MBA Advocacy Update, Mar. 6, 2023

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

MBA President and CEO Bob Broeksmit Pens Letter in WSJ in Support of FHA MIP Cut 

The Wall Street Journal published a letter to the editor from MBA President and CEO Bob Broeksmit, CMB, in support of the HUD announcement at MBA’s Servicing Solutions Conference last week to lower the annual Mortgage Insurance Premium on Federal Housing Administration loans. 

• Why it matters: The letter was written in response to the inaptly titled, February 23 editorial, “A Bigger Subsidy for Risky Mortgages,” that was critical of the 30-basis-point reduction to the annual MIP.
• What’s next: MBA will continue to monitor the FHA’s Mutual Mortgage Insurance Fund (MMIF) performance to ensure the program protects taxpayers with strong reserves, without charging borrowers excessively high premiums. Should loan performance remain strong through this year’s forecasted recession, and the MMIF reserves remain well above their required level, further action on the MIP (e.g., such as reducing the life of loan premium) may be warranted. 

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

Supreme Court Takes Up Appeal on CFPB’s Funding Mechanism  

On Feb. 27, the Supreme Court said it would consider the Consumer Financial Protection Bureau’s appeal of the Fifth Circuit Court of Appeals decision in CFSA v. CFPB – in connection to its Payday Lending Rule – over the constitutionality of the Bureau’s funding mechanism. The Court said it would hear the case during its next term, beginning on October 1. 

• Why it matters: This case has potential to significantly impact the regulatory landscape of the mortgage industry. In its brief supporting the petition, the Bureau cited MBA’s Amicus Brief in Seila Law to point out the effect this case could have and the resulting disruption in the mortgage industry. A decision upholding the 5th Circuit ruling could create significant regulatory uncertainty for the financial services industry unless there is a court-directed remedy or subsequent Congressional action to ratify existing rules of the road.
• What’s next: MBA is working with other industry trades and stakeholders to develop proposed options that would mitigate potential disruptions depending on the outcome of a decision and its possible impact on existing Bureau rules that have been implemented.  

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

House Advances Bill to Establish Federal Minimum RON Standards

The House on Feb. 27 passed H.R. 1059, the SECURE Notarization Act, by voice vote. The MBA-supported measure complements the 42-state (plus the District of Columbia) remote online notarization laws by creating a set of minimum federal standards, while allowing individual states the flexibility and freedom to implement their own RON standards. Following the House vote, MBA President and CEO Bob Broeksmit, CMB, issued a press statement supporting the bill’s passage. MBA’s Mortgage Action Alliance issued a Call to Action late last week urging members to contact their representatives to voice their support for the bill, with 84% of all House offices contacted ahead of the unanimous/bipartisan vote.

• Why it matters: The SECURE Notarization Act has now cleared the full House early in this new session of Congress with the broadest possible bipartisan support, signaling to the Senate there is considerable momentum for the legislation to be considered and debated in the upper chamber.
• What’s next: MBA will continue to advocate for the reintroduction of a bipartisan Senate companion SECURE Notarization Act. Once that bill has been formally introduced, MAA will issue a new Call to Action to urge our members to contact their Senators to voice support for – and urge co-sponsorship of – this parallel legislation. 

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

Data Privacy Takes Center Stage in Two Key House Committees 

Last week, the House Financial Services Committee advanced the Data Privacy Act and, separately, the House Energy and Commerce Committee’s Innovation, Data and Commerce Subcommittee held a hearing focused on data security and data privacy. Both panels are interested in creating a federal standard for data privacy. The HFSC bill is narrowly tailored to Gramm-Leach-Bliley Act reforms, while the E&C Subcommittee is considering a broader approach that would impact financial institutions as well as a host of other industries.  MBA submitted a letter on the Data Privacy Act; a summary of the E&C hearing can be found here.       

• Why it matters: Reforms to the GLBA are critical in determining how MBA members collect, retain, share, and dispose of consumer information as part of their mortgage origination and underwriting activities.  
• What’s next: Multiple House and Senate committees hold jurisdiction over data-related policies. The E&C Subcommittee is expected to markup its version of data privacy and security legislation in the coming months, which will be followed by debate amongst House Republican leaders about the specific proposal they wish to advance.  

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

MBA Releases White Paper on The Future of Loss Mitigation

At last month’s Servicing Solutions Conference and Expo, the MBA released a white paper on the Future of Loss Mitigation. Based on extensive contributions from MBA members regarding lessons learned during the pandemic, the paper provides recommendations for key loss mitigation flexibilities that should be incorporated across all insurers and guarantors and used for future borrower hardships, national emergencies, and natural disasters. Using the guiding principles of simplicity, standardization, and sustainability, the Future of Loss Mitigation also highlights roadblocks that policymakers must eliminate and outlines MBA’s ongoing work to improve loss mitigation in a high-interest rate environment. 

• Why it matters: With the expected expiration of the national emergency and evolving market conditions, the Future of Loss Mitigation urges policymakers to create a durable and aligned loss mitigation structure ahead of the next adverse market event. Servicers have adjusted processes, technology, and borrower communications over the past three years. The recommendations seek to preserve those improvements and ensure servicers can maintain default scalability while offering effective solutions and favorable outcomes to distressed borrowers.
• What’s next: MBA will continue to advocate on loss mitigation policy priorities and communicate progress to members. 

