MBA Advocacy Update Mar. 1 2021

Bill Killmer; Pete Mills

On Friday the House began approving a $1.9 trillion “reconciliation” package based largely on President Joe Biden’s American Rescue Plan. Also on Friday, MBA submitted comments in response to the Federal Housing Finance Agency’s Request for Information on Appraisal-Related Policies, Practices and Processes.

And on Tuesday and Wednesday, Federal Reserve Chairman Jerome Powell appeared before key House and Senate committees to offer his semiannual report to Congress. 

1. House Approves $1.9 Trillion American Rescue Plan 

On Friday the House began approving a $1.9 trillion “reconciliation” package, largely on party lines, based on President Joe Biden’s American Rescue Plan. Over the past several weeks, 11 separate committees held markups on jurisdictionally specific components of the reconciliation package, including the Financial Services and the Ways and Means committees. The bill is likely to pass mostly along partisan lines, with votes going into the weekend. 

  • Why it matters: MBA sent a letter to the House ahead of the vote noting key provisions of interest to the real estate finance industry, including emergency rental assistance, broad-based homeowner assistance and housing counseling provisions. 
  • What’s next: Once the House passes the bill, it will then move for consideration by the Senate, which will review the entire package where changes (e.g., eliminating the bill’s $15 per hour minimum wage increase) will likely be made. 

For more information, please contact Borden Hoskins at (202) 557-2912, Tallman Johnson at (202) 557-2866, or Ethan Saxon at (202) 557-2913.

2. FHFA Aligns COVID-19 Mortgage Relief Policies Across the Government 

On Thursday, the Federal Housing Finance Agency announced extensions of several measures to align COVID-19 mortgage relief policies across the federal government.

The GSEs are extending the moratoriums on single-family foreclosures and REO evictions until June 30. The foreclosure moratorium applies to Enterprise-backed, single-family mortgages only. The REO eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on March 31.

FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional three-month extension of COVID-19 forbearance. This additional three-month extension allows borrowers to be in forbearance for up to 18 months. Eligibility for the extension is limited to borrowers who are in a COVID-19 forbearance plan as of February 28, and servicers must make “quality right-party contact” prior to each extension. See the GSEs’ servicer bulletins here and here

  • Why it matters: MBA has urged FHFA, the Department of Housing and Urban Development (HUD), Department of Veterans Affairs (VA), and Department of Agriculture (USDA) to align their COVID-19-related servicing policies to the greatest extent possible. These actions bring the GSEs’ COVID-19 forbearance framework into closer alignment with federal guarantee agencies.
  • What’s next: MBA will continue to work with FHFA, the administration, and other stakeholders on ways to help consumers throughout this difficult time.

For more information, please contact Darnell Peterson at (202) 557-2796.

3. MBA Provides Recommendations to FHFA on Appraisal Issues

On Friday, MBA submitted comments in response to FHFA’s Request for Information on Appraisal-Related Policies, Practices and Processes. Over the past several weeks, MBA has solicited feedback from a diverse cross-section of its membership to provide FHFA with recommendations to shape its policies regarding GSE appraisal modernization; the Uniform Appraisal Dataset (UAD) and the design of appraisal forms, Automated Valuation Models (AVMs) and appraisal waivers; and valuation differences by borrower and neighborhood ethnic makeup.

  • Why it matters: Modernization is needed within the appraisal process to incorporate advancements in property data collection methods, address an aging appraiser population, and acknowledge concerns surrounding potential racial bias in appraisal findings. MBA’s comments seek to underscore the need for innovative technology that is balanced with manual due diligence, AVM standardization, improvements to the UAD effort, FHFA supervision of the appraisal waiver process, increased public accessibility to property data collected by the GSEs, and further research and development of policies and tools that mitigate the risk of suppressed valuations for minority borrowers.
  • What’s next: FHFA will review the public comments and determine the appropriate modifications to its appraisal policies to ensure the GSEs operate in a safe and sound manner.

For more information, please contact Julienne Joseph at (202) 557-2782.

4. HUD Issues Longer-Term Extension of FHA Origination Flexibilities

On Tuesday, HUD extended the Federal Housing Administration’s appraisal and reverification of employment flexibilities through June 30. These flexibilities were scheduled to expire on February 28, 2021, and this update aligns with MBA advocacy for longer-term extensions to provide greater certainty to market participants. HUD also extended FHA requirements related to verification of self-employment and rental income through June 30.

  • Why it matters: The appraisal and reverification of employment flexibilities allow for reduced face-to-face contact in the home-buying process and relieve difficulties associated with social distancing or work-from-home policies.
  • What’s next: MBA will continue to work with HUD on FHA policies that ensure smooth market functioning – both during the pandemic and in its aftermath.

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

5. MBA Provides Comments on Framework for GSEs’ Affordable Housing Goals

On Tuesday, MBA submitted comments to the Federal Housing Finance Agency in response to its request for feedback on potential changes to the structure of the GSEs’ affordable housing goals. Mirroring recommendations made in its 2017 GSE Reform white paper, MBA encouraged FHFA to consider including qualitative goals such as outreach campaigns and analytical research to supplement – not replace – current quantitative goals. MBA also offered a list of principles for FHFA to consider in any new framework for the Enterprise Housing Goals.

  • Why it matters: MBA strongly supports efforts to ensure sustainable and affordable housing for low-income and very low-income households, both through homeownership and rental housing. The Enterprise Housing Goals contribute to this objective.
  • What’s next: FHFA will review the public comments and may publish a proposed rule in the coming months.

