MBA Advocacy Update July 11, 2022

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

MBA submitted recommendations to the GSEs to improve their appraiser guidance for high-quality manufactured housing. Last week, the GSEs also announced they would once again begin engaging in bulk acquisitions of seasoned loans. And MBA issued a white paper examining how climate change is dramatically reshaping lenders’ and policymakers’ approaches to the U.S. residential and commercial real estate markets. 

MBA Recommends Improvements to GSE Appraiser Guidance for Manufactured Housing

On Thursday, MBA submitted recommendations to Fannie Mae and Freddie Mac regarding guidance provided to appraisers completing assignments on high-quality manufactured housing. MBA’s comments focus on the selection of comparable sales by appraisers for purposes of the GSEs’ MH Advantage and CHOICEHome offerings. To reduce instances of undervaluation of high-quality manufactured housing, MBA recommended modest adjustments to the GSEs’ appraisal guidance that would encourage appraisers to use site-built homes as comparable sales when sales of similar types of manufactured housing are not available.

• Why it matters: New building technology has led to the development of manufactured housing that closely resembles site-built housing in terms of both appearance and build quality. Industry feedback suggests that valuations of these properties, however, often come in lower than expected due to the use of older manufactured housing as comparable sales. Adjustments to the GSEs’ appraiser guidance would promote the use of site-built homes as comparable sales when appropriate, thereby addressing one of the primary constraints to further investment in high-quality manufactured housing.
• What’s next: MBA will continue to work closely with the GSEs, as well as the Federal Housing Finance Agency (FHFA) on policy reforms that increase the supply of affordable housing.

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

GSEs Partially Lift Pandemic-Era Restrictions on Bulk Acquisitions of Seasoned Loans

Last week, Fannie Mae and Freddie Mac announced they would once again begin engaging in bulk acquisitions of seasoned loans. The GSEs temporarily suspended bulk acquisitions shortly after onset of the COVID-19 pandemic in 2020, citing concerns regarding the uncertainty brought on by the pandemic. Both GSEs stated that they will lift these suspensions but pursue bulk acquisitions on a limited basis with a focus on loans sold by smaller lenders. MBA has advocated for the GSEs to return to their pre-pandemic practices of purchasing seasoned loans on a bulk basis.

• Why it matters: As MBA noted in recent comments to FHFA’s strategic plan, “These transactions, which are particularly vital for smaller banks and credit unions, provide an additional avenue for liquidity management, enhancing diversity in the secondary market and supporting equal access to the liquidity provided by the [GSEs] for lenders of all types and sizes.” Bulk transactions of seasoned loans also represent an important mechanism for lenders to manage interest rate risk and concentration risk.
• What’s next: Freddie Mac indicated that it would begin to bid on bulk transactions at the end of the third quarter, while Fannie Mae did not specify a timeline in its guidance.

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

HUD Announces New Flexibilities for FHA Borrowers Previously Impacted By COVID-19 National Emergency

On Thursday, HUD released ML 2022-09, providing new flexibilities for lenders when calculating “Effective Income” for borrowers who saw reduced hours or income due to the Presidentially Declared COVID-19 National Emergency. The Mortgagee Letter adjusts the calculation by allowing lenders to exclude the period of the hardship when determining average income over time. The Mortgagee Letter also provides new flexibilities for borrowers who are self-employed or may have experienced a gap in employment due to the COVID-19 National Emergency, recommendations proposed by MBA in a recent letter to senior FHA leadership.

• Why it matters: The updated guidance allows borrowers who have recovered from a COVID-19 hardship to be evaluated more accurately during the underwriting process.
• What’s next: Lenders may implement these flexibilities immediately but are required to by September 5.

For more information, please contact Dan Fichtler at (202) 557-2780 or Darnell Peterson at (202) 557-2805.

AARMR Releases Remote Work Best Practices for Mortgage Loan Originators

The American Association of Residential Mortgage Regulators’ Board of Directors approved remote work model practices for mortgage loan originators.

• Why it matters: The intention of the AARMR guidance, called the “Best Practices for Permitting Employees to Work Remotely,” is to set forth best practices that state agencies should consider when permitting employees of state-licensed residential mortgage lenders to work from an unlicensed home or other location. The guidance is consistent with the MBA state model legislation and regulations for remote work.
• What’s next: We will continue to work with state policymakers and local association partners to advocate for MBA’s model legislation and regulation to create licensing flexibility nationwide.

