MBA Advocacy Update Oct. 30: CRA Final Rule Released
CRA Final Rule Released
On Tuesday, the Federal Reserve Board, Office of the Comptroller of the Currency, and Federal Deposit Insurance Corporation (the “Agencies”) released a final rulemaking to reform and align each agency’s Community Reinvestment Act (CRA) framework that depository banks must comply with.
What’s in it: The final rule makes certain changes from the proposed rule, which help to better achieve some of the Agencies’ goals of ensuring that regulations continue to reflect the original intent of the statute, especially in light of significant changes in the banking industry over the last few years.
• These changes are fully applicable to large banks (defined in the rule as $2 billion in assets and above) and partially applicable to intermediate banks (asset sizes between $600 million and $2 billion). Small banks (asset sizes of less than $600 million) will continue to be evaluated under the current CRA framework but may choose to opt into the application of the new rules.
Why it matters: Last year, MBA expressed support for the objectives to update the regulatory framework implementing the CRA and offered recommendations to ensure that the final rule achieves the intended goals of the statute without resulting in unnecessary burdens for the banks that have to implement them.
Go deeper: The final rule includes several of MBA’s recommendations, including to increase the threshold for delineating additional assessment areas, revising the weightings assigned to the overall Retail Lending and Community Development tests, maintaining full CRA credit for LIHTC investment, and recognizing Special Purpose Credit Programs in a bank’s CRA rating. The final rule also extends the implementation timeline as requested by MBA, with the first applicability date not until January 2026.
• An MBA summary can be found here.
What’s next: MBA is still reviewing the nearly 1,500-page final rule and will provide any relevant updates.
For more information, please contact Fran Mordi at (202) 557-2860 or Stephanie Milner at (202) 557-2747
CFPB Releases Proposed Rulemaking to Promote Open Banking
Last Thursday, the Consumer Financial Protection Bureau (the Bureau) released a Notice of Proposed Rulemaking (NPR) to implement Section 1033 of the Dodd-Frank Act. The proposed rule would require depository institutions and nonbanks to make consumer information available to the consumer and third parties through prescribed methods. The proposal is intended to promote “open banking,” a system of entities required to share personal financial data with consumer authorization that is intended to promote competition by making it easier for consumers to switch providers.
• Under the proposal, data providers would be required to make certain data available to a consumer or authorized third party in an electronic format. Data providers would also be required to maintain both a consumer interface–as well as a developer interface–to be accessed by third parties to facilitate this transfer.
Go deeper: MBA’s full summary can be found here.
Why it matters: Depository institutions would be covered under the proposal as a data provider only if they maintain a consumer interface. Most independent mortgage banks would be covered as third parties accessing consumer information held by data providers. MBA previously submitted a comment letter supporting efforts to streamline access to consumer financial data because it allows for faster and more reliable verification of borrower income and assets for underwriting.
What’s next: MBA plans to submit a response to the proposal and will keep members informed of any updates.
For more information, please contact Gabriel Acosta at (202) 557-2811.
Senate Judiciary Subcommittee Holds Hearing on Housing Market Competition
On Tuesday, the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights held a hearing titled, “Examining Competition and Consumer Rights in Housing Markets.” A summary of the hearing dialogue can be found here.
Why it matters: The hearing focused on mergers in the housing industry and other anti-competitive behaviors in both the single-family and rental markets. The discussion also highlighted the negative impact of the Federal Reserve’s short-term Fed funds rate hikes on housing affordability.
What’s next: Senators may seek greater anti-trust enforcement in industry mergers and continue to review occurrences of “algorithmic collusion” as new technology is deployed in real estate management.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
CSBS Requests Regulators Provide Grace Period for Q1 2024 Mortgage Call Report Filing; Announces Office Hours for MCR Questions
Thursday, and in response to requests from MBA, the Conference of State Bank Supervisors (CSBS) alerted licensees that it has requested that their state regulator members provide a grace period for the Version 6 Mortgage Call Report (V6MCR) filings that will begin in the first quarter of 2021.
Our thought bubble: MBA strongly opposed the V6MCR implementation timeline in a July letter to CSBS, in staff meetings during the summer, and again at the NMLS Ombudsman meeting. Among other concerns, the implementation timeline is not reasonable for the industry, especially considering the technical specifications (XML file) were just released last week on the eve of licensing renewal season.
