MBA Advocacy Update Aug. 1, 2022

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

Activities of note on Capitol Hill:
Last Wednesday night, Senator Joe Manchin, D-W.V., Senate Majority Leader Chuck Schumer, D-N.Y., and the White House reached agreement on a $740 billion reconciliation package, giving Senate Democrats another chance to enact broad climate and tax code changes before the end of Fiscal Year 2022.

Earlier on Wednesday, the full House of Representatives passed H.R. 3962, a bill to establish federal minimum standards for the use of remote online notarization. And on the economic front, the Federal Reserve raised short-term interest rates again – and the economy contracted for the second straight quarter. 

Join the 320+ MBA member companies that have signed MBA’s Home for All Pledge, representing a commitment to promoting minority homeownership; affordable rental housing; and company diversity, equity, and inclusion. One senior executive (e.g., CEO, COO, President, Head of Mortgage, SVP) is encouraged to sign this online form on behalf of your organization.

Senators Manchin And Schumer Reach Deal on Energy, Healthcare, Tax Package

On Wednesday, Senator Joe Manchin agreed to support a renewed legislative reconciliation package designed to address climate change, curb healthcare costs, and reduce budget deficits while raising corporate taxes. The deal, primarily negotiated with Senate Majority Leader Chuck Schumer and the White House, would raise approximately $740 billion in revenue, with much coming from a 15% corporate minimum tax and enhanced funding for the Internal Revenue Service, as well as projected savings from allowing Medicare to negotiate some prices on prescription drugs. A summary of the deal can be found here. 

• Why it matters: Importantly, the Manchin-Schumer agreement on the corporate minimum tax incorporates the previous MBA-negotiated language to preserve the deferred tax treatment of mortgage servicing rights (as included in the House version of the BBBA last fall). In addition, the agreement does not include many items proposed in previous versions of the Build Back Better Act (BBBA), including changes to the tax treatment of pass-through entities, such as the expansion of the Net Investment Income Tax (NIIT) or limits to the 199a pass-through deduction. The language also does not include revenue raisers such as a cap on 1031 Like-Kind Exchanges, changes to capital gains treatment/stepped-up basis, or other proposals, such as altering treatment of the gain on sale from a home.
• What’s next: Senate Democrats will use “fast-track” budget rules to advance the legislation and do not need any votes from Senate Republicans. While both procedural and political challenges remain, Schumer indicated he would like to have the bill on the floor and voted on next week, prior to the start of the August congressional recess.

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

House Advances Bill to Establish Federal Minimum RON Standards 

Last Wednesday, the full House of Representatives voted to advance H.R. 3962, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act. Earlier this week, the Mortgage Action Alliance (MAA) issued a call to action urging members to contact their representatives and voice their support for the bill. The MBA-supported measure complements the 41 state remote online notarization (RON) laws by creating a set of minimum federal standards. The measure passed 336 – 90 as part of a package of 12 bills. Following passage in the House, MBA President and CEO Bob Broeksmit, CMB, issued a statement supporting the bill’s passage.  

• Why it matters: The SECURE Notarization Act has now cleared the relevant committees and full House with broad bipartisan support, signaling to the Senate that there is considerable interest to clear the bill in the upper chamber.
• What’s next: MBA will advocate the Senate to advance H.R. 3962 as a standalone measure or to be included as part of a larger vehicle before the end of the 117th Congress. 

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

House Financial Services Committee Holds Legislative Markup  

Last Wednesday and Thursday, the House Financial Services Committee considered and marked up eight bills and two resolutions addressing a broad range of issues. The Committee adopted resolutions by unanimous consent to reauthorize both the Task Force on Artificial Intelligence and the Task Force on Financial Technology. Included in the markup was H.R. 8485, the Expanding Access to Credit through Consumer-Permissioned Data Act, as introduced by Rep. Nikema Williams, D-Ga., which would task lenders with considering additional data not found on a credit report in the underwriting of a mortgage.

• Why it matters: MBA appreciates H.R. 8485’s intent, as the prudent use of additional or “alternative” underwriting data, such as rental or utility payments, has the potential to increase responsible access to mortgage credit for consumers that do not have robust credit histories with the national credit reporting agencies. Alternatively, MBA believes  the Federal Housing Administration, the Department of Veterans Affairs, the Department of Agriculture and Fannie and Freddie should be encouraged to expand their current initiatives to incorporate and allow the use of additional data in their underwriting guides. This approach would provide standardization and scale, allowing lenders the ability to consider data in ways that more clearly would fit within the bounds of investor guidelines.
• What’s next: The bill was favorably reported out of committee on a party line vote. MBA will continue to closely monitor the legislation’s possible progress – either as included within a broader package of bills or as a standalone measure. A more detailed summary of the markup can be found here.

