MBA Advocacy Update Nov. 22, 2021

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

On Friday, the House passed the most current version of President Biden’s Build Back Better Act legislation, largely along party lines. On Monday, HUD published its Annual Report to Congress on the financial status of the FHA’s MMI Fund. And on Wednesday, HUD released Mortgagee Letter 2021-27, which provides details regarding Fair Housing Act compliance with respect to FHA appraisals.

Also last week, MBA President and CEO Bob Broeksmit, CMB, penned a blog post highlighting servicers’ efforts during the COVID-19 pandemic.

Has your company joined the 100+ member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting minority homeownership; affordable rental housing; and company diversity, equity, and inclusion? One senior executive (e.g., CEO, COO, President) is encouraged to sign this online form on behalf of your organization.

1. House Passes Build Back Better Act; Legislation Faces Procedural and Substantive Hurdles in the Senate

On Friday, the House passed a new version (and its latest iteration) of President Joe Biden’s Build Back Better Act (BBBA) legislation (H.R. 5376), largely along party lines by a 220-213 vote. The vote hinged in part on release of a full Congressional Budget Office budgetary analysis of the most current legislative text. The CBO estimated the bill would increase the deficit by a net $367 billion from fiscal years 2022 through 2031 by increasing spending by $1.64 trillion and raising $1.27 trillion in revenue over that period. The estimate does not include additional revenue from tax enforcement funding, which CBO separately estimated would raise $207 billion in revenue.

• Why it matters: Though not final, this House-passed BBBA text includes MBA-supported language excluding income derived from mortgage servicing contracts from the bill’s 15% minimum book tax requirements, preserves current small-business “pass-through” deduction tax rules (Section 199(a)), preserves current tax treatment for Section 1031 Like-Kind Exchanges, does not include a Biden administration proposal altering the treatment of “stepped-up” basis vis-à-vis estate taxes, does not include changes to the taxation of capital gains on the sale of a home, and does not include a requirement that financial institutions report transactions that exceed $600 directly to the IRS. The House-passed package also includes an MBA-supported $10 billion federal “first-generation” down payment assistance grant program (including a safe harbor for participating lenders), establishes an MBA-supported Neighborhood Homes Investment Act credit for single-family developers to rehabilitate residences in LMI census tracts, and includes roughly $500 million in housing counseling funds.
• What’s next: The Senate’s consideration of H.R. 5376 will continue in earnest after Thanksgiving, with a goal of completion in December (as stated earlier this week by Majority Leader Chuck Schumer (D-NY)). Though final timing is uncertain, Senate negotiations will most likely yield further substantive changes, making MBA’s ongoing engagement regarding our industry’s key priorities critical. “High-stakes” negotiations to fund the federal government for the remainder of fiscal year 2022 and raise the statutory federal debt limit are also ongoing. MBA staff will keep you updated – with further detailed summary analyses – as these consequential discussions continue to evolve.

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

2. HUD Releases 2021 Report on Health of FHA Program; Capital Ratio of MMI Fund Improves

On Monday, HUD published its Annual Report to Congress on the financial status of the Federal Housing Administration’s Mutual Mortgage Insurance Fund. The report announced a strong combined capital ratio of 8.03% – well above the statutory minimum of 2.0% – while also noting concerns about lingering pandemic-related serious delinquencies and the dependency of HUD’s modeling on assumptions regarding future home-price appreciation.

• Why it matters: A healthy FHA program is necessary to ensure the broad availability of sustainable mortgage credit to low- and moderate-income households, minority borrowers, first-time homebuyers, and other historically underserved communities. The strength of this year’s annual assessment of the health of the MMI Fund provides an opportunity for HUD to consider changes to the level and structure of FHA premiums.
• What’s next: MBA will work with HUD as it evaluates potential changes to FHA pricing. MBA President and CEO Bob Broeksmit, CMB, issued a statement that said “it is appropriate for HUD to expeditiously examine reductions in FHA mortgage insurance premiums, which have been at their current levels for nearly seven years . . . while being mindful of the current delinquency levels in the FHA portfolio and the elevated number of borrowers who remain in forbearance.”

For more information, please see MBA’s summary of the report or contact Hanna Pitz at (202) 557-2796.

3. HUD Issues Guidance on Fair Housing Compliance for FHA Appraisals

On Wednesday, HUD released Mortgagee Letter 2021-27, which provides details regarding Fair Housing Act compliance with respect to FHA appraisals. While most of the Mortgagee Letter’s provisions address expectations of appraisers, one addition to the FHA Handbook requires lenders to ensure an FHA appraisal “complies with all applicable federal, state, and local laws, including the Fair Housing Act and other federal, state, or local anti-discrimination laws.”