• Also in response to MBA, CSBS said in addition to the normal NMLS Call Center, its staff will be available for “office hours” starting Monday, Nov. 6, and continuing every other Monday from 1:00 p.m. – 2:00 p.m. ET. As these new data collection requirements become effective on January 1st, MBA recommends lenders contact their vendors and begin any possible system changes that are necessary immediately.
Why it matters: While CSBS is not a state regulator, its request for a grace period is a significant declaration of acceptance of the challenges the industry is facing. Regulators are squeezing what should be at least an 18-month implementation period into only a 10-week period that coincides with the busiest time of year for state licensing compliance staff (and the holiday season).
What’s next: CSBS said it will provide updates on the grace period request and on how to access the office hours. Some materials have already been updated directly to the MCR resource page. Member companies may also send questions and concerns to CSBS via a new dedicated email address (MCRV6@csbs.org) and to their state regulators.
The bottom line: MBA remains committed to representing its members’ needs in this matter and continues to make suggestions to CSBS on ways to mitigate the impact and compliance risks and burdens.
For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
2024 NMLS Renewal Period Begins Next Week
With the commencement of the annual state licensing renewal season on November 1, 2023, regulators are encouraging individual mortgage loan originators (MLOs) and mortgage companies to prepare by:
• Completing MLO continuing education requirements;
• Updating your NMLS record to make sure your profile is accurate;
• Resetting your NMLS password to ensure it’s current when you are ready to access NMLS;
• Providing a current email address to ensure you receive important NMLS updates;
• Reviewing state-specific renewal requirements; and
• Accessing free, on-demand renewal training from the Conference of State Bank Supervisors.
Why it matters: The renewal period is the busiest time of year for member companies and regulators alike. According to CSBS, MLOs and their employers account for more than 846,000 state licenses to be renewed.
What’s next: The renewal period in most states runs from Nov. 1 – Dec. 31, 2023.
For more information, please visit the NMLS Annual Renewal page or contact William Kooper (202) 557-2737 at or Liz Facemire (202) 557-2870.
Illinois Revised CRA Update: MBA Meets with Department and Legislative Staff
Following the release of revised proposed rules to implement the Illinois Community Reinvestment Act (CRA), MBA met with the staff and Acting Director of the Banking Division of the Illinois Department of Financial and Professional Regulation (IDFPR), as well as with staff for the Illinois Legislature’s Joint Committee on Administrative Rules (JCR).
The bottom line: MBA raised significant concerns with the clear change in regulatory direction by IDFPR because the revisions diverge from: the language of the enacted Illinois CRA statute; IDFPR’s own public commentary about its direction for the rules in written public statements and stakeholder meetings dating back to the Spring of 2021; and, the proposed rules released for comment in December 2022.
• MBA and the Illinois MBA submitted detailed comments that urged for the use of objective criteria and performance-based measures.
Why it matters: IDFPR has rejected MBA’s suggestion to rely on Home Mortgage Disclosure Act (HMDA) lending data as the independent objective metric for assessing lending activities and establishing annual examination priorities for IMBs. The rules would also establish an unnecessarily narrow approach that could upend lending to LMI borrowers by counting only the origination and then initial sale of a mortgage loan as eligible for CRA credit.
• Additionally, without previously offering an opportunity for comment, IDFPR announced that it would commission a new “disparity study” developed by “pro bono” authors without any guaranty that the process would be public or conducted by independent neutral parties. Lastly, the revised language proposes to hold lenders accountable for decisions made by independent appraisers.
What’s next: MBA and the Illinois MBA will continue to collaborate and comment on the rules regarding these and other issues ahead of the next JCAR meeting on November 7th.
For more information, please visit MBA’s State CRA resource page or contact William Kooper (202) 557-2727 or Liz Facemire (202) 557-2870.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family and commercial/multifamily programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – which are complimentary to MBA members:
• Strategies for Serving Millennial and Gen Z Homebuyers–Nov. 2
• Avoiding TCPA Class Actions and Do Not Call Complaints–Nov. 9
• Adopting Best Practices for Prefunding QA and Post-Close QC–Nov. 14
• Originating and Succeeding with High-Net-Worth Borrowers–Nov. 29
MBA members can register for any of the above events and view recent webinar recordings by clicking here.
For more information, please contact David Upbin or (202) 557-2931.
