MBA Advocacy Update Monday Mar. 20, 2023

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

FHFA Delays Implementation of DTI-based LLPA

On Wednesday, the Federal Housing Finance Agency announced a 90-day delay in the effective date of the new Loan Level Price Adjustments for certain borrowers with debt-to-income ratios above 40 percent. The new effective date will be for deliveries on or after August 1. In addition, lenders will not be subject to post-purchase price adjustments related to this DTI ratio-based fee resulting from post purchase quality control reviews for loans acquired by the Enterprises between August 1, and December 31. In a statement announcing the delay, FHFA Director Sandra Thompson said, “FHFA has decided to delay the effective date of the DTI ratio-based fee by three months to August 1, 2023, to ensure a level playing field for all lenders to have sufficient time to deploy the fee.” FHFA also stated that during this time they intend to remain engaged with the industry to address “operational concerns.”

• Why it matters: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “While we appreciate the delay, we are disappointed that FHFA’s statement did not recognize the need to consider alternatives to using a debt-to-income pricing adjustment.” MBA considers DTI-based LLPA to be unworkable and has urged FHFA to eliminate the DTI-based LLPA or delay its implementation to consider alternative solutions. The primary concern continues to be the adverse impact of the fee on the consumer experience, and MBA is disappointed that the announcement does not propose alternatives to ease the negative impacts on lenders and their customers.  
• What’s next: The extended effective date allows for the necessary time to reconsider this policy, and MBA will continue its ongoing engagement with FHFA to push for the elimination of the DTI-based LLPA or to find a workable alternative solution.

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

MBA Launches CONVERGENCE Philadelphia

Last Wednesday, MBA launched CONVERGENCE Philadelphia, its third city-based pilot program to promote and increase minority homeownership. CONVERGENCE Philadelphia will be led by MBA and three cornerstone partners: Radian, TD Bank, and Wells Fargo. The multiyear commitment will involve key community and industry stakeholders working together to identify and address homeownership barriers for people and communities of color. CONVERGENCE Philadelphia joins initiatives underway in Memphis, Tennessee, and Columbus, Ohio. 

• MBA’s President and CEO Bob Broeksmit, CMB, said, “MBA is developing stronger and more effective affordable housing partnerships to close the minority homeownership gap and create meaningful change in underserved communities. CONVERGENCE Philadelphia will bring together a local network of housing leaders, non-profits, and other stakeholders to collaborate on sustainable housing opportunities in the city. We are grateful for the generous support from Radian, TD Bank, and Wells Fargo and will work together with housing advocates and city leaders to strengthen existing programs and develop new solutions that increase affordable homeownership opportunities for Black, Hispanic, and other diverse households.”
• What’s next: For more information on CONVERGENCE, please click here. 

For more information, please contact Steve O’Connor at (202) 557-2867.

House Lawmakers Introduce Bipartisan Bill to Make Permanent the MI Tax Deduction

Last week, House Ways and Means Committee members Rep. Vern Buchanan (R-FL) and Rep. Jimmy Panetta (D-CA) reintroduced bipartisan legislation, the Middle-Class Mortgage Insurance Premium Act of 2023 (H.R. 1384), which would make permanent the mortgage insurance (MI) tax deduction and increase the income cap for eligibility. Last November, MBA joined a coalition of housing organizations in sending a letter to the House Ways and Means Committee and Senate Finance Committee urging members to make the MI premium tax deduction permanent and increase the income level for the phaseout.

• Why it matters: Affordability remains a persistent barrier to homeownership across the country due to high interest rates, strong home-price appreciation, and limited housing supply, and mortgage insurance helps bridge the down payment gap for millions of borrowers. Low down payment mortgages have proven critical for many first-time, low- and moderate-income, and minority homebuyers to secure financing and attain the dream of homeownership. The MI deduction expired at the end of 2021 and the Fiscal Year 2023 omnibus did not address tax extenders.
• What’s next: MBA and our coalition partners continue to urge policymakers on the tax-writing committees (House Ways and Means Committee and Senate Finance Committee) to consider this bipartisan legislation for inclusion in any potential tax package that could come together this Congress.

