MBA Advocacy Update Feb. 28 2022

Bill Killmer; Pete Mills

With Congress in recess this past week, on Thursday the Federal Housing Finance Agency had two major announcements: a long-awaited re-proposal of updates to the capital, liquidity and net worth requirements for servicers; and a final revised capital framework for the GSEs.

Also last week, MBA staff spoke during a pair of panels at the annual NMLS User Conference, which is a gathering of the nation’s state mortgage industry regulators and other supervisors.

FHFA Re-Proposes Capital, Liquidity, and Net Worth Requirements for IMB Servicers

On Thursday, the Federal Housing Finance Agency released a long-awaited re-proposal of updates to the capital, liquidity and net worth requirements for servicers of loans backed by Fannie Mae and Freddie Mac. These requirements primarily would apply to independent mortgage bank servicers, with certain additional requirements placed on large IMB servicers – those with servicing portfolios greater than $50 billion.

  • Why it matters: This proposal would adjust the minimum financial requirements necessary for IMBs to be eligible to service GSE-backed loans. Importantly, the proposed requirements reflect several recommendations made by MBA, including removal of the problematic, pro-cyclical treatment of how liquidity requirements are calculated in periods of market stress, differentiation between actual and scheduled servicing remittances, and no imposition of a risk-based approach that would diminish liquidity for mortgage servicing rights. At the same time, the proposal includes other changes that will require deeper analysis to ensure that capital, liquidity, and net worth requirements are properly calibrated to mitigate risk but are not excessive to the point where they will increase costs or reduce access to credit.
  • What’s next: Comments on the proposal are due on April 25. FHFA notes that it expects to finalize the updated requirements in the second quarter, with most elements taking effect on December 31. MBA will further analyze the proposal and develop comments that reflect the vital role IMB servicers play in the market.

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

FHFA Issues Final Rule Revising Enterprise Capital Framework

On Friday, FHFA issued a final rule establishing a revised capital framework for Fannie Mae and Freddie Mac. The final capital framework substantially preserves the elements contained in the proposed rule but incorporates changes FHFA proposed last year. The final changes include replacing the fixed leverage buffer equal to 1.5% of a GSE’s adjusted total assets with a dynamic leverage buffer equal to 50% of the GSE’s stability capital buffer, replacing the prudential floor of 10% on the risk weight assigned to any retained credit-risk transfer exposure with a prudential floor of 5% on the risk weight assigned to any retained CRT exposure, and removing the requirement that an enterprise must apply an overall effectiveness adjustment to its retained CRT exposures.

  • 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 largely supported the proposed amendments and 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: The effective date for the changes to the final rule will be 60 days after the day of publication in the Federal Register. MBA plans to further analyze the final rule over the coming weeks and will continue to advocate that FHFA and the 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 this revised framework.

For more information, please contact Mike Fratantoni at (202) 557-2935, Dan Fichtler at (202) 557-2780, or Sasha Hewlett at (202) 557-2805.

MBA Staff Highlight Industry Issues During Remarks at State Regulators’ Annual NMLS Conference

This week, MBA staff spoke during a pair of panels at the annual Nationwide Multistate Licensing System User Conference, which is a gathering of the nation’s state mortgage industry regulators and other supervisors. On Wednesday, Dan Fichtler, MBA Associate Vice President of Housing Finance Policy, discussed the industry’s views on the Conference of State Bank Supervisors’ proposed state prudential standards for nonbank servicers and the need for consistency among states in adoption as well as the need for alignment with existing and future federal requirements. Later in the conference, William Kooper, MBA Vice President of State Government Affairs and Industry Relations, delivered a presentation on the industry’s state legislative priorities, including: opposition to the application of Community Reinvestment Act requirements to nonbanks; the campaign for uniform adoption of remote online notarization (RON) statutes; the need for ongoing licensing flexibility for loan originators in states that require them to work from a licensed location; deeming compliance with new state data-protection laws for those institutions subject to, and in compliance with, federal Gramm-Leach-Bliley mandates; and the need to align states’ post-forbearance policy proposals with those of the affordable housing programs of the federal government.

  • Why it matters: This year’s NMLS conference included participation from nearly 500 regulators from 46 different states.
  • What’s next: MBA will next participate in state regulator meetings during the upcoming NMLS Ombudsman meeting on April 7.

For more information, please contact William Kooper at (202) 557-2737 or Dan Fichtler at (202) 557-2780.

[WATCH]: mPower Moments: Trusting Your Instincts and Promoting Wellness with FHFA Acting Director Sandra L. Thompson

In this episode of mPower Moments, mPower Founder Marcia M. Davies chats with FHFA Acting Director Sandra L. Thompson on her illustrious career in the financial services industry and the path that led her to currently being one of the most powerful and influential women in real estate finance.

  • Why it matters: During this insightful interview, Director Thompson explains the importance of promoting employee wellness at FHFA and why “trusting your gut” is so important when making decisions as a leader. Additionally, Thompson provides advice on what the industry can do to get more women of color into the C-suite.
  • What’s next: For more mPower Moments, please click here.

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

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:

  • A Lender’s Playbook for Maximizing the ROI of your CRM – March 1
  • Driving Engagement and Purchase Volumes in Today’s Market – March 3
  • COVID’s Continued Impact on CECL and Lending – March 8
  • The Future of Remote Work for MLOs and Licensees – March 9
  • Combating Multifamily Real Estate Financial Crimes and Fraud – March 10
  • CRE Investor Themes & Perspectives – March 16

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.