MBA Advocacy Update Apr. 17, 2023

Bill Killmer; Pete Mills

Amicus Update: Joint Trades Challenge New York’s Foreclosure Abuse Prevention Act

On Monday, MBA, NYMBA, ABA, NYBA and HPC filed a joint Amicus brief with the New York State Appellate Division of the Supreme Court in support of the plaintiff in U.S. Bank National Association v. Simon. In this case, the plaintiff is, in part, challenging the constitutionality of New York’s Foreclosure Abuse Prevention Act. The joint trade groups’ brief argues that the retroactive application of FAPA violates the New York and U.S. Constitution by destroying the lender’s rights to collect payments on mortgages after a voluntary discontinuance, in violation of both the State and federal Due Process and Takings Clauses and the federal Contract Clause.  

  • Why it matters: Passed in December 2022, despite strong opposition by MBA and NYMBA, FAPA prohibits New York servicers from unilaterally halting a foreclosure action and restarting the loan’s statute of limitations in order to offer homeowners facing financial hardship with loss mitigation opportunities. The joint trade groups also argued that the retroactive application of FAPA would severely damage the state’s mortgage market. 
  • What’s next: MBA will continue to monitor the case and keep members informed of any updates.  

For more information, please contact Justin Wiseman at (202) 557-2854 or Brendan Kelleher at (202) 557- 2779.

FHA Releases Draft ML to Include ADU Rental Income in Borrower Underwriting 

On Thursday, the Federal Housing Administration posted a draft Mortgagee Letter to the FHA Single Family Housing Drafting Table that would update its requirements for insuring mortgages on single-family homes with Accessory Dwelling Units. The draft ML would include rental income generated by an ADU as qualifying income when underwriting a borrower for forward and reverse mortgages. The ML would also amend FHA’s 203(k) program to allow attached ADU construction to be financed within the program.

  • Why it matters: MBA has advocated for updates to FHA’s 203(k) program, including the ability to finance ADUs within the program. While the draft ML would allow attached ADUs, it stops short of allowing detached ADUs. MBA will be submitting comments urging further expansion of ADU financing options in response to a separate FHA request for information on the 203(k) program. 
  • What’s next: MBA will collect comments on the draft ML through the Government Loan Production Subcommittee. Comments are due by April 27.

For more information, please contact Darnell Peterson at (202) 557-2779.

New Version of Homeownership for Dreamers Act Re-introduced in the House

Rep. Juan Vargas (D-CA), along with Reps. Pete Aguilar (D-CA) and Sylvia Garcia (D-TX), reintroduced the MBA-supported Homeownership for Dreamers Act (H.R. 2397), which would provide clarity to the lending community regarding the eligibility of Deferred Action for Childhood Arrivals recipients for federally insured mortgage programs or loans eligible for purchase by the Government Sponsored Enterprises. While the FHA Handbook updated language to clarify that Dreamers would be eligible to apply for FHA-backed mortgages effective January 19, 2021, this bill aims to prevent future administrations from potentially limiting lending access to DACA recipients.     

  • Why it matters: As MBA members strive to provide access to affordable home loans for a wide range of eligible borrowers in communities across the country, clear rules are required regarding the treatment of DACA recipients as eligible borrowers. Legislation that clarifies borrower eligibility criteria, for DACA recipients or other borrowers, provides certainty to lenders and allows MBA members to better serve their communities.
  • What’s next: MBA will monitor the legislation and report back with any relevant updates regarding its potential consideration.

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

FHFA Finalizes Amendments to Enterprise “Duty to Serve” Rule

This week, the Federal Housing Finance Agency published a final rule that amends the Enterprise Duty to Serve Underserved Markets regulation to facilitate Fannie Mae and Freddie Mac’s activities related to serving colonias. The final rule adds a new definition of “colonia census tract,” which would serve as a census tract-based proxy for a “colonia,” amends the definition of “high-needs rural region” by substituting “colonia census tract” for “colonia,” and amends the definition of “rural area” to include all colonia census tracts regardless of location. These changes enable Enterprise activities in all colonia census tracts to be eligible for Duty to Serve credit.  

  • Why it matters: The rule reflects FHFA’s ongoing efforts to strengthen the GSEs’ mission-related programs supporting affordability, equity, and sustainability in underserved communities. The final rule will help eliminate barriers and allow the lenders to better serve people living in colonias.
  • What’s next: The final rule will be effective on July 1, 2023. MBA will continue to engage with FHFA on this and other critical housing issues.  

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

North Dakota Enacts Bill to Implement CSBS Model Servicing Standards

Earlier this week, North Dakota Governor Doug Burgum signed into law (HB-1068) important changes to the state’s mortgage licensing statutes. The new law implements the model framework for capital, liquidity, and governance standards for nonbank servicers issued by the Conference of State Bank Supervisors (CSBS) that MBA helped shape. North Dakota is the fourth state to implement the CSBS model; others are expected to follow this year. Last year, Maryland promulgated rules and Connecticut enacted legislation which also follow the regulator-proposed model. Montana enacted its law in February 2023, and legislation is pending in Minnesota (HF-2175).

  • Why it matters: Adoption of the CSBS model for nonbanks helps maintain aligned requirements across multiple states.
  • What’s next: MBA will continue to work with its partner state associations to support the pursuit of consistent laws and rules among state policymakers.

For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.

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:

  • Multifamily Finance Faces Headwinds Head-On – April 18
  • Turn Distressed Mortgage Loans into Performing Portfolios Faster – April 20
  • ROI Guide to Risk & QC Technology – April 25
  • LIBOR and the Impact on Legacy ARMs – April 25
  • MSR Transfers: Balancing Risk, Customer Experience and Efficiency – May 11
  • Explore Build-to-Rent Advantages, Trends & Opportunities – May 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