MBA Advocacy Update May 2 2022

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

Last week, more than 400 state/local leaders and rank-and-file MBA members assembled in Washington to meet elected officials and key congressional staffers on Capitol Hill during MBA’s National Advocacy Conference. Also last week, CFPB Director Rohit Chopra testified before the Senate Banking Committee and the House Financial Services Committee in his second public appearance since being sworn in last year. And on Monday, MBA submitted comments to FHFA on its recent proposal to update capital, liquidity and net worth requirements for servicers of loans backed by Fannie Mae and Freddie Mac.    

MBA Hosts 2022 National Advocacy Conference

Last week, more than 400 state/local leaders and rank-and-file MBA members assembled in Washington to meet elected officials and key congressional staffers on Capitol Hill. Thanks to the MBA advocacy team’s efforts, our members were able to hear directly on Tuesday from key thought leaders such as House Democratic Caucus Chair Hakeem Jeffries (D-NY), Senate Republican Whip John Thune (R-SD), CBS News’ Face the Nation host Margaret Brennan, and House National Republican Congressional Committee Chairman Tom Emmer (R-MN). Additionally, Reps. Madeleine Dean (D-PA) and Young Kim (R-CA), were part of a spirited, bipartisan mPower panel. Attendees also met with more than 50 other lawmakers and senior congressional staffers at MBA’s Tuesday night reception at the historic National Archives rotunda.

• Why it matters: Industry members from 36 states were able to conduct 256 meetings (both in person and virtual) with individual House and Senate offices on a full range of key policy themes — e.g., appraisals, affordable housing, tax policy, Consumer Financial Protection Agency regulatory clarity, remote online notarization, Federal Housing Administration lending and HUD appropriations and more. This was MBA’s first in-person NAC experience for members since 2019.
• What’s next: MBA staff will assimilate the member feedback received from these discreet NAC office visits and continue to advocate for the key policy priorities emphasized during the conference. 

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

CFPB Director Testifies Before Congress

On Tuesday and Wednesday, CFPB Director Rohit Chopra testified before the Senate Banking and Housing Committee and the House Financial Services Committee in his second public appearance since being sworn in last year. In both chambers, Director Chopra faced questioning on a broad range of topics falling under the jurisdiction of the CFPB, including the use of overdraft fees, algorithmic bias in lending and the appraisal process and discriminatory and predatory lending practices, as well as the Bureau’s ongoing and upcoming rulemaking endeavors.

• Why it matters: Republicans in both chambers voiced their concerns over the CFPB’s expanded interpretation of “disparate impact” under the Dodd-Frank Act’s “unfair, deceptive or abusive acts or practices” provision, arguing that it may leave businesses unknowingly liable for discriminatory business practices. Senators Pat Toomey (R-PA) and Thom Tillis (R-NC) pushed Director Chopra on why the CFPB chose not to pursue a formal rulemaking process regarding its expanded interpretation of UDAAP — suggesting possible violations of the Administrative Procedures Act. In response, the Director argued that there is precedent for the actions being undertaken without formal rulemaking.
• What’s next: Congressional questions can sometimes put pressure on an agency like CFPB to resolve issues garnering significant attention, including the implementation of specific programs and the heavy handedness of enforcement actions. A summary of both hearings can be found here. MBA will continue to work with both the CFPB and Congress on a broad range of issues. MBA staff is actively evaluating the implications of the UDAAP policy shift, including educational opportunities for members to better understand and prepare for this policy change. 

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

MBA Provides Detailed Views on FHFA Capital, Liquidity and Net Worth Requirements for GSE Servicers

On Monday, MBA submitted comments to the Federal Housing Finance Agency on its recent proposal to update capital, liquidity, and net worth requirements for servicers of loans backed by Fannie Mae and Freddie Mac. MBA’s detailed recommendations focus on three areas of concern in the FHFA proposal: 1) the substantial increase in required liquidity for most GSE servicers; 2) the problematic incentives created by additional surcharges on the use of To-Be-Announced securities for hedging purposes; and 3) the lack of recognition of committed lines of credit as stable sources of liquidity. Also on Monday, MBA President and CEO Bob Broeksmit, CMB, participated in a public listening session co-hosted by FHFA and Ginnie Mae, during which he reiterated these concerns and presented MBA’s recommendations to address them.

• Why it matters: These requirements play a substantial role in the financial planning and risk management practices of institutions that service GSE-backed loans. MBA has long acknowledged the importance of ensuring resiliency in the servicing sector, while also noting the need for any such requirements to be tailored appropriately to the risks presented in the market. The frameworks implemented by regulators, in particular, should produce incentives for strong risk management without generating unintended consequences that increase risk or unduly restrict access to credit for consumers.
• What’s next: FHFA noted that it plans to finalize its updated requirements by June 30, and implement most of them by December 31. MBA has called for an 18-month implementation timeline to provide servicers sufficient runway to adjust to any new requirements. Ginnie Mae is expected to take further steps to update its capital, liquidity, and net worth requirements for issuers in the coming months – and MBA has recommended that it harmonize its framework with that of FHFA and the GSEs to the greatest extent possible. State regulators and lawmakers, meanwhile, are beginning the process of implementing the framework finalized by the Conference of State Bank Supervisors last year. This framework calls for states to align with the FHFA and Ginnie Mae requirements in several key areas.

