MBA Advocacy Update Oct. 16: MBA, Housing Trades Call on Fed to End Rate Hikes, Pledge Not to Sell MBS Book

  1. MBA, Housing Trades Call on Fed to End Rate Hikes, Pledge Not to Sell MBS Book

Last Monday, MBA led a coalition letter sent to the Board of Governors of the Federal Reserve (the Fed) that conveyed the housing industry’s serious concerns about the negative market impacts the Fed’s monetary policy actions (e.g., rate hikes and quantitative tightening) are having on the market. Fed policy has created market uncertainty and volatility, driving the spread between the 10-Year Treasury and 30-year fixed-rate mortgage to historically high levels and in turn reducing homes sales activity. The letter, which garnered significant national and trade media coverage, was signed with the National Association of Home Builders (NAHB) and National Association of Realtors (NAR), urges the Fed to make two clear statements to the market:

– The Fed does not contemplate further rate hikes; and

– The Fed will not sell off any of its MBS holdings until and unless the housing finance market has stabilized and mortgage-to-Treasury spreads have normalized.

MBA President and CEO Bob Broeksmit, CMB, also stressed the need for the Fed to do this during a live CNBC interview last Wednesday, explaining that these steps will provide the market greater certainty about the Fed’s rate path and its plans for the MBS portfolio.

– Why it matters: MBA understands how severely current market conditions are straining the housing finance market and member companies and is regularly engaged with senior leadership at the Fed to share real-time market color on both residential and commercial lending. Absent concerns about systemic risk to U.S. economy the entire financial U.S. system (e.g., the early months of the pandemic), the Fed will not intervene to actively support a specific segment of the housing finance market. However, as the joint letter underscores, the Fed can reduce the uncertainty premium by sending a clear signal to the market that the rate hikes are over and there will be no sales from its MBS portfolio until spreads return to historical norms.
– What’s next: Fiscal policy and political dysfunction have also played a role in driving rates and spreads higher, making it imperative that Congress and the Administration work together to restore budget discipline and effective policymaking. MBA will continue to advocate with the Fed and with policymakers on both sides of the aisle and in the Biden Administration to ensure monetary and fiscal policy work together to avoid a hard economic landing.

For more information, please contact Pete Mills at (202) 557-2878 and Bill Killmer at 557-2736.

  1. CFPB Releases Advisory Opinion on Consumer Information Requests to Large Banks and Credit Unions

On Tuesday, the Consumer Financial Protection Bureau (the Bureau) released an advisory opinion banning the charging of “junk fees” for certain consumer requests. The Bureau released this Opinion as part of its Advisory Opinion Program, which is used to provide written guidance to assist regulated entities to better understand their legal and regulatory obligations. Section 1034(c) of the Dodd-Frank Act requires large banks and credit unions to comply with consumer requests for information concerning their accounts for consumer financial products. This section applies to insured depository institutions and credit unions with total assets of more than $10 billion, as well as their affiliates. Covered entities may not impose unreasonable impediments on consumer information requests, including charging fees for providing information such as account balances, transaction histories, interest rates, payoff statements, etc., or for providing supporting documentation.

Additionally, covered entities may not require consumers to endure excessive wait times, require consumers to submit the same request multiple times, require consumers to interact with a chatbot that does not respond adequately to requests, or direct consumers to obtain information from a third party.

MBA’s summary of the Advisory Opinion can be found here.

– Why it matters: The Bureau’s proposal was released as part of the Biden Administration’s effort to crack down on so-called “junk fees.” The joint press release with the Bureau, Federal Trade Commission, and White House can be found here.
– What’s next: MBA will keep members informed of any updates on this matter and others pertaining to the Bureau.

For more information, please contact Justin Wiseman at (202) 557-2858 or Alisha Sears at (202) 557-2930.

  1. California Enacts Unprecedented and Costly Climate Impact Disclosure Bills

California Governor Gavin Newsom recently signed Senate Bill 253, the Corporate Climate Data Accountability Act. The bill, along with related legislation (SB-261) signed by the Governor, requires companies operating in California to provide data on the climate impact of their operations or face penalties. Both efforts create a complex reporting and accounting regime for companies to navigate with little to no baseline reference. SB 253 mandates a “Scope 3” value chain reporting requirement, which far exceeds the U.S. Securities and Exchange Commission (SEC) proposed rule on climate disclosure released in March 2022.

MBA and the California MBA opposed the legislation and urged Mortgage Action Alliance members in the state to tell the Governor to veto it. Scope 3 includes items that are outside of MBA members’ control and are duplicative considering the sources within the chain are likely already required to disclose under Scopes 1 and 2. Governor Newsom included a letter that cited the need to watch for the cost to California businesses, which may provide an avenue to narrow Scope 3 reporting.

– Why it matters: This new type of data tracking will be costly to comply with because it is not based on known data and will instead rely on unknown industry averages or unreliable secondary sources. This cost will hurt all businesses operating in California. This issue deserves a more prudent national debate about Scope 3 emissions disclosure. Unfortunately, this policy direction by California could be emulated by other states and result in a compliance patchwork of expensive and potential divergent mandates. It may also adversely influence the SEC’s rulemaking.
– What’s next: MBA will oppose similar policy proposals in other states and will work with the California MBA and other stakeholders to engage in the rulemaking process and provide member guidance.

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

  1. 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:

– Using Data Analysis as Part of a Strong Fair Lending Compliance Program – October 24
– Strategies for Serving Millennial and Gen Z Homebuyers – November 2
– CREF Career Conversations – November 9
– Avoiding TCPA Class Actions and Do Not Call Complaints – November 9
– Originating and Succeeding with High-Net-Worth Borrowers – November 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.