MBA Advocacy Update Jan. 10, 2022

Bill Killmer; Pete Mills

On Wednesday, the Federal Housing Finance Agency announced it directed the GSEs to increase upfront fees for high-balance conforming and second-home loans. Also last week, FHFA determined that the revised Duty to Serve Proposed Underserved Markets Plans for 2022-2024 submitted by the GSEs did not meet the non-objection standard for any of the three underserved markets.

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FHFA Raises Fees on GSE High-Balance Conforming Loans, Second-Home Loans

On Wednesday, the Federal Housing Finance Agency announced it directed Fannie Mae and Freddie Mac to increase upfront fees (“loan-level pricing adjustments” [LLPAs] for Fannie Mae; “credit fees” for Freddie Mac) for high-balance conforming and second-home loans. According to FHFA’s announcement, the fee increases are intended to ensure the GSEs “better achieve their mission of facilitating equitable and sustainable access to homeownership, while improving their regulatory capital position over time.” The fees for high-balance loans (above the base conforming loan limit) will increase between 25 and 75 basis points, while the fees for second-home loans will increase between 112.5 and 387.5 basis points, both tiered by loan-to-value ratio. Upfront fees will be removed for high-balance conforming loans to first-time homebuyers with incomes at or below 100% of area median income. To minimize market and pipeline disruption, the new fees will go into effect for loan deliveries and acquisitions beginning April 1.

  • Why it matters: The fee increases are unsurprising given FHFA’s recent statements about undertaking a full review of the GSEs’ pricing framework, and in light of the significant increases in conforming loan limits. In the context of a more comprehensive pricing review, higher fees for high-balance conforming loans and second-home loans could provide an opportunity for the GSEs to lower fees on the portions of their businesses that primarily serve first-time and low- to moderate-income borrowers. Using pricing as a tool to manage these loan deliveries is more reasonable than the previously imposed percent-of-delivery caps – as is the nearly 90-day implementation period to mitigate disruptions to loan pipelines.
  • What’s next: Further details on these pricing adjustments can be found through Fannie Mae’s lender letter and Freddie Mac’s update. MBA will continue to work with FHFA leadership to ensure these increases are properly calibrated and that the comprehensive review of the LLPA framework will reduce excessive price adjustors in key segments of the market. 

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

FHFA Objects to GSEs’ Proposed Duty to Serve Plans 

This week, FHFA determined that the revised Duty to Serve Proposed Underserved Markets Plans for 2022-2024 submitted by the GSEs did not meet the non-objection standard for any of the three underserved markets. FHFA has directed the GSEs to submit revisions to improve the plans; however, they still expect implementation to continue based on objectives in the current proposed plans.

  • 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: FHFA will review the revised plans submitted by the GSEs and evaluate their expected impact in each market. 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.

New York Enacts RON Legislation

On December 22, New York Governor Kathy Hochul (D) signed legislation (S1780) that will permit use of remote online notarization in the state. In addition, Hochul included a chapter amendment that outlines how S1780 must be changed to include language that addresses standards for credential analysis and “papering out.” The chapter amendment language is supported by MBA and is consistent with the MBA-ALTA RON model. The chapter amendment must be introduced and passed by the legislature to be included in the law. MBA and the NYMBA also submitted recommendations to New York Secretary of State Rossana Rosado urging her to adopt rules consistent with the Mortgage Industry Standards Maintenance Organization (MISMO) RON standards and the Uniform Law Commission’s Revised Uniform Law on Notarial Acts.

  • Why it matters: New York becomes the 40th state to adopt RON, creating further momentum nationwide to get the remaining 10 states to enact RON laws during the 2021-2022 legislative session.
  • What’s next: S1780 becomes effective on June 20. MBA and NYMBA will advocate for the chapter amendment’s passage when the New York state legislature reconvenes.

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

Watch: Barron’s Live Interview with MBA’s Mike Fratantoni on 2022 Mortgage Market Expectations 

On Wednesday, MBA SVP and Chief Economist Mike Fratantoni participated in a Barron’s Live interview on 2022 expectations for the housing and mortgage markets with Jacob Passy of MarketWatch. Topics of discussion included the forecast for mortgage rates, the Federal Reserve and monetary policy, investor demand for mortgage-backed securities and home prices and affordability.

  • Why it matters: Watch a replay of the webinar here. The podcast/audio version can be heard here
  • What’s next: MBA’s latest (December 2021) Economic and Mortgage Market forecasts can be viewed here.

For more information, please contact Mike Fratantoni at (202) 557-2935.

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:

  • Ten Things Your Company Must Do in 2022 – January 12
  • The Climate Change Imperative: Exploring the Role of Residential Lenders and Servicers – January 18
  • DUS Multifamily Asset Management Perspectives – January 19
  • Winning Game Plan for Improving “B” Originators – January 25
  • Fair Lending and Redlining, Part I – Overview of Regulations and Enforcement – February 7
  • Successful Recruiting in a Changing Marketplace – February 10
  • Combating Multifamily Real Estate Financial Crimes and Fraud – March 10

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.