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

Yellen Testifies Before Senate Finance Committee on FY24 Budget, Health of U.S. Banking System

On Thursday, a hearing with Treasury Secretary Janet Yellen before the Senate Finance Committee on the President’s Fiscal Year 2024 budget featured much discussion on the health of the U.S. banking system. Yellen said the banking system is sound and resilient, but faced numerous questions on the future of deposit insurance, bank supervision, and the shortcomings of Silicon Valley Bank. Related to real estate, Chairman Ron Wyden (D-OR) stated in his opening remarks that there appears to be bipartisan interest in tax credits to boost the supply of affordable housing. A summary of the hearing can be found here. 

• Why it matters: The hearing was the first opportunity for Senators to question Secretary Yellen regarding the recent failure of Silicon Valley Bank and Signature Bank. Senators also discussed the economic impact of inflation and the harmful consequences of not raising the debt ceiling.
• What’s next: Both the Senate Banking Committee and House Financial Services Committee are expected to hold oversight hearings on the federal regulators’ response to the recent bank failures. 

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

Biden Administration Releases Budget Justifications 

On Tuesday, the Biden Administration released the Analytical Perspective and Appendix portion of its proposed budget for FY 2024. The additional documents provide a more detailed look at the recently released proposal. As noted during our high-level review last week, the proposed budget emphasizes programs for first-time home buyers, renter protections, and recommends increases in certain corporate taxes. MBA staff have put together an analysis of the relevant housing and tax portions of the proposed budget.

• Why it matters: The President’s budget proposal is a blueprint of the administration’s priorities provided to Congress as it begins its budget and appropriations process. 
• What’s next: The Congressional budget process begins shortly, starting with possible efforts to pass a budget resolution, and then followed by expected work on appropriations bills.  

For more information, please contact Matt Jones at (202) 557-2933.

MBA Submits Comments Responding to HUD Section 184 Proposed Rule

On Tuesday, MBA submitted comments responding to the Department of Housing and Urban Development’s (HUD) proposed rule regarding the Section 184 Indian Home Loan Guarantee Program (Section 184 Program). HUD’s proposed rule seeks to codify the standards governing the Section 184 Program into rules. MBA’s comments recommend against this action and instead advise HUD to mirror the Section 184 Program after the Federal Housing Administration’s (FHA) program by creating a handbook to allow for greater regulatory flexibility.

• Why it matters: The Indian Home Loan Guarantee Program is an essential tool to provide affordable homeownership opportunities to borrowers residing on tribal land. The proposed rule clarifies policies governing Native American participation in the Section 184 Program, as well as origination and servicing requirements for lenders. 
• What’s next: MBA will continue engaging with HUD to provide member feedback in response to proposed rules.

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

CFPB Announces Review of Regulation Z’s Mortgage Loan Originator Rules 

Last Friday, the Consumer Financial Protection Bureau announced a review of Regulation Z’s Mortgage Loan Originator Rules. The review is required for all rules with significant impact on small entities, including the Mortgage Loan Originator Rules, pursuant to the Regulatory Flexibility Act. The CFPB has asked for comments on the impact of the Mortgage Loan Originator Rules on small entities. Specifically, the CFPB has requested comments on the continued need for the rules, the complexity of the rules, the extent to which the rules overlap with other applicable law, the degree to which the mortgage market has changed, and other information relevant to the CFPB’s review. 

• Why it matters: This presents an opportunity for MBA to reiterate suggested changes for the Mortgage Loan Originator Rule, with a likely starting point referring to past our comments in a prior Bureau RFI, which can be found here (beginning on page 3) .
• What’s next: MBA will continue to monitor this review process and will work with members to submit a response.  

For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.

House Financial Services Subcommittee Holds Flood Insurance Hearing

Last week, the House Financial Services Committee’s Subcommittee on Housing and Insurance held a hearing on options to expand flood insurance coverage. The primary focus of the hearing was aimed at addressing the issue of flood insurance coverage for consumers who reside outside of National Flood Insurance Program Special Flood Hazard Areas. Lawmakers on the panel also discussed the need to reauthorize the NFIP on a long-term basis. There have been almost two dozen short-term reauthorizations for the NFIP since the last long-term reauthorization of the program (the “Biggert-Waters” reforms) was enacted in 2012. 

