MBA Advocacy Update Sept. 5: Banking Regulators Propose Long-Term Debt Requirements for Large Banks

Banking Regulators Propose Long-Term Debt Requirements for Large Banks

On Tuesday, the Federal Deposit Insurance Corporation (FDIC), Federal Reserve, and the Office of the Comptroller of the Currency (OCC) (the Banking Regulators) released proposed, long-term debt requirements for large banks (the “Proposal”). The Proposal applies to G-SIBs as well as banks with $100 billion or more in total assets. The Proposal requires covered banks to issue and maintain long-term subordinated debt equal to at least 6% of the bank’s risk weighted assets, and also equal to at least 3.5% of total assets. For banks that are subject to the Supplemental Leverage Ratio, long-term debt must exceed 2.5% of total leverage. According to the Banking Regulators, this Proposal would have provided “additional loss absorption capacity and reduced costs to the depositor class, including the DIF” if it had been in place prior to this past March’s large bank failures. 

• Why it matters: The Proposal aligns closely with the October 2022 ANPR and largely conforms with expectations. While the rule does not have specific mortgage market provisions, it will significantly raise costs for large regional banks and comes on the heels of the large capital increases in the proposed Basel III “end game” rules. The combined impact of these rules – which is not analyzed in either rule – could substantially reduce the ability of larger banks to meet credit needs across many sectors of the economy, including real estate finance markets.
• What’s next: Comments on the Proposal are due on November 30, 2023, with a three-year phase-in after final rules are issued (which aligns with the Basel proposal). MBA will continue to work with members and other industry stakeholders to formulate recommendations on the Basel rule and to ensure there is calibration between the two rules to mitigate the impact on single-family and commercial/multi-family financing markets.

For more information, please contact Fran Mordi at (202) 557-2860.

MBA Joins Coalition Reiterating the Need for a Public Process on VASP

On Thursday, MBA joined the Housing Policy Council (HPC) and the National Consumer Law Center and reiterated the need for the Department of Veterans Affairs (VA) to provide a public process for review and comment on the VA’s forthcoming foreclosure prevention solution, the Veterans Assistance Servicing Purchase (VASP) program. Together, the coalition requests the opportunity for the VA to post a proposed policy document by September 21, 2023.  

• Why it matters: Thursday’s letter further escalates the previous call for the VA to follow a public process. The lack of specific, written program details limits the industry’s ability to provide valuable feedback to ensure the program delivers what is promised to veterans and can be implemented by servicers. As MBA stated in its letter, “all stakeholders need a common starting point from which to provide comments to ensure the program will meet the desired objectives and expectations.” Without additional information, the industry is unable to assess the borrower impact and the potential costs or risks for servicers (compliance, operational, financial, and reputational).
• What’s next: MBA will continue to monitor and communicate developments on VASP to members.

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

MBA Submits Comments Responding to HUD’s Notice of Proposed Information Collection

Last Friday, MBA responded to the Department of Housing and Urban Development’s (HUD) request for input on the proposed information collection for the Informed Consumer Choice Disclosure and Application for Federal Housing Administration (FHA)-insured mortgages. MBA focused on HUD’s request for comment on obstacles encountered during the information collection process for originating FHA loans, and the challenges associated with FHA’s current mandate that lenders manually review documents before submission, a task that could be easily automated. Additionally, MBA alerted HUD to the existence of regulatory guidance from the OCC received by MBA members that contradicts FHA’s underwriting requirements and increases cost for borrowers and lenders.

• Why it matters: Assisting FHA in identifying costly and redundant procedures should help with costs and improve efficiency for FHA lenders and borrowers.
• What’s next: MBA will continue to monitor and communicate developments on VASP to members.

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

Get Involved – MBA Advocacy Month Kicks Off in September 

Join MBA’s Legislative and Political Affairs (LPA) team in September for MBA Advocacy Month, an all-member campaign focused on raising awareness on the top single-family and commercial/multifamily issues that can help produce positive policy changes at the national level. 

• Why it matters: Throughout this month, MBA will work with members to engage with their employees and help run impactful Mortgage Action Alliance (MAA) and MORPAC campaigns. In addition, MBA staff will host virtual events, including legislative townhalls and webinars with a focus on how members can make their voices more effectively and better heard.
• What’s next: If interested in learning more and how to get involved, visit

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

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:

• Navigating the Obstacles in Multifamily Housing: Perspectives from the Affordable Rental Housing Advisory Council – August 29
• Recent LO Comp Enforcement and Supervisory Activity – September 7
• Succeeding Today and Tomorrow: Tech Tools That Can Drive More Market Share – September 7
• Optimizing Technology in the Origination Process – September 12
• Budgeting and Financial Planning for Non-Believers – September 13
• Section 1071: A Practical Approach to Unpacking the CFPB’s Final Rule – September 13

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.