MBA Advocacy Update Feb. 22 2022
Last Monday, MBA submitted comments to the OCC on draft principles for large banks’ management of climate-related financial risk. On Tuesday, the FHA announced it is extending the mandatory implementation deadline for mortgagees to begin delivering appraisals through the FHA Catalyst: Electronic Appraisal Delivery Module.
And though on Thursday Congress passed yet another Continuing Resolution to keep the federal government funded through March 11, earlier in the week partisan differences most likely delayed votes in the Senate Banking Committee until sometime in March on several key nominations at the Federal Reserve and FHFA.
MBA Comments on OCC’s Draft Principles for Climate-Related Financial Risk Management for Large Banks
On Monday, MBA submitted comments in response to the Office of the Comptroller of the Currency’s Request for Information on a set of draft principles for large banks’ management of climate-related financial risk. MBA supported the OCC in considering a principles-based rather than prescriptive approach, focusing on leveraging existing risk-management frameworks rather than calling for an entirely new framework of risk management.
- Why it matters: While the OCC’s draft principles would apply only to banks with more than $100 billion in consolidated assets, it is important for MBA to monitor and provide guidance in this space as other regulators, investors, and insurers will likely consider climate-related policy changes.
- What’s next: MBA will continue to track climate-related policy proposals that may impact the mortgage industry and weigh in where appropriate.
FHA Extends Mandatory Implementation Deadline for Catalyst EAD Module
On Tuesday, the Federal Housing Administration extended the mandatory implementation deadline for mortgagees to begin delivering appraisals through the FHA Catalyst: Electronic Appraisal Delivery Module. FHA cited industry concerns over the existing implementation deadline as the reason for the extension, which, if left unchanged, would have required mortgagees to begin using the module by April 15. Mortgagees must now deliver appraisals through the FHA Catalyst: EAD Module based on the following updated mandatory transition dates:
– Effective on and after March 14, 2023, appraisal delivery through the FHA Catalyst: EAD Module is mandatory for all cases unless a previous appraisal version was submitted to the legacy EAD.
– For cases with a previous appraisal submission to the legacy EAD before March 14, 2023, appraisal resubmissions may continue to be delivered through the legacy EAD portal until April 17, 2023.
– After April 17, 2023, appraisal submissions for all cases, regardless of previous submissions, must be delivered through the FHA Catalyst: EAD Module.
- Why it matters: The extension provides the industry with the needed time to update internal processes to comply with FHA requirements.
For more information, please contact Darnell Peterson at (202) 557-2922.
IRS Abandons Facial Recognition Technology for Taxpayer Authentication
Last week, the Internal Revenue Service announced it would transition away from its plan to require millions of taxpayers to use a private company’s facial recognition services to authenticate their identities to access their tax accounts online.
- Why it matters: As part of the bipartisan Taxpayer First Act, enacted in 2019, Congress required the IRS to implement much-needed updates to its Income Verification Express Service system that financial services providers use to submit Form 4506-C to verify a credit applicant’s income, helping to prevent fraud and ensure accurate underwriting. The legislation included a temporary, two-year user fee increase to pay for the upgrades, and the IRS had informed MBA that facial recognition would be part of its new “real-time” transcript solution.
- What’s next: MBA, in coalition with other stakeholders, has met with members of Congress, key congressional committees, and the administration to highlight the problems we have identified with the proposed IRS solution. We continue to urge the IRS to form a new IVES industry group that broadly represents the expected users of the new Application Programming Interface and consult the group on the specifications of the API function before moving forward.
California CRA Bill for Nonbanks, Credit Unions, State Charted Banks Introduced
The Chair of the California Senate Banking Committee, Sen. Monique Limón (D), introduced a bill (SB-1176) that would apply Community Reinvestment Act mandates to nonbanks, credit unions and state chartered banks operating in the state. The bill is similar to laws enacted in New York and Illinois last year, but it goes beyond those statues. For example, the bill would create a new Community Reinvestment Fund with monies from a new administrative penalty on lenders that could reach $100,000 if they regularly fail to meet CRA obligations. Anticipating this development, MBA and the California MBA have already been collaborating on advocacy efforts to strongly oppose the bill. Among the tools that will be used are those located on a new resource center – www.mba.org/StateCRA – that includes MBA’s comment letters and veto requests as well as state data sheets that quantify the essential role nonbanks play in doing the majority of lending to minority and low- and middle-income borrowers.
- Why it matters: Imposing CRA legislation on independent mortgage banks will not address affordability and credit access challenges facing LMI borrowers in California. Nonbanks do not take insured deposits to reinvest, they do not have access to direct government support, and they are already the dominant source of mortgage credit to LMI and minority borrowers in the state. Proponents of the legislation also allege the bill is needed because IMBs are lightly regulated, which ignores the fact that they are subject to robust oversight and supervision in every state as well as from federal regulators.
- What’s next: MBA and the California MBA will work together to advocate against this legislation and will issue a Mortgage Action Alliance Call to Action. Member IMBs in California are also strongly encouraged to meet with their state senators and Assembly members in Sacramento to demonstrate how your companies are already meeting the credit needs of LMI and minority borrowers and communities, and to express concern and opposition to the increased costs this legislation will impose on the lenders that are already serving the borrowers the legislation is supposed to help.
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:
- mPower presents Being You Is Your Superpower! – February 28
- 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
- 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.