• Why it matters: The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, and disability in the sale, rental, or financing of housing. This Mortgagee Letter, which HUD describes as “clarify[ing] FHA’s existing requirements,” suggests a more vigorous emphasis from HUD on lender efforts to identify discriminatory factors potentially used in appraisal reports.
• What’s next: Because HUD is considering this guidance to be a clarification of existing requirements for both lenders and appraisers, it is effective immediately. MBA will work with HUD to better understand its expectations of FHA lenders, identify the appropriate bounds of lenders’ roles in this process, and facilitate compliance across the industry.

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

4. FHFA Releases Annual Scorecard for Fannie Mae and Freddie Mac

This week, the Federal Housing Finance Agency released its 2022 Scorecard for Fannie Mae and Freddie Mac, as well as for Common Securitization Solutions. The 2022 Scorecard reiterates many of the objectives the GSEs have pursued in prior years, though a greater emphasis is placed on issues related to affordability, fair lending, and equity. The 2022 Scorecard includes specific single-family initiatives related to facilitating a greater supply of affordable housing, updating the current pricing framework, modernizing the appraisal process, improving the availability of small-balance loans, finalizing the review of new credit score models, and ensuring a focus on the effects of climate change.

• Why it matters: The Scorecard outlines FHFA’s expectations for the GSEs’ priorities in the coming year. These priorities, in turn, influence the GSEs’ operations across a wide range of policy areas and business activities. FHFA notes that the objectives found in the 2022 Scorecard should better position the GSEs to support the housing market throughout the economic cycle.
• What’s next: MBA will continue to work with the GSEs as they implement the Scorecard initiatives and, over a longer term, pursue the necessary conditions to exit conservatorship.

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

5. Ginnie Mae Permits eSignatures and Remote Online Notarization for Modifications of ‘Paper’ Mortgages

Last week, Ginnie Mae issued All Participant Memorandum (APM) 21-07, which allows use of electronic signatures and remote online notarization for modifications of “paper” loans – expanding these tools for use beyond its Digital Collateral Program. This update aligns with MBA advocacy efforts and reflects the ongoing shift to digital processes that leverage industry standards.

• Why it matters: Loan modifications are expected to increase as many borrowers exit COVID-19 forbearances in the coming months. This updated Ginnie Mae policy should improve the speed and efficiency of the modification process by permitting the use of widely accepted technological solutions featuring appropriate safeguards. This policy requires that modifications transmitted electronically be delivered as MISMO SMART Docs® or PDFs, as well as that participating RON platforms be in compliance with MISMO’s RON standards.
• What’s next: This updated policy is effective immediately. Ginnie Mae plans to address requirements for modifications of eMortgages or eNotes in a separate APM.

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

6. 11th Circuit Orders Rehearing in Hunstein

On Wednesday, the 11th Circuit Court of Appeals vacated the substitute opinion Hunstein v. Preferred Collection and Management Services, Inc. and ordered a rehearing en banc of the case. The court’s order was issued sua sponte, meaning the decision was made on the court’s own initiative and not in response to the defendant’s petition for a rehearing.  

• Why it matters: This positive development means that the expansive reading of the Fair Debt Collection Practices Act in Hunstein, which held that a debt collector violates the FDCPA when transmitting a consumer’s personal information to a mail vendor, is, at least temporarily, no longer law. Whether the court readopts the earlier interpretation will be determined by the full 11th Circuit after its en banc rehearing.
• What’s next: MBA will work with outside counsel, members, and partner trade associations to prepare an amicus brief for the court’s en banc review.

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

7. CFPB Issues Request for Information on HMDA

On Tuesday, the Consumer Financial Protection Bureau released a Request for Information seeking stakeholder input on a planned assessment of the 2015 Home Mortgage Disclosure Act rule. The assessment, which the CFPB has decided to conduct voluntarily, will focus on whether the changes made to HMDA in 2015 have been effective in meeting the goals of the rule. 

• Why it matters: The 2015 HMDA rule significantly expanded the types of data reported by lenders, most notably by requiring greater reporting of loan-level data.
• What’s next: MBA will work with our Legal Issues and Regulatory Compliance Committee to prepare a response to the Bureau’s HMDA RFI. Comments are due 60 days after the date the RFI is published in the Federal Register.

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

8. [VIDEO]: mPower Moments: On Authenticity and ‘Being Me’ with Laura Escobar of Lennar Mortgage

In this episode of mPower Moments, mPower Founder Marcia M. Davies chats with Laura Escobar, President of Lennar Mortgage. Escobar shares great advice on how being true to yourself leads to success and new opportunities, the key lessons she’s learned throughout her career and the importance of paying it forward and having empathy for others.

• What’s next: To watch more mPower Moments, click here.

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

9. 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:

• Learn How MISMO is Helping You Go Digital with the New e-Eligibility Exchange – November 22
• Introduction to MISMO’s Commercial Appraisal Dataset – November 23
• Rental Housing Perspectives: Low-Income Housing Tax Credit Landscape – November 30
• Commercial Real Estate Tech Tools & Trends – December 1
• DUS Multifamily Asset Management Perspectives – December 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) 557-2931.