MBA Advocacy Update Sept. 18: Broeksmit Testifies on Capitol Hill

1. MBA President and CEO Bob Broeksmit Testifies on Capitol Hill on the Basel III Bank Capital Proposal

MBA President and CEO Bob Broeksmit, CMB, testified before the House Financial Services Subcommittee on Financial Institutions and Monetary Policy last week to highlight real estate finance industry concerns with the banking agencies’ proposed changes to bank capital requirements.

The so-called “end game” proposed rules complete U.S. regulators’ implementation of the Basel III standards and ostensibly make changes in response to the recent large bank failures. A summary of the hearing can be found here, and a video recording can be found here. Click here for MBA’s written testimony.

• Why it matters: Broeksmit was able to address a bipartisan group of subcommittee members and reinforce MBA’s opposition to certain provisions of the proposal that would undermine mortgage credit availability, highlighting for them how the proposed rule could affect the economy, single-family housing market, and commercial real estate finance markets. He also outlined how the proposal undermines several current policy objectives of the Biden Administration, including efforts to close the racial homeownership and wealth gaps, the provision of affordable housing (both ownership and rental), the promotion of competition over consolidation, and the upcoming unveiling of a final Community Reinvestment Act rule.
• What’s next: Comments on the proposal are due by November 30, 2023, with July 1, 2025, as the start of a three-year transition period provided for the final rule. MBA created a summary of the proposed rule and will work with members and other industry stakeholders to formulate our response, focusing on the numerous negative impacts these proposed rules would have on the housing finance ecosystem.

For more information, please contact Alden Knowlton at (202) 557-2816 or Bill Killmer at (202) 557-2736.

2. MBA, Housing Trades Urge Congress to Avoid Lapse of the NFIP

MBA and other real estate organizations recently sent a joint letter to congressional leadership urging them to act quickly to extend the National Flood Insurance Program (NFIP), which is set to expire concurrently with Fiscal Year (FY) 2023 government funding on September 30, 2023. Since 2017, the NFIP’s authority has been extended 25 times and allowed to briefly lapse on several occasions. An extension would ensure that this vital program does not lapse in the middle of hurricane season or create additional challenges for residential and commercial property owners, buyers, managers, renters, and tenants.

• Why it matters: Not only would Americans be unable to purchase new NFIP policies during a lapse in authorization, but property owners and renters who are currently insured by the NFIP would be unable to renew their policies. Without access to flood insurance, families must rely on federal disaster aid, which is severely limited, and property buyers could lose financing or be forced to pay fees to hold interest rates. Some property owners could be subject to force-placed insurance by their mortgage servicers, which is typically more costly than borrower-obtained insurance, resulting in even more cost burdens.
• What’s next: The risk of an unnecessary NFIP lapse could further impact affordable housing and create additional challenges for small businesses and must be avoided. MBA will work with members of Congress on both sides of the aisle to stress the importance of avoiding a lapse in the NFIP program while stressing the need for a long-term authorization to protect residential and commercial real estate markets and provide stability for those that administer the related policies.

For more information, please contact Alden Knowlton at (202) 557-2816, Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.

3. FHFA Announces Updates to Implementation Plan for Credit Scoring Changes

Last week, the Federal Housing Finance Agency (FHFA) announced the next steps in the implementation process for Fannie Mae’s and Freddie Mac’s (the GSEs) adoption of FICO 10T and VantageScore 4.0 and bi-merge reporting requirements. FHFA outlined additional opportunities for public engagement to facilitate the transition. This will include stakeholder forums and listening sessions that will provide an avenue to identify issues, opportunities, and challenges related to successful implementation of the new requirements, including potential adjustments to the timeline for adoption. The announcement also stated that the transition to bi-merge reporting requirements would likely occur later than the first quarter of 2024 – as was initially proposed. MBA’s Broeksmit released a statement following the announcement that expressed appreciation for the reformulated plan and reiterated MBA’s commitment to supporting FHFA’s efforts to ensure better competition in the credit scoring space.

• Why it matters: The implementation of the new credit score models and a transition to bi-merge has multiple and wide-raging impacts, and a well-coordinated and appropriate execution strategy is needed to minimize disruption to the housing finance system. While this was a welcome announcement, MBA and other industry participants hope to get more information from FHFA regarding the release of credit scoring data and plans for coordination with other stakeholders, including for the Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and the Department of Agriculture (USDA).
• What’s next: Interested parties who wish to participate in the public engagement process should send their name, affiliation, and contact information to CreditScores@fhfa.gov by September 25th. FHFA plans to provide further details to participants and hold initial sessions in the coming weeks. MBA will continue to partner with FHFA and other trade associations to ensure that throughout the transition process unintended consequences are mitigated and that costs, complexity, consumer impact, and policy implications are taken into consideration.

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

4. Negotiations Underway to Extend Federal Government Funding Beyond September 2023 Deadline

The current federal government funding allocated for Fiscal Year (FY) 2023 is scheduled to run out at the end of September. Currently, Congress is engaged in negotiations to secure the necessary funding to sustain the operations of the U.S. Government beyond September 30, 2023. If an agreement is not reached by this deadline, federal agencies will face a disruption in their ability to function normally. Should that happen, MBA has created a guide for its members in the event of a federal government shutdown.

• Why it matters: The status of federal government funding is closely tied to the housing industry’s health and stability. Any disruptions or delays in funding can have a ripple effect on mortgage markets, market confidence, housing development, and federal mortgage programs.
• What’s next: MBA will provide ongoing updates as negotiations continue in Congress.

