MBA Advocacy Update April 22: GSEs Confirm Existing Policy on Interested Party Contributions

GSEs Confirm Existing Policy on Interested Party Contributions

Last Monday, and in response to MBA’s ongoing advocacy on this issue, Fannie Mae and Freddie Mac (GSEs) each released notices that confirmed that their policies will continue to exclude seller or listing agent payments of buyer agents’ commission from interested party contributions (IPCs). If a seller or seller’s real estate agent continues to pay the buyer’s real estate agent commission in accordance with local common and customary practices, the amounts are not required to be counted towards the IPC limits.

• The GSEs also noted that they will continue to evaluate their requirements on real estate agent commissions to determine any necessary changes that may be needed in the future.

Go deeper: For months, MBA has been engaged with GSEs, Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), and the Department of Veterans Affairs (VA) to identify possible guideline clarifications or changes that may be needed because of new real estate agent compensation arrangements that might arise from the National Association of Realtors®(NAR) commissions litigation.

• Following the details of the settlement announced in March, MBA sent a joint letter with NAR to leadership at FHA, FHFA, and the GSEs that asked for confirmation that their policies will continue to exclude seller or listing agent payment of buyer agents’ commission from IPCs.
• In addition to the GSEs’ announcement on Monday, the FHA last month also confirmed, in response to the MBA/NAR letter, that “under existing FHA policy, if sellers continue to pay buyer-side real estate agent commissions and fees as a matter of state or local law or local custom, and if the commissions and fees are reasonable in amount, existing policy would not treat those payments as interested party contributions provided all other requirements are met.”
• The FHA and GSE announcements did not increase IPC limits or change policy; rather, they confirmed that seller agreements to pay reasonable and customary buyer agent commissions will not count toward the limits.

What’s next: MBA will continue its advocacy on this issue with the VA and Rural Housing Service.

• In addition, MBA urged the VA in an April 3 letter to expedite regulatory changes to its rule prohibiting Veterans and active-duty service members from paying any portion of brokerage commission when purchasing a home with a VA mortgage. Failure to revise the rule would put VA buyers at a significant disadvantage – especially in today’s tight inventory market.
• MBA is also assessing other changes that may be needed in agency guides and Consumer Financial Protection Bureau (CFPB) rules to ensure any new agent compensation arrangements do not limit access or raise the cost of mortgages.

For more information, please contact Pete Mills at (202) 557-2878 or Justin Wiseman at (202)557-2854.

FHFA Seeks Comment on New Second-lien Mortgage Product from Freddie Mac

Last week, FHFA announced a proposed new product from Freddie Mac that would permit the GSE to begin purchasing certain single-family, closed-end second mortgages.

• Freddie Mac proposes to purchase closed-end second mortgages on properties for which it holds the first mortgage. In a closed-end second mortgage loan, the borrower’s funds are fully disbursed when the loan closes, the borrower repays over a set time schedule with a fixed rate, and the mortgage is recorded in a junior lien position in the land records.

Go deeper: This proposal is intended to provide borrowers a lower cost alternative to a cash-out refinance in higher interest rate environments. Freddie Mac states that the purchase parameters would aim to minimize their credit risk while balancing potential cost saving to existing homeowners.

The product would allow up to a 20-year term and a maximum total loan-to-value (TLTV) of 80%, not to exceed the maximum LTV/TLTV for a cash-out refinance mortgage.

Why it matters: This proposal could provide an avenue for borrowers to access equity in their homes that might come at a lower cost than cash-out refinances or home equity lines of credit (HELOC). FHFA has determined this proposal to be a new product that merits public notice and comment about whether it is in the public interest. 

• MBA appreciates the use of a comment period, which will be essential to evaluate what market this new product serves and to determine additional details such as the loan-level pricing adjustments that would be applied to this product.

What’s next:  Written comments will be accepted for 30 days after publication to the Federal Register. Following that 30-day period, FHFA will have 30 days to make a final decision on product approval.

• MBA plans to submit comments after reviewing the proposal and soliciting feedback from members and will remain engaged with FHFA and Freddie Mac during this process.

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

Acting HUD Secretary Todman and FHFA Director Thompson Appear Before Senate Banking Panel

On Thursday, Acting HUD Secretary Adrienne Todman and Federal Housing Finance Agency (FHFA) Director Sandra Thompson testified as witnesses at a housing regulator oversight hearing of the full Senate Banking Committee.

• Among other items, their statements and responses to Senators’ questions covered: the prospect of expanding opportunities for homeownership and affordable rental housingbuilding climate resilient communities, ending discrimination in housing, HUD’s Fair Market Rents, the conservatorship of the GSEs, incentivizing credit risk transfer at the Fannie Mae and Freddie Mac (the GSEs), FHFA’s Title Insurance Pilot Program, institutional investors purchasing affordable housing, Loan-Level Pricing Adjustment (LLPA) matrix changes, property insurance costs and availability, manufactured housing issues, and the activities and regulation of the eleven Federal Home Loan Banks.
• A full summary of the hearing can be found here.

Why it matters: The Senate Banking Committee is rumored to be scheduling a “mark-up” of various housing-related bills in the near future. The hearing testimony from both these key regulators earlier this week could potentially impact the bills Senators may offer for consideration.