• Why it matters: For years, Congress has debated the need for reforms to modernize the financially beleaguered flood insurance program, with policymakers divided over the appropriate level of public subsidy needed. Members on both sides of the aisle discussed affordability issues, especially in LMI communities, as well as the importance of consumer education, pointing to the proportion of flood damage that occurs in areas deemed “low risk.” A detailed hearing summary is here.
• What’s next: The subcommittee will likely hold additional hearings in the coming months, and another brief reauthorization is likely before the program lapses on September 30, pending bicameral negotiations tied to the FY 2024 budget and appropriations process. MBA will continue to advocate for a long-term NFIP reauthorization, with uniformity and consistency in private flood insurance requirements for all types of mortgages. 

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

MBA and Illinois MBA Deliver Comments on Proposed CRA Regulation

Yesterday, in response to a proposal released in late December 2022 by the Illinois Department of Financial and Professional Regulation, MBA and the Illinois MBA submitted the industry’s views on the state’s implementation plan for the Illinois Community Reinvestment Act of 2021. With respect to independent mortgage banks (IMBs), the letter asked IDFPR to minimize divergence with rules in Massachusetts, which is the only other state to have an operational regulation for applying CRA to IMBs. The associations also asked IDFPR to provide appropriate incentives and rewards for IMBs that have already demonstrated strong lending performance to LMI and minority communities. Additional recommendations in the letter included weighting IMB CRA exams most heavily on their lending activities (as opposed to service or investment tests); establishing a presumption of compliance for IMBs that meet or beat established benchmarks based on the overall statewide averages for lending to LMI borrowers or LMI communities; and provide for extended examination cycles for IMBs whose prior-year HMDA data exceed those same statewide benchmarks. The letter also encouraged IDFPR to pause any final rulemaking with respect to state-charted banks until the pending changes to the federal CRA rule are implemented, and to give those institutions who score well on these national exams a strong presumption of compliance with Illinois mandates.  

• Why it matters: MBA will work with its state association partners to oppose all bills that create CRA requirements for IMBs. However, where these bills are enacted, it is vital to reduce divergent and contradictory requirements among states and between federal rules and any state mandates.
• What’s next: MBA will continue to brief members on any developments on CRA legislation, such as the defeat last month of an IMB community reinvestment bill under consideration in Maryland or last year in California.

For more information, please visit MBA’s resource center at www.mba.org/StateCRA or contact William Kooper (202) 557-2737.

mPower Moments: On Making Room for the Next Generation with Nina Tassler 

In this mPower Moments episode, mPower Founder Marcia M. Davies sits down with Nina Tassler, Advisor and Former Chairman, CBS Entertainment and Managing Partner of PatMa Productions. During this inspiring chat, Tassler discusses her journey and how she was able to ascend to Chairperson at CBS, despite a career “full of surprises.” Tassler also talks about her experience and motivation for writing her book, “What I Told My Daughter,” and how she was able to incorporate a collection of essays from other powerful women who were able to share their experiences balancing their careers as well as navigating motherhood.

• What’s next: To watch more mPower Moments, click here. 

For more information, please contact Marcia Davies at (202) 557-2707.

Register Today: MBA’s National Advocacy Conference – April 18-19

​Registration is open for MBA’s National Advocacy Conference on April 18-19 in Washington, D.C. This critical event allows you to connect directly with elected officials in our nation’s capital. Your story matters – share it with key policymakers as they consider legislation that affects all of us.

• Why it matters: The last few years have been unprecedented for millions of Americans, and the real estate finance industry is no different as we navigate new terrain. NAC gives you the opportunity to share your narrative with the key staff and decision-makers while networking with your industry colleagues. When we work together and combine our voices, we can do great things.  
• What’s next: Share your experiences, your voice, and your passion for our industry on April 18-19!  Register for yourself – and encourage your colleagues to attend – today at mba.org/nac.

For more information, please contact Bill Killmer at (202) 557-2736.

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:

• Meet the Homeseeker: 2023’s Most Important Borrower – March 30
• Deciphering ESG in Affordable Multifamily Lending – March 30
• Warehouse Lending: Latest Activity, Trends and Developments – April 12
• Multifamily Finance Faces Headwinds Head-On – April 18
• What Trends will Shape the Lending Space in the Second Half of 2023 – June 1

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