For more information, please contact Pete Mills at (202) 557-2878 or Dan Fichtler at (202) 557-2780.

FHFA Approves GSEs’ Duty to Serve Plans  

This week, FHFA determined that the revised Duty to Serve Proposed Underserved Markets Plans for 2022-2024 submitted by Fannie Mae and Freddie Mac met the non-objection standard for all three underserved markets. Earlier this year, FHFA had directed the GSEs to submit revisions to improve the plans, after they previously failed to meet the non-objection standard.

• Why it matters: The Duty to Serve program holds the GSEs accountable for serving three important markets – rural housing, affordable housing preservation, and manufactured housing.
• What’s next: To ensure that Duty to Serve activities continue without interruption, the plans have a retroactive implementation date of January 1. MBA will continue to work with FHFA on this and other critically important housing finance issues.

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

MBA Submits Comments Responding to HUD ML 2022-06

On Monday, in conjunction with the Housing Policy Council and the National Community Stabilization Trust, MBA submitted comments responding to HUD ML 2022-06, which establishes allowable claims payments for property preservation and protection expenses. MBA’s comments highlight the industry’s concerns that HUD’s establishment of a Property Preservation and Protection period had unintentionally eliminated its commitment to reimburse servicers for expenses that occur prior to beginning the foreclosure process.

• Why it matters: This change in policy potentially leaves servicers financially exposed for securing and maintaining vacant and abandoned properties. Clarity will further reinforce FHA and industry’s commitment to protecting properties and communities from blight and HUD’s lien interest prior to a potential conveyance.
• What’s next: MBA will continue to work with its sister trades and FHA to provide the necessary clarity to industry stakeholders.

For more information, please contact Brendan Kelleher at (202) 557-2779.

FASB Proposes Updates to its Guidance on Reference Rate Reform

On April 20, the Financial Accounting Standards Board issued a proposed Accounting Standards Update extending the proposed sunset date of reference rate reform relief guidance it issued in 2020 and also amending the definition of the Secured Overnight Financing Rate (SOFR)-based interest rates available as benchmark interest rates.  

• Why it matters: In the 2020 guidance, FASB provided relief on the potential burden in accounting for (or recognizing the effects on financial reporting) associated with the transition from the London Interbank Offered Rate (LIBOR) to an alternative reference rate. Due to the extension of the LIBOR sunset date to June 30, 2023, FASB is proposing to extend the date of its 2020 guidance from December 31, 2022, to December 31, 2024, which will allow preparers to utilize the relief during the period of time in which a significant number of LIBOR modifications would likely take place. In 2018, FASB issued guidance recognizing the Secured Overnight Financing Rate Overnight Index Swap (OIS) rate as a Benchmark Interest Rate for Hedge Accounting Purposes, thereby adding the term SOFR Swap Rate to the Master Glossary of the FASB Accounting Standards Codification. The definition of the SOFR Swap Rate was specific to the OIS rate based on SOFR. The proposed ASU amends the definition of SOFR Swap Rate to include other versions of SOFR, such as SOFR term, as a benchmark interest rate.
• What’s next: Feedback on the proposed ASU is requested by June 6. MBA generally supports the amendments in the proposed ASU, and plans to submit feedback through the comment process. 

For more information, please contact Fran Mordi at (202) 557-2860.

Maine Governor Signs Legislation to Permanently Allow Remote Online Notarization

Last week, Maine Governor Janet Mills signed legislation (LD2023) that will permanently allow remote online notarization for real estate financial transactions in the state. LD2023 was introduced on behalf of the Maine Secretary of State and replaces a temporary law that was enacted in response to the needs of the pandemic and allowed remote notarizations. The bill is consistent with the Uniform Law Commission’s Revised Uniform Law on Notarial Acts (RULONA).

• Why it matters: LD2023 is also consistent with the MBA-ALTA model bill and continues the momentum toward having all 50 states pass RON legislation.
• What’s next: MBA will continue to work with the American Land Title Association (ALTA) and local partners to encourage the remaining states to adopt RON laws.

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

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:

• Introduction to Commercial Mortgage-Backed Securities – May 19
• New Fannie Mae and Freddie Mac Condominium and Cooperative Guideline Changes – May 24
• What Trends will Shape the Lending Space in the Second Half of 2022 – June 2
• CFPB, UDAAP and the Focus on Junk Fees – June 9
• Serving Loan Applicants with Limited English Proficiency – June 14
• Leveling Up Your Social Media Strategy with Paid Advertising – June 28

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.