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

6. Federal Reserve Chairman Powell Testifies Before Congress 

Federal Reserve Chairman Jerome Powell appeared before the House Financial Services Committee and the Senate Banking Committee last week to provide his semiannual report to Congress. As part of his prepared opening remarks, Powell said, “the housing sector has more than fully recovered from the downturn.” Sen. Bob Menendez (D-NJ) asked about evictions leading to a housing crisis, to which Powell responded that his agency would respond as ably as possible to ensure a robust and complete recovery. Sen. Jon Tester (D-MT) also raised the need for added affordable housing supply. Sen. Pat Toomey (R-PA), the panel’s Ranking Member, quizzed Powell about rising interest rates and fears of inflation.    

In the House, Rep. Emanuel Cleaver (D-MO) and Rep. Steve Stivers (R-OH) both asked about the Fed’s role in revisiting the Community Reinvestment Act. Powell responded by saying banking and lending has evolved, and this evolution will require a rewrite of the CRA. The Fed is currently working with the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency to develop a unified rule that works for all impacted stakeholders. 

  • Why it matters: Powell’s views expressed at the hearing will inform the allocation of additional assistance contained in the soon-to-be-passed $1.9 trillion American Rescue Plan.
  • What’s next: Federal financial regulators will play a central role in implementation of additional COVID-19 relief legislation, once enacted and the CRA overhaul mentioned at the hearing. 

For more information, please contact Borden Hoskins at (202) 557-2912, Tallman Johnson at (202) 557-2866, or Ethan Saxon at (202) 557-2913.

7. MBA Engages with State Regulators at NMLS Conference

The annual Nationwide Multistate Licensing System User Conference took place virtually last week and included presentations from MBA staff during three key sessions. MBA President and CEO Bob Broeksmit, CMB, participated in a general session discussion on the Conference of State Bank Supervisors’ proposed “prudential framework” for independent mortgage bank (IMB) servicers. Broeksmit’s remarks focused on several critical areas, including improved liquidity metrics, the importance of alignment between federal and state standards, and the need for coordinated implementation across state regulators.

Pete Mills, MBA Senior Vice President for Public Policy and Member Engagement, participated in a panel with state regulators, and discussed MBA’s support for the concept of One Company/One Exam for IMBs and offered recommendations on how to ensure the program will improve exams and reduce regulatory burden. Lastly, William Kooper, MBA Vice President of State Government Affairs and Industry Relations, delivered comments on a variety of COVID-19 response bills and also presented MBA’s model state legislation and regulation for remote work flexibility, which can be reviewed at the new MBA campaign resource page.  

  • Why it matters: MBA has been working with CSBS and NMLS for the past several years to promote a more efficient state regulatory system for IMBs, with successes on issue like the Uniform State Test for state-licensed MLOs and MLO Temporary Authority among states.
  • What’s next: MBA will work closely with regulators and CSBS staff on all initiatives discussed during the conference, and brief MBA members on any developments.

For more information, please contact Pete Mills at (202) 557-2878 or William Kooper at (202) 557-2737.

8. MBA, MMBBA Submit Comment Letter in Response to Maryland Proposed Rules for Remote Work

On Thursday, MBA and the Maryland Mortgage Bankers and Brokers Association shared a comment letter with the Maryland Department of Labor’s Office of the Commissioner of Financial Regulation in response to its proposed rules for remote work.

  • Why it matters: MBA is supportive of Maryland’s proposed rules, which provide Maryland licensees with additional clarity and flexibility necessary to work remotely during the health crisis. The proposed rules are consistent with model legislation and regulations that are a part of MBA’s campaign to modernize state licensing for the mortgage finance industry. For more information on the MBA State Licensing Flexibility Campaign, please visit our resource center.   
  • What’s next: The proposed rules were adopted on an emergency basis, and will expire on May 3. MBA will continue to collaborate with DLLR in its effort to modernize its state licensing rules.

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

9. Mortgage Action Alliance Issues Call to Action in New Mexico to Support LIBOR Transition Bill

Last week, Mortgage Action Alliance members in New Mexico wrote to their legislators in support of SB-365, a bill supported by the New Mexico Mortgage Lenders Association and MBA, to amend state law to address an unintended consequence of the transition from the London Interbank Offered Rate (LIBOR) to the Secured Overnight Financing Rate. Fannie Mae and Freddie Mac announced last year that they would no longer acquire mortgages indexed to LIBOR. A key difference in the GSEs’ parameters is that, while LIBOR-indexed loans featured interest rate resets once per year, SOFR-indexed loans reset the interest rate twice per year. SB-365 fixes a provision in state law that prohibits a state-chartered mortgage lender, whether a bank or a nonbank, from originating an adjustable-rate mortgage that resets more than once every 12 months.

  • Why it matters: Without this change, some GSE-eligible SOFR-based ARMs may violate the terms of the New Mexico statute.
  • What’s next: The New Mexico Legislature only meets every other year to consider policy changes, and this year’s session is already well underway. Industry professionals are strongly encouraged to take action by clicking here and reaching out to colleagues to write their representatives as well.

For more information, please contact William Kooper at (202) 557-2737 or Alden Knowlton at (202) 557-2816.

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 and recent webinars – which are complimentary to MBA members:

  • Achieving Touchless Mortgage Automation: Insights from Industry Experts – March 3
  • Multifamily Real Estate Financial Crimes Training – March 10
  • Commercial Real Estate Market Fundamentals – March 12
  • 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

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