MBA Advocacy Update Sept. 6 2022

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

On Wednesday, FHFA announced that it would begin a comprehensive review of the Federal Home Loan Bank System this fall. And HousingWire published a guest column penned by MBA’s Mike Fratantoni, Marina Walsh, CMB, and Joel Kan that looks at industry employment levels in the current and forecasted mortgage market environment.

FHFA Announces Comprehensive Review of the Federal Home Loan Bank System

On Wednesday, the Federal Housing Finance Agency announced it would begin a comprehensive review of the Federal Home Loan Bank System this fall. Director Sandra Thompson noted the vital role of the FHLBs over the past 90 years in supporting affordable, equitable and sustainable access to mortgage credit, and said FHFA is undertaking this review process to ensure the banks remain prepared to meet current and future needs. MBA President and CEO Bob Broeksmit, CMB, issued a press statement applauding FHFA’s decision to conduct the review, noting the need for the FHLB System to reflect today’s housing market – both in terms of new membership and new forms of liquidity support needed for a housing finance system reliant on securitization. As part of the review process, FHFA will host two public listening sessions and a series of regional roundtable discussions to consider and evaluate the mission, membership eligibility requirements, and operational efficiencies of the FHLBanks. 

• Why it matters: MBA has long advocated for responsible expansion of FHLB membership to critical providers of mortgage originations, servicing and investments – such as mortgage REITs and independent mortgage banks – to further support its housing mission and to provide stable liquidity sources for key players in the mortgage market. The FHLB System should more closely reflect the diverse composition of the mortgage market, which in turn would generate benefits for consumers and the FHLBs.
• What’s next: FHFA will host two public listening sessions and a series of regional roundtable discussions. The first listening session will be held on September 29. FHFA will also be accepting written comments through October 21. MBA will continue to engage with FHFA throughout the review process and will be providing feedback in the key areas highlighted in the announcement.

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

HousingWire Guest Column from MBA Economists on Mortgage Industry Employment 

Last week, HousingWire published a guest column penned by MBA SVP and Chief Economist Mike Fratantoni, MBA VP of Industry Research Marina Walsh, CMB, and MBA AVP of Economic and Industry Forecasting Joel Kan that takes a look at whether the industry has too much or too little capacity. 

• Why it matters: Based on MBA’s read of 2021 Home Mortgage Disclosure Act data, total originations volume last year was $4.4 trillion. By comparison, total volume is expected to be at around $2.3 trillion this year, with similar levels over the next two years. Fratantoni, Walsh, and Kan analyze recent and historical data from several MBA reports and outside sources to estimate how much loan production employment and servicing employment may need to be trimmed in a lending environment with much lower volume. 
• What’s next: “Based on our back-of-the-envelope analysis here, if the industry experiences a 65% drop in origination volume from the peak in fourth-quarter 2020 to a trough in first-quarter 2023, per MBA’s forecast, production employment will likely need to be scaled back by 24 to 31%. As of second-quarter 2022, we are only between 2 and 10% there at this point, with the employment data from the QPR showing a bigger drop thus far relative to that from the BLS and NMLS. Servicing employment is likely to be steady or somewhat higher over the next few years, so total industry employment is likely to drop by a smaller percentage.”

For more information, please contact Mike Fratantoni at (202) 557-2935, Marina Walsh, CMB at (202) 557-2817, and Joel Kan at (202) 557-2951.

FHA Updates Requirements on Notices for Due and Payable Statuses of HECM Transactions 

On Thursday, the Federal Housing Administration issued Mortgagee Letter 2022-15, which updates requirements on notices for due and payable statuses on Home Equity Conversion Mortgage transactions. The ML’s guidance now requires mortgagees to notify the borrower’s estate, heirs or another party with legal title to the property that their HECM is due and payable within 30 days of notifying FHA of the last surviving borrower’s death. HUD details that the guidance outlined in this ML can be implemented immediately if mortgagees choose but must be implemented no later than 90 days from the ML’s publication. In this case, 90 days from publication is Tuesday, November 29.

• Why it matters: The new ML is an update to guidance originally issued via ML in 2015, which detailed how and when a HECM is considered eligible to be called due and payable, and provided an overview of the required notices servicers must execute to both HUD and borrowers. This new policy aligns the notification requirements following a HECM becoming due and payable due to the death of the last surviving borrower for HECMs, regardless of the case number assignment date or the due and payable status.
• What’s next: MBA will solicit feedback from HECM-originating members on any implementation issues.  

For more information, please contact John McMullen (202) 557-2706.

Register Today – MBA’s Risk Management, QA and Fraud Prevention Forum, September 11-13 in Nashville 

Book your travel to Nashville today to attend MBA’s Risk Management, QA and Fraud Prevention Forum. The conference offers attendees the opportunity to meet with current and potential business partners at the premier gathering of risk management, quality control, underwriting, and fraud prevention professionals. Hear new insights from key leaders on industry issues, fraud prevention, risk management, and more.

• Why it matters: Notable sessions at the conference include: Fraud Update with Bob Broeksmit, CMB, and Mike Fratantoni; GSE Update with Mike Fratantoni and representatives from Fannie Mae and Freddie Mac; CONVERGENCE Memphis: Increasing Affordability for Minority Homeowners; and General Session: When Good Fraud Investigations Go Bad.
• What’s next: Click here to register.

For more information, please contact Pete Mills at (202) 557-2878.

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:

• Climate Risk Management: Data & Analytics – September 7
• Relationships Matter: How to turn Today’s Purchaser into Tomorrow’s Refinancer – September 8
• CRE Mortgage Risk and What the Pandemic Taught Us – September 20
• State of Non-QM Lending & What You Need to Know Now – September 27
• Empowering Mortgage Servicers with Proactive KPIs – September 29

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.