MBA Letter Offers Support, Recommendations for House Committee Budget Markup

(House Financial Services Committee.)

As the House Financial Services Committee this week begins the reconciliation process for a number of fiscal 2022 legislative and budget priorities, the Mortgage Bankers Association sent a letter to Committee leadership offering support for several programs and recommendations for others.

The Sept. 13 letter to Committee Chair Maxine Waters, D-Calif., and Ranking Member Patrick McHenry, R-N.C., focuses on the Committee’s markup of what should ultimately be a budget resolution for fiscal 2022. The Committee began debate on the amendments to the resolution on Monday.

MBA Senior Vice President of Legislative and Political Affairs Bill Killmer addressed a number of issues facing the committee, including the following:

Subtitle B. 21st Century Sustainable and Equitable Communities; Section 40104. Unlocking Possibilities Program

MBA commended the Committee for identifying a legislative solution that provides federal support to a national challenge while preserving local and regional decision-making and implementation. This section creates a new Local Housing Policy Grant program to help regions, states, cities and tribes recover and ultimately thrive by encouraging the adoption of pro-housing policies, housing plans and updated codes. This section targets funding to the places in most need of housing and where there is the most significant imbalance of jobs and housing. It also prioritizes funding for communities with existing public transportation options.

“Reforming and updating local and regional housing policies and plans is a critical part of addressing housing affordability and security,” MBA said. “It will spur regional planning and cooperation by giving special consideration to applicants from multijurisdictional coalitions.”

Subtitle C. Homeownership Investments; Section 40201. First-Generation Downpayment Assistance

MBA commended the Committee for addressing barriers to homeownership, especially for minorities and lower-income individuals. MBA supports this section, which provides first-time, first-generation homebuyers with up to 10 percent of the purchase price of an eligible home in financial assistance, including for down payment costs, closing costs, and costs to reduce the rates of interest.

“Ensuring qualified homebuyers have access to resources to overcome barriers to homeownership, such as challenges to building resources for down payments, is critical to supporting a diverse, fair and equitable real-estate market,” the letter said. “MBA appreciates the inclusion of language within this section supporting uniformity in administration of the down payment assistance program as well as granting participating lenders a meaningful safe harbor should borrowers self-attest their first-generation homebuyer status and later be determined ineligible.”

Killmer noted MBA previously has supported, and continues to support, robust funding for housing counseling agencies to help qualified homebuyers meet the legislation’s housing counseling and education requirements prior to entering into a sales purchase agreement or submitting a loan application. “Whether through the regular appropriations process, or this reconciliation vehicle as proposed, MBA supports increased access to housing counseling as a means to provide a more positive experience for first-time homebuyers unfamiliar with the homeownership process, as well as for other underserved communities,” the letter said.

Section 40202. Wealth-Building Home Loan Program

This section purports to create a pathway for borrowers to build equity in their homes at twice the rate of a comparable 30-year mortgage insured by the Federal Housing Administration, while making roughly the same monthly payments, which could simultaneously expand and improve homeownership opportunities without posing significant additional market risk.

Killmer said MBA promotes policies that support sustainable homeownership as an important means of producing generational wealth for all Americans, especially communities of color; and that MBA is supportive of initiatives that assist borrowers in the acceleration of equity growth and provide American families with greater affordability without compromising the safety and soundness of the loan. “While MBA appreciates this section’s intent, we note, however, that this program has significant operational complexities and more limited borrower appeal (to be determined by the extent to which the monthly payments would differ between the 20-year and 30-year options) when compared to the forgivable grants in Section 40201,” the letter said.

Section 40203. FHA-Insured Small Dollar Mortgage Demonstration Program

Section 40203 builds on previous legislative efforts, and MBA is directionally supportive of the establishment of this pilot program at HUD to expand small-dollar lending options to everyday homebuyers seeking to purchase homes priced at $100,000 or less.

While MBA strongly supports policies and legislation designed to broaden and diversify homeownership as well as enhance housing affordability, MBA does recommend, however, that any aspects of this pilot program wherein only a set number of lender participants benefit from the policy being tested be confined to a strict timeline. This defined pilot phase would avoid providing certain lenders with an unfair competitive advantage for extended periods of time. MBA said upon completion of the trial phase, a comprehensive review of the pilot’s impact can be undertaken to ensure it is meeting its objectives and to determine how best to expand access to all FHA-approved lenders.