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

MBA Seeks Clarity on FHA Loss Mitigation Mortgagee Letter 2023-03

On Monday, MBA submitted feedback to the FHA seeking clarity regarding FHA’s most recent loss mitigation mortgagee letter, 2023-03, Expansion of the COVID-19 Recovery Loss Mitigation Options. Before servicers must implement the new policy, FHA should clarify the required documentation for Special Forbearance-Unemployment, the conversion of in-flight trial payment plans, and the treatment of non-borrowers.

• Why it matters: Mortgagee Letter 2023-03 extends FHA’s COVID-19 Recovery Loss Mitigation Options until October 24, 2024, to all borrowers, regardless of their reason for hardship. To effectively facilitate FHA’s expansion of its COVID-19 loss mitigation waterfall, FHA should address several issues ahead of the April 30, mandatory compliance deadline before servicers adjust processes and borrower communications. 
• What’s next: MBA will continue to engage with FHA to ensure industry is provided the necessary clarity ahead of the mandatory compliance deadline. Moreover, MBA will continue to monitor the industry’s performance to ensure that FHA permanently adopts the COVID-19 loss mitigation waterfall into the 4000.1 Single-Family Housing Policy Handbook. 

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

MBA Signs on to Coalition Letter to Congress on FTC Noncompete Clauses Proposal 

On Tuesday, MBA and other trades sent a joint letter to Congress on the Federal Trade Commission’s proposed rule to impose a nationwide ban on almost all noncompete clauses. The U.S. Chamber of Commerce led this letter initiative requesting that Congress use its oversight and appropriations authority to closely examine the FTC’s proposed rulemaking authority. FTC’s proposed rule would ban the use of noncompete clauses in worker contracts, including for paid and unpaid employees, independent contractors, internships, and volunteer contracts. A noncompete clause blocks workers from working for a competing employer or starting a competing business after that person stops working for an employer. The rule would label the use of such clauses as an unfair method of competition for employers towards their workers.  

• Why it matters: This rule is proposed under the FTC’s rarely used Section 5 rulemaking authority to prevent unfair methods of competition. The novel use of this rulemaking authority may indicate the FTC’s focus on certain business practices and its willingness to stop those practices through rulemaking rather than enforcement. 
• What’s next: Comments to the FTC’s proposal are due March 20, and a coalition comment letter to the FTC is currently in the works. MBA will continue to monitor this rulemaking and provide any relevant updates. 

For more information, please contactAlisha Sears at (202) 557-2930.

MBA Letter Highlights VA Appraisal Reform Recommendations

On Monday, MBA sent a letter to the Department of Veterans Affairs containing recommended policy changes to improve the VA appraisal process. MBA provided the suggested policy revisions in response to VA’s statutory obligations under the recently passed Improving Access to the VA Home Loan Benefit Act of 2022 to report recommendations for appraisal reform to Congress by March 27. 

• Why it matters: Under the law, VA is required to prescribe updated regulations or program requirements by June 25. 
• What’s next: MBA will continue to be in contact with VA policy staff regarding industry-supported recommended reforms and follow any related developments as the deadline approaches. 

For more information, please contact Hanna Pitz at (202) 557-2796.

HUD Releases Final Rule on LIBOR Transition for FHA Mortgages

On Wednesday, HUD released its final rule regarding the required transition away from the London Interbank Offered Rate. Beginning on March 31, newly originated forward ARMs and HECM ARMs will transition away from the LIBOR index and will be replaced with the Secured Overnight Financing Rate (SOFR). The final rule also creates a spread-adjusted SOFR index for existing forward and HECM ARMs to transition away from LIBOR, responding to recommendations highlighted in previous MBA-led comment letters.   

• Why it matters: The industry has been preparing for its conversion away from LIBOR, and HUD’s final rule provides the guidance needed to move forward.  For more information, visit MBA’s LIBOR transition resources page.  
• What’s next: LIBOR will be completely phased out of use on June 30, 2023.

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

California DFPI Clarifies Position on Permitting Remote Work for MLOs

On Monday, the California Department of Financial Protection and Innovation issued guidance that clarifies their position on mortgage loan originators working away from a licensed branch location. In the guidance, DFPI stated that the California Residential Mortgage Lending Act does not expressly prohibit employees of a licensee from working at a remote location, such as an employee’s home. Therefore, a licensee may authorize an employee to perform limited functions at a remote location that is not considered a branch office, provided that the location does not have the indicia of a branch office and is not advertised to the public as a business location.

• Why it matters: The language of DFPI’s guidance is consistent with the MBA model and other states that have acted to permit remote work. There are now 24 states that have enacted legislation, promulgated rules, or issued regulatory guidance that permanently allows MLOs to work from a remote location.
• What’s next: MBA will continue to work with our state and local association partners to advocate for its model legislation and regulation to create licensing flexibility nationwide. 

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

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:

• Top Commercial Mortgage Servicing Issues in 2023 – March 6
• RESPA Advisory Opinion on Comparison Shopping and Lead Generation Platforms – March 7
• Responsibly Using AVMs and AI to Automate Appraisal Underwriting – March 8
• Conversation with the GSEs: Repurchase Trends and Optimizing Loan Quality – March 8
• Achieving Success in Ginnie Mae’s Digital Collateral Program – March 14

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.