MBA Advocacy Update Monday Mar. 13, 2023

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

HUD Issues Final Rule to Offer Standalone 40-Year FHA Loan Modifications

On Wednesday, HUD announced a final rule increasing the maximum allowable term for Federal Housing Administration-insured loan modifications from 360 months to 480 months. FHA quickly implemented the new policy by releasing Mortgagee Letter (ML) 2023-06, Establishment of the 40-Year Loan Modification Loss Mitigation Option. 

• Why it matters: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “This additional tool will allow mortgage servicers to help struggling FHA borrowers stay in their homes through a more affordable and sustainable mortgage payment.” He also said the addition of the 40-year option to FHA’s loss mitigation toolkit better aligns FHA policy with the GSEs’ loss mitigation framework, a long-standing MBA priority and a recommendation in our new white paper on the future of loss mitigation. 
• What’s next: Per ML 2023-06, servicers are required to implement the new program requirements no later than May 8, 2023. 

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

Biden Administration Releases FY24 Budget Request  

On Thursday, the Biden Administration released its Fiscal Year 2024 budget proposal. The Budget requests $73.3 billion in discretionary budget authority for HUD, (a 1.6 percent increase from the 2023 enacted level), including $10 billion in mandatory funding for a new First-Generation Down Payment Assistance program to help address racial and ethnic homeownership and wealth gaps. The budget also proposes a $100 million down payment assistance pilot for first-generation and/or low-wealth first-time homebuyers. On the tax policy front, the Budget proposes increasing the corporate tax rate to 28 percent, establishing a 25 percent minimum tax on those with wealth exceeding $100 million, expanding Net Investment Income Tax (NIIT) liability for S Corps, and establishing limits on tax deferral for 1031 “like-kind” exchanges.       

• Why it matters: Each year, the President’s budget request provides a blueprint for the administration’s priorities as Congress kicks off its appropriations process for the new fiscal year. The Biden vision is not expected to gain momentum in Congress, but is an opening salvo in tax and spending talks with Republicans.
• What’s next: More detailed FY 24 budget information will follow in the coming days when the various federal agencies release their FY24 Budget Justifications to Congress and OMB releases its Analytical Perspectives report. MBA staff will provide an in-depth analysis as these are released and circulate a report on items most relevant for MBA members.   

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

House Financial Services Committee Hearing Focuses on CFPB Reforms

On Thursday, the House Financial Services Subcommittee on Financial Institutions and Monetary Policy held a hearing focused on potential reforms to the Consumer Financial Protection Bureau. The hearing featured several industry panelists as well as Minnesota State Attorney General Keith Ellison. Legislative proposals to reform the Bureau were discussed including subjecting the agency to Congressional Appropriations, requiring CFPB rulemakings to go through a cost benefit analysis, creating a separate CFPB inspector general, and replacing the single director with a 5-member bipartisan commission. A complete summary of the hearing can be found here.

• Why it matters: Last year the 5th Circuit Court ruled that the funding structure of the CFPB is unconstitutional and the Supreme Court of the United States is expected to consider the case later this year. The SCOTUS ruling could determine not only fate of the Bureau but could also have implications for the Bureau’s mortgage related rulemakings such as qualified mortgage and ability-to-repay. 
• What’s next: MBA is monitoring the upcoming SCOTUS decision and working with Congress and other industry stakeholders to find a viable solution to ensure continuity for mortgage market participants.  

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

Federal Reserve Chair Testifies In House and Senate; Warns About Long Inflation Fight

Federal Reserve Chair Jerome Powell testified before the House Financial Services Committee and Senate Banking Committee this week and warned lawmakers that the central bank may have to push interest rates higher than previously expected to curb inflation. Lawmakers questioned Powell on a wide range of issues including inflation, the debt ceiling standoff, bank capital standards, and the U.S. dollar’s status as the world’s reserve currency. A summary of both hearings can be found here.

• Why it matters: Powell’s inflation warning comes after a series of economic indicators that show the economy is running hotter than expected despite action from the Fed. 
• What’s next: Powell added that Fed policymakers may have to raise interest rates more aggressively at its next meeting in two weeks if new data on employment and inflation show similar strength. 

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

House Ways and Means Committee Holds Markup

On Thursday, the House Committee on Ways and Means held a markup of the Default Prevention Act (H.R. 187), which would allow the Treasury Secretary to continue to borrow and pay interest and principal on the debt, while prioritizing some federal payments over others. The markup, held the same day President Biden announced his Fiscal Year 2024 budget, sets the stage for a potential vote in the full House of Representatives, absent a bipartisan, bicameral agreement on the debt ceiling. House Republicans have said they want a two-year budget agreement to cut government spending in exchange for voting to increase the borrowing limit (no specific cuts have been outlined yet).

• Why it matters: House Republicans passed this legislation on separate occasions in 2013 and 2015. Both a Democratic-controlled Senate and Republican-controlled Senate declined to consider the proposal in the years 2013 and 2015, respectively. During the markup, Republicans present defended the measure, arguing it would protect the creditworthiness of the U.S. should the two parties not reach a deal on the debt ceiling. Conversely, Democrats strongly criticized the bill, arguing it would be impossible to implement and not actually shield the economy from the catastrophic effects of default. Given the more than $10.3 trillion in mortgage debt backed by the federal government through Fannie Mae, Freddie Mac, Ginnie Mae, and other federal agencies, the housing and real estate markets are particularly susceptible to any resulting instability resulting from the debt limit debate. 
• What’s next: MBA and our real estate coalition partners will undoubtedly be asked – by both the White House and key lawmakers – to engage on this highly-charged topic. The Treasury Department has indicated it can continue taking “extraordinary measures” to meet U.S. obligations up until early June.  

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

Senate Finance Committee Holds Housing Hearing

On Tuesday, the Senate Finance Committee held a hearing, “Tax Policy’s Role in Increasing Affordable Housing Supply for Working Families.” The hearing provided a forum for senators to highlight different tax policies they support to expand investment in single-family housing, including S.657, the Neighborhood Homes Investment Act (NHIA) and a new tax credit for first-time homebuyers worth up to $15,000. A summary of the hearing can be found here. 

• Why it matters: Prior to the hearing Senators Cardin (D-MD), Young (R-IN), Wyden (D-OR), Moran (R-KS), and Brown (D-OH) reintroduced the NHIA, which is endorsed by MBA. 
• What’s next: MBA will continue discussions with House and Senate members to push for action on potential bipartisan tax legislation that helps to increase the supply of affordable housing. 

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

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:

• Achieving Success in Ginnie Mae’s Digital Collateral Program – March 14
• 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

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.