MBA Advocacy Update Nov. 29, 2021

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

On Monday, President Joe Biden announced his intent to nominate current Federal Reserve Chair Jerome Powell for a second term and current Board member Lael Brainard for Vice Chair. Also last week, MBA submitted comments to the Federal Housing Finance Agency in support of its proposed changes to the capital framework applicable to the GSEs.

1. White House Nominates Powell for Second Term as Fed Chair; Brainard for Vice Chair

On Monday, President Joe Biden announced his intent to nominate current Federal Reserve Chair Jerome Powell for a second term and current Board member Lael Brainard for Vice Chair. If confirmed by the Senate, Powell would bring continuity in leadership at the Fed as it begins its process of tapering accommodative asset purchases. Brainard, if confirmed for Vice Chair, is expected to further emphasize the Fed’s analysis of climate-related risks and the development of a modernized Community Reinvestment Act framework.

• Why it matters: The Federal Reserve Board conducts the nation’s monetary policy and regulates and supervises much of the domestic banking and payments systems. The leadership of the Board sets the Fed’s priorities and will guide its efforts to ensure a continued smooth recovery from the COVID-19 pandemic.
• What’s next: The Senate is expected to schedule hearings and take up consideration of these nominees quickly, though a busy December calendar includes consideration of the House-passed Build Back Better Act, as well as the need to fund the federal government and raise or suspend the debt limit. There will be three additional vacant seats on the Federal Reserve Board for President Biden to fill in the coming months, giving the administration the opportunity to shape the composition and direction of the Board for the foreseeable future.

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

2. MBA Supports FHFA Amendments to GSE Capital Framework

Last week, MBA submitted comments to the Federal Housing Finance Agency in support of its proposed changes to the capital framework applicable to Fannie Mae and Freddie Mac. The adjustments to the capital framework would generate greater incentives for the GSEs to engage in credit risk transfer and would lower the likelihood that a risk-insensitive leverage ratio serves as a binding capital constraint.

• Why it matters: The GSE capital framework plays an important role in shaping the GSEs’ business activities and operations, as well as in determining the cost and availability of conventional mortgage credit. MBA has recommended various adjustments to the framework that would bolster the GSEs’ ability to broaden access to credit without sacrificing safety and soundness.
• What’s next: FHFA will consider public input on its proposal and release a final rule in the coming months. MBA will continue to advocate that FHFA, and the U.S. Department of the Treasury remove a problematic provision from the Senior Preferred Stock Purchase Agreements that requires the GSEs to adhere to an older version of the capital framework – even if revised – thereby negating the positive effects of any improvements to the framework.

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

3. MBA Recommends Elimination of Ginnie Mae Pooling Restrictions

On Friday, MBA and the Housing Policy Council jointly submitted recommendations to Ginnie Mae seeking an end to restrictive pooling measures put in place in response to the COVID-19 pandemic. The letter addresses situations in which Ginnie Mae issuers buy loans out of pools because the borrowers have gone 90 or more days without making a payment – likely due to a COVID-19 forbearance – and those borrowers ultimately resume making their payments without a loan modification (for example through a partial claim or reinstatement). Under existing policy, these loans may be re-delivered into Ginnie Mae securities only through custom pooling and only after a 210-day seasoning period.

• Why it matters: These pooling restrictions were put in place by Ginnie Mae to discourage loan buyouts that were not required because the borrowers did not undergo loan modifications. In many cases, these borrowers were brought out of forbearance through a Federal Housing Administration (FHA) partial claim, and in some cases, borrowers simply reinstated their loans. At this late stage of the forbearance process, most of the borrowers who remain in forbearance are likely to require modifications to secure deeper payment relief, which obviates the need for any restrictions meant to slow prepayment rates.
• What’s next: MBA will continue to advocate for the elimination of Ginnie Mae pooling restrictions that are not necessary and harm market liquidity.

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

4. Ginnie Mae Extends Alternative Procedures for Annual Audit of Document Custodians

On Tuesday, Ginnie Mae issued APM 21-08 Extension of Permitting Alternative Procedures for Certain Aspects of Issuer Annual Audit Report. Ginnie Mae will accept audited financial statements and Audit Reports for Issuers with a fiscal year ending on or before March 31, 2022, where the independent auditor relied on alternative procedures to meet the Issuer’s document custodian annual audited financial statement and Audit Report review objectives.

• Why it matters: Ginnie Mae is extending the alternative procedures due to the continuing impact of the COVID-19 pandemic. Where necessary, auditors will be permitted to follow alternative procedures to evaluate processes and controls of document custodians.
• What’s next: MBA will continue working with Ginnie Mae to address any COVID-19 issues that affect the mortgage industry.

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

5. 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:

• Rental Housing Perspectives: Low-Income Housing Tax Credit Landscape – November 30
• Commercial Real Estate Tech Tools & Trends – December 1
• MISMO Monthly Webinar: Introduction to Extensible Stylesheet Language Transformations (XSLT) – December 8
• DUS Multifamily Asset Management Perspectives – December 14
• Ten Things Your Company Must Do in 2022 – January 12
• The Climate Change Imperative: Exploring the Role of Residential Lenders and Servicers – January 18

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.