MBA Advocacy Update Nov. 7, 2022

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

MBA Advocates for Expansion of FHLB Membership in Letter to FHFA 

​On Monday, MBA submitted comments to the Federal Housing Finance Agency’s ongoing comprehensive review of the Federal Home Loan Bank System. MBA reiterated its long-standing advocacy for responsible expansion of FHLB membership to critical providers of mortgage origination, servicing and investment activities – such as mortgage REITs and independent mortgage banks – to add diversity to the FHLB System and to provide stable liquidity sources for key players in the single-family and multifamily mortgage markets. MBA also stressed the need to manage risk and maintain safety and soundness in a manner that strikes an appropriate balance that allows for responsible modernization of the FHLB System.

• Why it matters: As the FHLB System approaches its 100-year anniversary, FHFA is undertaking this review process to ensure it is prepared to meet its current and future needs. MBA agrees that the current FHLB System should be evaluated, particularly with respect to FHLB membership and eligible collateral standards. IMBs are critical players in the housing finance system, currently originating more than 60% of single-family loans throughout the country and, depending on the year, approximately half of multifamily lending by dollar volume. Similarly, REITs have become important holders of single-family, multifamily and community development loans and securities, all of which support the FHLBs’ mission.
• What’s next: FHFA has regional roundtables scheduled in various cities through the end of 2022. MBA will participate in the upcoming sessions and will continue to engage with FHFA throughout the review process.

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

GSEs Publish Details on Targeted Changes to Pricing Framework

Fannie Mae and Freddie Mac published additional details following last week’s FHFA announcement at MBA’s Annual Convention that it would eliminate upfront fees for certain first-time homebuyers and affordable mortgage products, while implementing targeted revisions to the upfront fees for most cash-out refinance loans. The elimination of upfront fees for first-time homebuyers at or below 100 percent of area median income and below 120 percent of AMI in high-cost areas, for HomeReady and Home Possible loans, HFA Advantage, and HFA Preferred loans, and single-family loans supporting the Duty to Serve program is effective for mortgages with settlement dates on or after December 1, 2022. In an effort to minimize market and pipeline disruption, the implementation of new fees for cash-out refinance loans will begin February 1, 2023. 

• Why it matters: The fee reductions for mission-oriented loans are part of FHFA’s ongoing pricing review, which began with increased fees for second homes and high-balance loans that were announced earlier this year. Given the ongoing affordability challenges facing homebuyers, FHFA’s targeted adjustments to the GSEs’ pricing framework are well-timed and will improve access to credit for low- and moderate-income households, first-time buyers, and minority buyers.
• What’s next: Details can be found in Freddie Mac Bulletin 2022-22 and Fannie Mae Lender Letter LL-2022-05. MBA believes that other aspects of the GSEs’ pricing framework warrant further review, including a recalibration of second home loan-level pricing adjustments and the differential pricing on correspondent and wholesale deliveries. MBA will continue to work with FHFA leadership as the agency continues its pricing review. 

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

MBA Closely Monitoring NMLS Renewal Process

The Conference of State Bank Supervisors reported on Tuesday – the beginning of the current license renewal process – that users of the Nationwide Multistate Licensing System were experiencing issues related to accessing credit reports to complete identity verification. CSBS staff also reported an issue with Advance Change Notices being processed. CSBS has been in constant contact with MBA staff and has committed to providing the industry with contemporaneous updates regarding the operation of NMLS renewals. After a planned system shut down for maintenance, CSBS was able to resolve the identified problems. 

• Why it matters: In response to the NMLS issues, the West Virginia Division of Financial Institutions has already said it will not penalize licensees for the late filing of renewals. MBA members are encouraged to review and complete company and mortgage loan originator (MLO) license renewals to avoid interruptions to business operations. 
• What’s next: The 2022 license renewal period is ongoing and will end at midnight on December 31. MBA will continue to engage with CSBS and state regulators during the license renewal period to address any NMLS system issues. 

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

Federal Reserve Announces Fourth 0.75 Percentage Point Interest Rate Hike

The Federal Reserve, in its ongoing efforts to slow inflation, raised the federal funds rate by another 75 basis points to a target range of 3.75%-4.00% on Wednesday. 

• Why it matters: The Fed’s latest short-term rate hike marks the fourth consecutive increase of 0.75% and the sixth overall since March. During his press conference, Federal Reserve Chair Jerome Powell indicated that more rate hikes are to come, although possibly in smaller increments but higher than previously anticipated. 
• MBA’s SVP and Chief Economist Mike Fratantoni said, “The financial markets correctly anticipated that the Federal Reserve would increase the federal funds rate by another 75 basis points at its November meeting. With inflation still running far too high, and the job market remaining strong, MBA expects the Fed to increase rates by another 75 basis points before holding them steady throughout 2023. The volatility seen in mortgage rates should subside once inflation begins to slow and the peak rate for this hiking cycle comes into view.”

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

IRS Issues Final Version of New Request for Return of Tax Transcript; Extends Timeline to Conform

On Tuesday, the Internal Revenue Service issued the final version for the new Request for Return of Tax Transcript (4506-C). The IRS also extended the timeline to use the existing version until February 28, 2023, and made two minor revisions to the previously issued draft.

• Why it matters: Effective March 1, 2023, all participants must utilize the new version of the IRS Form 4506-C to obtain tax transcripts. Both the new and previous version may be used through February 28, 2023. The new form will be read by a new IRS optical character recognition (OCR) software program that is expected to be deployed in early 2023. The OCR software will reject manual revisions to the form. The IRS also indicated that certain sections of the form must be completed prior to the taxpayer signing the form.
• What’s next: MBA will monitor implementation of the new form and related IRS OCR software and will inform members on any substantive issues. 

For more information, please contact Rick Hill at (202) 557-2718.

Register: mPact “Cook Like a Pro” Fall Fundraiser 

On Thursday, November 10, mPact: MBA’s network for young professionals, will host a virtual fall fundraiser with Chef Joe Sasto, a past finalist of Bravo TV’s Top Chef. “Cook Like a Pro” will provide attendees with the opportunity to prepare a tasty and delicious meal, Crispy Ricotta Gnocchi and Sage Brown Butter, in real-time with Chef Joe. 

• Why it matters: mPact hosts a series of fundraisers every year with the goal of raising funds to support the MBA Opens Doors Foundation’s mission of providing mortgage and rental assistance grants to parents and guardians caring for a critically ill or injured child. Opens Doors has been selected as the charity of choice since 2018. 
• What’s next: Help mPact support families in need while learning new skills in the kitchen. Please register here with a $30 donation. Unlimited raffle tickets are also available for $10 each.

For more information, please contact Jacky Salazar at (202) 557-2746

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:

• Augmenting Talent with Technology – November 8
• TRID Housekeeping & Latest Information – November 15
• Inflation, Interest Rate, Cap Rates & Values: What Do We Really Know? – November 30
• Ensuring HMDA Data Integrity and Common Reporting Issues – December 14
• Ten Things Your Company Must Do in 2023 – January 18

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.