MBA Advocacy Update Sept. 13, 2021

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

On Thursday, five House committees, including the House Ways and Means Committee, began to consider their respective reconciliation bills as a non-binding September 15 deadline approaches. Also last week, the Federal Housing Finance Agency announced the GSEs will submit Equitable Housing Finance Plans that will identify and address barriers to sustainable housing opportunities. 

1. House Committee Action Begins on $3.5 Trillion Budget Resolution

On Thursday, five House committees, including the House Ways and Means Committee, began to consider their respective reconciliation bills as a non-binding September 15 deadline approaches. The House Ways and Means Committee continues to shoulder the bulk of the effort, including the massive task of developing specific “pay-fors,” which may include, among other items, raising the corporate tax rate, raising the top marginal personal income tax rate, raising the capital gains rate, and reforming international tax rules. Other revenue raisers under discussion that could impact MBA members include changes to small-business “pass-through” deduction tax rules (Section 199(a)) and a minimum book tax proposal that would negatively impact the value of mortgage servicing rights assets.

A separate House Financial Services Committee markup of its reconciliation instructions, which includes roughly $327 billion toward several housing initiatives, will begin on Monday, September 13. Included in the expected HFSC package are targeted funding streams for federally backed mortgage “innovations,” including an FHA small-dollar mortgage pilot program and a new 20-year mortgage product for first-generation homebuyers, a HUD program for first-generation homebuyer down payment assistance and housing counseling, green housing, and fair housing enforcement (among other investments).

• Why it matters: Democrats are trying to complete work on a comprehensive reconciliation package by the end of September, along with a potential House vote on a Senate-passed bipartisan infrastructure package, and votes in both the House and Senate on a Continuing Resolution to fund the federal government and raise the federal debt ceiling. As this House committee process on reconciliation unfolds, informal, behind-the-scenes discussions on important Senate procedural – and congressional budget scoring – hurdles are also ongoing.
• What’s next: Mortgage Action Alliance members need to take action TODAY to urge Congress to preserve industry tax priorities that support real estate investment.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

2. FHFA Announces Equitable Housing Finance Plans for the Enterprises

The Federal Housing Finance Agency announced Fannie Mae and Freddie Mac will submit Equitable Housing Finance Plans that identify and address barriers to sustainable housing opportunities, including the GSEs’ goals and action plans to advance equity in housing finance for the next three years. The plans will be updated each year and FHFA will also require the GSEs to provide annual reports detailing the actions taken during the prior year to implement their plans. The GSEs must submit these plans to FHFA by December 31.  

• Why it matters: MBA has supported efforts to reduce the racial homeownership gap and has established policy recommendations on this issue to be shared with the FHFA and the GSEs in the coming weeks.
• What’s next: Importantly, the FHFA announcement was accompanied by a Request for Input to gather public input and will hold a listening session on September 28. The deadline to submit comments is October 25. MBA will be submitting recommendations and meeting with FHFA and the GSEs to provide practitioner input on policy and program changes that will be most impactful and embraced by homebuyers and industry.

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

3. MORPAC Turns 50, Hits $1 million 

MORPAC, the only Political Action Committee representing the entire real estate finance industry, was established in 1971 and turns 50 this year. After a time of staff transition and on the heels of its best initial fundraising quarter ever in an “off” election year, MORPAC hit $1 million in receipts a few weeks ago – earlier within a calendar year than ever before. This figure includes contributions from 1,265 individuals, with 817 first-time MORPAC donors.

• Why it matters: MORPAC and MAA are important components of MBA’s ongoing advocacy strategies and efforts. To join MAA and start taking action, click on this link and follow the simple instructions: https://www.mba.org/get-involved/join-maa.
• What’s next: The combined MBA advocacy staff teams look forward to our continued work together to heighten our association’s public policy effectiveness – and grow both MAA and MORPAC – in the weeks and months ahead. We look forward to seeing you at the MBA Annual Convention & Expo in San Diego – and our Advocacy Reception on October 18.

For more information, please contact Rachel Kelley at (202) 557-2816.

4. Maryland Issues Guidance on Law to Allow Non-Traditional Items of Review for Residential Loan Applicants 

Last week, The Maryland Department of Labor Licensing and Regulation issued guidance on a recently enacted law (HB1213), which requires lenders to consider alternative methods of evaluating an applicant’s creditworthiness when considering an application for a primary residential mortgage loan or an extension of credit. HB1213 will require lenders to consider an applicant’s history of rent payments, history of utility payments, school attendance and work attendance if the information provided by the applicant is “verifiable.”

• Why it matters: School and work attendance are not considered in automated underwriting models, nor do most investors or guarantors consider this information as a compensating factor in a manual underwriting process even if an applicant could provide verifiable evidence of this information. The law creates potential litigation risk by failing to provide specifics about how lenders should interpret and weigh such factors in an assessment of an applicant’s creditworthiness.
• What’s next: MBA will continue to work with the Maryland DLLR and will advocate for a process that limits any potential negative impact to the real estate finance industry. MBA encourages members operating in Maryland to begin incorporating protocols for consideration of these non-traditional items of review in their risk and compliance documents ahead of the new law’s October 1 effective date.

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

5. MBA Urges North Carolina Legislators to Pass RON Legislation 

On Wednesday, MBA and the Mortgage Bankers Association of the Carolinas submitted a letter to North Carolina Senate Judiciary Committee members ahead of a hearing on H776, which would enable the use of remote online notarization for real estate finance transactions. In the letter, MBA and MBAC urged North Carolina senators to adopt the House version of H776, which overwhelmingly passed the House and is consistent with the national consensus for RON adoption. Furthermore, the associations expressed concern that an alternative Senate proposal (S680) does not include the requisite language for credential analysis and ID proofing that are necessary to protect the personal information and data of North Carolina consumers. At the conclusion of the hearing, the Senate Judiciary Committee passed an amended version of H776 that includes the necessary language for credential analysis to verify a person’s identification. However, the amended bill places restrictions on RON transactions by requiring the notary and principal to be physically present in the state at the time of notarization.

• Why it matters: If H776 is passed without amendment, the bill would join pending RON legislation in New Hampshire and New York. If all three states’ governor’s sign the bills, the result would be 40 states that have adopted RON generally consistent with the MBA-ALTA model legislation.
• What’s next: The bill has been referred to the Senate Commerce Committee for additional consideration. MBA will continue to partner with MBAC to advocate for removal of the in-state requirement. 

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

6. Conference of State Bank Supervisors Announces Streamlined Process for 2022 License Renewals

On Tuesday, the Conference of State Bank Supervisors issued a notice it created a streamlined process for state license renewal. This annual process requires state licensees to update any relevant information and attest to its veracity. CSBS encourages licensees to visit the Annual Renewal page on the Nationwide Multistate Licensing System & Registry Resource Center for a list of state regulator renewal deadlines, requirements, and renewal fees.

• Why it matters: MBA urges members to consider starting the renewal process as soon as possible to account for any issues that may arise with the new system process.
• What’s next: NMLS 2022 Streamlined Renewal Process will begin November 1 and end December 31. 

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

7. 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:

• CONVERGENCE: Mayors and Affordable Housing: Perspectives from City Hall – September 16
• Today’s Borrowers and Their Credit Scores: Findings from a New Research Study – September 21
• Introduction and Walkthrough of MISMO’s Enhanced Logical Data Dictionary (LDD) – October 6
• Regulation F: Overview & Considerations – October 6
• Increasing Profitability: Transitioning to Delegated Underwriting and Improving Loss Mitigation – October 7
• Are We There Yet? CRE and LIBOR Transition Check-Up – November 4

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.