – those related to employment verification, condo project reviews, and power of attorney – are expected to be retired on April 30.
- Why it matters: Further extending these flexibilities helps to temporarily relieve uncertainty for market participants and brings additional stability to the housing market as the economy continues to be heavily impacted by the effects of the COVID-19 pandemic.
- What’s next: MBA will continue to advocate for appropriate extensions of certain flexibilities, such as those related to appraisals, while also working with FHFA and the GSEs to determine which flexibilities could potentially be made permanent.
For more information, please contact Sasha Hewlett at (202) 557-2805.
6. Ginnie Mae Adds ESG Classification to MBS Pools
On Thursday, Ginnie Mae announced that it will implement a new Environmental, Social, and Governance (ESG) stratification record in single-family MBS pools. The new ESG record will provide pool-level data on the volume and unpaid principal balance of loans located in low- and moderate-income areas.
- Why it matters: Investor interest in ESG issues has grown rapidly in recent years, leading to an increase in assets that meet various ESG benchmarks. Regulators also have taken greater interest in ESG issues, with the Securities and Exchange Commission, in particular, examining ESG disclosures among publicly traded companies.
- What’s next: Ginnie Mae will provide a test file in mid-April, and the first production MBS supplemental file with the ESG record will be available on May 10.
7. CFPB Issues ECOA Interpretive Rule
On Wednesday, the Consumer Financial Protection Bureau issued an interpretive rule clarifying that the prohibition against sex discrimination under the Equal Credit Opportunity Act and Regulation B includes sexual orientation discrimination and gender discrimination. The prohibition also covers discrimination based on actual or perceived nonconformity with traditional sex- or gender-based stereotypes, and discrimination based on an applicant’s social or other associations. This development aligns with previous MBA advocacy for equal treatment under the law for all credit applicants.
- Why it matters: This interpretative rule addresses any residual uncertainty as to the appropriate interpretation of ECOA or Regulation B following the U.S. Supreme Court ruling in Bostock v. Clayton County, Georgia, which held that sex discrimination under Title VII of the Civil Rights Act of 1964 includes discrimination on the basis of sexual orientation or gender identity discrimination.
- What’s next: MBA will continue working with the CFPB and advocate for the Bureau to update ECOA in a way that clarifies compliance expectations.
8. CFPB Rescinds Policy Statement on UDAAP’s Abusiveness Standard
On Thursday, the CFPB announced that it is rescinding its January 24, 2020, policy statement on UDAAP’s abusiveness standard. The Bureau’s announcement explains that the statement, which described how the Bureau would apply the abusiveness standard in supervision and enforcement matters, limited the Bureau’s discretion in a way that “was inconsistent with the Bureau’s duty to enforce Congress’s standard[.]”
- Why it matters: MBA supported the Bureau’s original policy statement issued last year because it provided greater clarity and certainty to the industry on the “abusive” standard. The rescission of this policy statement, and the Bureau’s stated desire for enforcement flexibility on “abusiveness,” reintroduces that uncertainty and compliance risk.
- What’s next: MBA will continue advocating for transparency on how the Bureau intends to utilize its supervisory and enforcement authorities under UDAAP.
9. House Financial Services Committee Holds Hearings on Legislative Priorities
On Wednesday and Thursday, the House Financial Services Committee held multiple legislative hearings laying the groundwork for Chairwoman Maxine Waters’ (D-CA) priorities. The full Committee hearing and Subcommittee hearings focused on several real estate finance-related policies impacting both the commercial and residential sectors. A few key provisions of emphasis during the hearings included a new federal down payment assistance program and an FHA student loan calculation bill. The full list of legislation discussed in relation to the hearings can be found here and here.
- Why it matters: These hearings are expected to serve as the baseline for legislation to be considered before the full House this Congress.
- What’s next: MBA will continue to engage with lawmakers in both the House and Senate (and the administration) to provide commentary on proposals impacting the industry.
10. Virginia Enacts Broad Consumer Data Privacy Law with Key Exemptions
Virginia Gov. Ralph Northam signed the Virginia Consumer Data Protection Act (CDPA), which goes into effect on January 1, 2023, and establishes a framework for controlling and processing personal data in the Commonwealth. CDPA applies to businesses that either control or process personal data of at least 100,000 consumers or derive over 50 percent of gross revenue from the sale of personal data, and control or process personal data of at least 25,000 consumers. The law also establishes responsibilities and privacy protection standards for data controllers and processors. Importantly, the law does not apply to certain types of data and information governed by federal law, including financial institutions or data subject to Title V of the federal Gramm-Leach-Bliley Act, or data/information collected for consumer credit reporting purposes under federal Fair Credit Reporting Act. Additionally, the law is subject to enforcement only through the Virginia Attorney General’s office and does not contain a private right of action.
- Why it matters: MBA has advocated for GLBA entity-level exemptions from state data privacy bills.
- What’s next: MBA staff will be reviewing the provisions of the bill with members and will determine if the language can serve to guide advocacy in other states.
11. MBA’s State Remote Online Notarization Campaign Maintains its Momentum
Last week, MBA continued its push for consistent minimum standards for RON, such as those in the MBA-American Land Title Association (ALTA) model state bill or the Uniform Law Commission’s Revised Uniform Law on Notarial Action (RULONA). On Tuesday, MBA shared a joint letter with Wyoming Secretary of State Edward Buchanan urging him to promulgate rules on SF 29 that would require remote ink notarizations (RIN) follow the same requirements as a RON to verify a principal’s identification. RIN transactions do not meet RON’s standards, and were developed to the address the short-term needs of the pandemic.
In Arkansas, SB 340 was recently amended to remove RIN references and substitute them with RON language.
In addition, legislation (AB 399) in New York was amended to improve provisions for credential analysis and ID proofing.
There is also momentum in New Mexico, where SB 12 unanimously passed the Senate and is now headed to the House. MBA and the New Mexico Mortgage Lenders Association support this legislation, which would adopt RULONA.
Lastly, MBA continues to advocate against RIN-only bills in Alabama (HB 470) and Arkansas (SB 14 & HB 1367), which would not adequately protect consumer data and personal information. MBA has met with the MBA of Alabama to discuss our advocacy efforts and to express our opposition HB 470.
- Why it matters: There are now 30 states with RON laws – an increase from 23 at the start of the pandemic.
- What’s next: MBA will continue to work with members and state and local partner associations to enact RON laws in the remaining states. To learn more visit www.mba.org/ron.
For more information, please contact Kobie Pruitt at (202) 557-2870.
12. Register Today: MBA’s Spring Conference & Expo 2021 – April 20-22.
MBA’s Spring Conference & Expo 2021, taking place via MBA Live, will feature several must-see sessions, including remarks from FHFA Director Mark Calabria and other prominent Washington policymakers and stakeholders.
- Why it matters: Calabria will discuss the various policy issues at FHFA, while MBA leadership and others will examine the latest updates on Capitol Hill and within the Biden administration.
- What’s next: To register for the conference, click here.
For more information, please contact Dawn Williams at (202) 557-2877.
13. Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family and commercial/multifamily 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:
- Steps Warehouse Lenders Must Take in Today’s Market – March 17
- Analyzing Housing Supply Shortages in the U.S. – March 19
- CCPA Review and What Lies Ahead – March 23
- Receivership 101 and Exploring Financing Opportunities – March 24
- Renter Counseling to Mitigate Evictions and Reduce Operational Costs – March 31
- The Location of Affordable & Subsidized Rental Housing Across and Within the Largest Cities in the United States – April 8