For more information, please contact Darnell Peterson at (202) 557-2922.

5. Senate Banking Subcommittee Holds Hearing on Housing Supply and Innovation

Last Tuesday, the Senate Banking Subcommittee on Housing, Transportation, and Community Development held a hearing titled, “Housing Supply and Innovation.” A summary of the hearing can be found here.

• Why it matters: Senators used the hearing to highlight the need to encourage zoning reforms at the state and local levels as well as the financing of modular construction homes and accessory dwelling units.
• What’s next: The Senate is expected to continue to discuss proposals to expand the supply of affordable housing.

For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.

6. MBA’s Tamara King Participates in Interagency Roundtable on SPCPs

Last Tuesday, the U.S. Department of Housing and Urban Development (HUD), Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB), and FHFA hosted a roundtable discussion to highlight the availability and importance of special purpose credit programs (SPCPs). Participants included MBA’s Tamara King, Vice President of Residential Policy and Strategic Industry Engagement, HUD Secretary Marcia Fudge, Comptroller Michael Hsu, CFPB Director Rohit Chopra, and FHFA Director Sandra Thompson.

• Why it matters: SPCPs permit lenders to offer mortgage credit to economically and socially disadvantaged borrowers and are an important tool for ensuring financial institutions can meet the needs of consumers. Last year, MBA and the National Fair Housing Alliance (NFHA) created an online toolkit for mortgage lenders interested in developing SPCPs. The online toolkit, which was developed with technical assistance from the Homeownership Council of America (HCA) and input from the Urban Institute, provides background information, best practices and guidance, industry examples, data, and other useful links to aid mortgage lenders in their work in developing SPCPs.
• What’s next: MBA will continue to work with the Biden Administration and industry stakeholders to promote the use of SPCPs as a proven way to serve disadvantaged borrowers and as a tool to help close racial homeownership and wealth gaps.

For more information, please contact Tamara King at (202) 557-2758.

7. In Significant Development for MBA’s Nationwide RON Campaign, California Bill Heads to Governor’s Desk

Last Monday, the California Senate unanimously passed amendments made recently by the State Assembly to MBA-supported remote online notarization (RON) legislation (SB 696). The final version being delivered to California Governor Gavin Newsom would delay California-commissioned notaries’ ability to perform RON until at least 2030, unless the Secretary of State office is able to implement commissions sooner. However, the bill retains language providing recognition of out-of-state RON notarizations, with overly burdensome reporting requirements having been removed from the original text. California would become the 45th state to enact RON for use in real estate finance transactions. Approval will represent years of sustained and coordinated industry advocacy involving MBA, the California MBA, member companies, and sister trade associations.

• Why it matters: California is the industry’s largest origination state, and the ability to perform RON transactions will provide more opportunity for notaries while increasing availability and flexibility of notary services for mortgage closings.
• What’s next: MBA and the California MBA expect Governor Newsom to sign the bill within the next month. MBA will continue to work with industry stakeholders to enact RON legislation in all 50 states to ensure consumers, lenders, and notaries have access to this advancement in the closing process.

For more information, please visit mba.org/RON or contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2816.

8. Get Involved – MORPAC Action Week Is September 18-22

On September 18-22, MORPAC, MBA’s bipartisan Political Action Committee, (PAC) will kick off its 6th annual Action Week in support of MBA’s advocacy efforts. MORPAC Action Week is a national, industry-wide campaign aimed at strengthening the PAC. To date, 23 member organizations, including MBA, will be participating.

• Why it matters: PACs, such as MORPAC, are the vehicles used to help many Americans engage in the political process through demonstrated support for candidates whose policies protect their industry, customers, and way of life.
• What’s next: During Action Week, MBA will conduct several virtual events, including two separate MORPAC Speaker Series events featuring House Financial Services Committee members Congresswoman Brittany Pettersen (D-CO) and Congressman Bryan Steil (R-WI). Participants will have an opportunity to learn more about critical industry issues, the role MORPAC plays in helping MBA educate lawmakers, and the impact legislation and regulation can have on the mortgage finance business and the broader economy.

For more information, please contact Jamey Lynch, AMP at (202) 557-2818.

9. Huddle Up for MBA Advocacy Month – Residential Townhall on September 19

Join MBA’s Legislative & Political Affairs Team for a Residential Legislative Townhall on Tuesday, September 19, from 3:00-4:00 PM. The townhall is part of the Mortgage Action Alliance’s (MAA) quarterly webinar series and is open to all MAA members. Hear a timely legislative briefing on current Calls to Action and other topical issues facing the residential industry. As a bonus, this virtual event will feature in-house experts from the Research and Industry Technology team to provide a market snapshot ahead of MBA’s Annual Convention & Expo in October. Don’t miss out, register now!

• Why it matters: MBA Advocacy Month raises awareness of industry advocacy efforts on a national level. Advocates from across the U.S. will have the opportunity to ignite change on behalf of their company, customers, and communities, and participate in activities during the month.
• What’s next: To learn more and how to get involved, visit mba.org/advocacymonth.

For more information, please contact Jamey Lynch, AMP at (202) 557-2818.

10. 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:

• MCPI/Zone of Opportunity: Understanding the Demand Side of Mortgage Origination – September 26
• An Overview of Regulatory Capital Requirements Proposed Revisions – September 27
• From Policy to Practice – Fannie and Freddie’s New Radon Sampling Requirements – October 5
• Using Data Analysis as Part of a Strong Fair Lending Compliance Program – October 24
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.