For more information, please contact Kobie Pruitt at (202) 557-2870 or William Kooper at (202) 557-2737.

North Carolina Legislature Passes RON Legislation; Sent to Governor for Signature

Through the advocacy efforts of the MBA of the Carolinas (MBAC) and MBA, the North Carolina legislature recently passed legislation (H776) that would enable the use of remote online notarization (RON) in the state. H776, which is consistent with the MBA state model RON law, is now headed to Governor Roy Cooper for his signature. Prior to the bill’s passage, MBA and MBAC wrote letters to members of the legislature in support of H776.

• Why it matters: If signed, North Carolina would become the 41st state to adopt RON and would continue the momentum towards having all 50 states enact RON.
• What’s next: MBA will continue to work with state and local partners to urge the remaining states without remote notarization laws to enact RON legislation.

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

MBA Releases New White Paper on Climate Risk 

Lastweek, MBA issued a white paper examining how climate change is dramatically reshaping lenders’ and policymakers’ approaches to the U.S. real estate market. The paper,  Who Owns Climate Risk in the U.S. Real Estate Market?, was presented last week at the American Real Estate and Urban Economics Association’s International Conference in Dublin, Ireland, by MBA Chief Economist Mike Fratantoni, who co-authored the paper with MBA Vice President of Commercial Real Estate Research and Economics Jamie Woodwell and Edward Seiler, Executive Director of the MBA Research Institute for Housing America and MBA Associate Vice President, Housing Economics.

• What it says: The paper notes that, “Physical, economic and social changes associated with a changing climate will directly affect the $50 trillion single-family residential real estate and $25 trillion commercial real estate markets in the United States.”
• Why it matters: The paper also discusses the changing climate and its impacts on the U.S. financial system; building a climate risk framework for the housing and mortgage markets; applying existing risk management regimes to climate change-related risks; and policy questions and implications.

For more information, please contact Mike Fratantoni at (202) 557-2935, Jamie Woodwell at (202) 557-2936 or Eddie Seiler at (202) 557-2739.

Massachusetts Call to Action on Key Industry Priorities 

Recently, the Mortgage Action Alliance issued a Massachusetts Call to Action asking all MAA members in the state to contact their state legislators and urge them to support critical legislative priorities that would provide protections to the industry and benefits to borrowers and homeowners. The following five bills require timely action:

1. H. 1146: Support permanent allowance of video or teleconference mortgage counseling;
2. H. 4716: Support the enactment of Remote Online Notarization (RON);
3. S. 868: Oppose legislation to implement real estate transfer taxes;
4. H. 1035: Oppose legislation requiring current mortgage rates be printed on monthly statements; and,
5. H. 1426/S. 890: Oppose problematic tenant’s first right of refusal legislation.

More information on these priorities from the Massachusetts MBA can be found here.

• Why it matters: The Commonwealth’s formal legislative session will end on July 31, leaving only a few weeks to deliberate these critical bills that could impact our industry. 
• What’s next: Massachusetts MAA members can support the Massachusetts MBA by taking action and contacting their state legislators to educate them on these issues and garner their support. 

For more information, please contact William Kooper (202) 557-2737 or Rachel Kelley (202) 557-2816.

VOICES: Courageous Conversations with Men of Color

MBA is pleased to extend its award-winning webinar series, Voices: Courageous Conversations with Women of Color, to include a new conversation focusing on the male experience. Hear from a dynamic and diverse lineup of male industry leaders on their personal journeys throughout their careers. This timely conversation will inspire and inform while giving voice to the challenges and lessons learned. 

• What’s next: The next installment of VOICES is July 19. Register here.

For more information, please contact the DEI team.

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. 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:

• Effective Internal Audit Function: Beyond the Basics – July 11
• Latest on AML Regulations and Impact of Economic Sanctions – July 12
• Do Commercial Servicer Ratings Matter? – July 14
• Tech Stack Optimization: Analyzing Efficiencies in the Current Economic Landscape – July 19
• Mortgage Servicers: Take Back Control to Accelerate and Modernize Borrower Communications – July 21
• Special Purpose Credit Program Toolkit: Overview and Walkthrough – July 21

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.