For more information, please contact Borden Hoskins at (202) 557-2712 or Alden Knowlton at (202) 557-2741.

DOJ and CFPB Announce $22 Million Redlining Settlement with Independent Mortgage Bank

The Department of Justice and the Consumer Financial Protection Bureau announced a settlement of a redlining case against an independent mortgage bank that was also a joint venture with a real estate brokerage company.

The complaint alleges the lender failed to provide mortgage lending services to majority-minority neighborhoods, demonstrating redlining through an analysis of branch locations, marketing plans, statistical peer comparisons, and statements by employees. The evidence for this complaint includes allegation that offices were concentrated in majority-white neighborhoods, most of their loan officers were white and were not assigned to solicit applications in majority-minority neighborhoods, inflammatory and racist internal communications by employees, and that they targeted their ads towards white neighborhoods.

HMDA and other lending data reflect that the lender underperformed peer lending in generating home applications and making loans in majority-minority neighborhoods in Philadelphia. They are also alleged to have not acted on third-party reports of its practices or changed behavior when informed they would be subject to a Fair Lending Exam.

• Why it matters: This is the first time the CFPB has settled with an independent mortgage bank over redlining. The proposed terms would require the lender to pay a $4 million fine to the CFPB and to fund an $18.4 million loan subsidy program for majority- Black and Latino neighborhoods, open at least four offices in majority-minority communities, and fund education and community developments. Because the lender is no longer in business, it will contract with another lender to provide loan subsidies and services to the “redlined” communities. The parent company real estate brokerage will guarantee implementation.
• What’s next: MBA will circulate additional analysis as appropriate.

For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557-2811.

Ginnie Mae Solicits Feedback on Enhancements to the Title I Manufactured Housing Program

On Wednesday, Ginnie Mae released a Request for Input concerning enhancements to FHA’s Title I Manufactured Home Loan Program. The RFI requests stakeholders to provide feedback on how both the FHA Title I manufactured housing program, and the Ginnie Mae securitization program that supports it, can be made more competitive, and references specific program features such as loan limits or lender eligibility requirements. It also requests stakeholders to propose policy modifications that would improve the financing market for manufactured housing.

• Why it matters: The RFI follows up on the Biden administration’s Housing Supply Action Plan released earlier this year to address the nation’s affordable housing crisis.
• What’s next: The MBA FHA Subcommittee will meet on August 10, 2022, at 1:00 PM ET, where the RFI will be an item of discussion. If you would like to be a part of the conversation, please contact Darnell Peterson for meeting details.

For more information, please contact Darnell Peterson at (202) 557-2922.

Federal Reserve Raises Short-Term Interest Rates Again; GDP Falls 0.9% in Q2 

On Wednesday, the Federal Reserve increased the benchmark federal funds rate three-quarters of a percentage point for the second straight meeting and reaffirmed its plans to reduce its balance sheet by continuing the passive runoff of its Treasury and MBS holdings. On Thursday, the U.S. Commerce Department reported that Gross Domestic Product fell 0.9% at an annualized pace – the second straight quarter of contraction.

• According to Mike Fratantoni, MBA’s SVP and Chief Economist, “Inflation continues to run too high, and the Fed remains committed to slowing it, even if it leads to a recession. Further rate increases are baked in through at least the remainder of this year. The unanimous vote for this rate increase emphasizes the commitment to this path.”
• Added Fratantoni, “The headline of a second straight decline in real GDP highlights the abrupt change in the path of the U.S. economy, but the ongoing strength in the job market and other signs of growth make it unlikely that this will be categorized as a recession at this point. MBA is forecasting 0.6% growth for all of 2022 and 1.5% growth for the next two years, with downside risk as the full impact of the Fed’s rapid rate hikes is realized over the next 12 months.”

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

Are You a Diversity Champion? Apply for MBA’s DEI Leadership Awards

MBA’s Diversity, Equity and Inclusion (DEI) Leadership Awards are back! Now in its seventh year of recognizing MBA member companies, this awards program acknowledges the dedication and creativity that increase DEI efforts within a company’s leadership and employee base. If your organization is a champion of diversity, share how you are inspiring change and highlight your success by applying today.

• What’s next: Applications are due August 5, 2022. Prior to getting started, please review application tips to help you prepare your entry.

For more information, please contact MBA’s DEI Team.

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:

• How Technology Helps Drive More LO Value with Realtor Relationships – August 4
• Commercial Real Estate Property Insights – Where are We Now? – August 11
• C-PACE Financing 101: A Commercial/Multifamily Lender’s Overview – August 23
• Risk and Compliance Management: Are You Covered? – August 24

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.