Go deeper: Senator Bill Hagerty (R-TN) noted that Director Thompson had stated that lifting the GSEs out of conservatorship would require the building of capital through retained earnings and congressional action. Senator Hagerty also affirmed his belief that former FHFA Director Mark Calabria’s work “needs to be continued,” and that the enterprises should be returned to the private markets.

• Senator Katie Britt (R-AL) and Thompson discussed that FHFA’s recently-announced Title Insurance Pilot Program has not yet been operationalized and would have limited applicability. Senator Britt stated her firm belief that FHFA should ask for public notice and comment on the proposal before implementing the title pilot. Senator Thom Tillis (R-NC) said Congress may need to consider re-tailoring FHFA’s regulatory authorities regarding required notice-and-comment procedures given last year’s revised LLPA rollout – and the resulting congressional debate.

What’s next: MBA will continue to monitor further information that HUD and FHFA are asked to provide publicly as a result of Senators’ questions at the hearing.

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

MBA Joins Coalition in Response to HUD’s RFI on Build America, Buy America

Last Monday, MBA joined the National Association of Home Builders and others in a joint letter to HUD on its Request for Information (RFI) regarding the implementation of the Build America, Buy America Act (BABA) as it applies to HUD’s housing programs using federal financial assistance.
• The RFI requested specific information on construction materials sourcing, supply issues, and where certain materials used in housing development are manufactured.

Go deeper: The coalition letter stressed the significant challenges housing developers face with rising construction costs and the negative outcomes that can result from applying domestic sourcing requirements to HUD’s affordable housing programs.
• The coalition urged HUD to postpone the implementation of BABA for at least a year and to conduct a thorough impact assessment of its impact on affordable housing supply.

What’s next: MBA will update members on any further developments related to this issue.

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

MBA Shares Views on Pertinent Bills at Extensive House Financial Services Committee Mark-up

On Wednesday, the full House Financial Services Committee (HFSC) considered and advanced 13 bills during an extensive legislative “markup.”

• Included among the full group of measures discussed were several Congressional Review Act (CRA) resolutions to disapprove specific regulatory actions, as well as several bills related to housing, financial innovation, and bank capital standards.

Why it matters: MBA shared a letter in advance of the markup with all HFSC member offices to reveal our specific industry views regarding: (1) a CRA resolution to disapprove the Financial Stability Oversight Council’s (FSOC) rule regarding the designation of nonbank financial entities as Systemically Important Financial Institutions (SIFIs); (2) one bill impacting the protection of insurance-related data; and, (3) another bill that corrects a CARES Act drafting error regarding eviction notice requirements for federally-assisted or federally-backed housing.

Go deeper: All three of the MBA-supported bills were cleared by the panel. Find additional details here. Examine a joint industry letter signed by MBA and other trade groups in support of the FSOC rule related CRA resolution here.

What’s next: MBA will continue to weigh in on–and seek to advance–our industry’s priority policies in the few remaining HFSC markups expected to be held before the end of the 118th Congress.

For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.

Key Senate Subcommittee Holds Hearing on Preserving Housing Stock

On Tuesday, the Senate Banking Committee’s Housing, Transportation, and Community Development Subcommittee held a hearing titled, “Challenges in Preserving U.S. Housing Stock.” A hearing summary can be found here.

Why it matters: The hearing discussed the urgent need for housing preservation and the challenges that many communities face in safeguarding existing affordable housing. Senators on a bipartisan basis voiced support for grant programs and for legislation such as S. 2790, the Rural Housing Service Reform Act – a bill designed to modernize and improve the U.S. Agriculture Department’s homeownership and rental assistance programs.

What’s next: The Senate Banking Committee may schedule a markup of housing-related legislation in the coming weeks. MBA will continue to push Senators on both sides of the political aisle to encourage taking action on industry priorities.

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

House Financial Services Subcommittee “Audits” the CFPB

On Tuesday, the House Financial Services Committee’s Financial Institutions and Monetary Policy Subcommittee held a hearing titled, “Agency Audit: Reviewing CFPB Financial Reporting & Transparency.” Lawmakers took familiar, party-line positions on the CFPB and its funding stream. Republicans continued to criticize what they cast as the Bureau’s increasing level of politicization under Director Rohit Chopra.

• To watch the full subcommittee hearing, click here. To read a full summary of the hearing, click here.

Go deeper: Republican lawmakers and their chosen witnesses argued that the Bureau’s “dual-insulated” funding structure (from the Federal Reserve) is unlike that of any other independent financial regulator, rendering it unaccountable to Congress and necessitating that the agency’s funding be subject to congressional appropriations and enhanced oversight.

• Democrats and their chosen single witness came to the defense of the CFPB’s funding structure, as well as the agency itself — touting its actions on predatory lending and credit card late fees, among other efforts.
• Democrats also highlighted findings from the Government Accountability Office (GAO) and independent audits of the CFPB’s financial reporting, indicating that the agency is acting in a responsible manner. They likened the CFPB’s funding arrangement to that of other financial regulators–including the Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), and Federal Reserve.

What’s next: MBA will continue to monitor the Bureau’s regulatory and enforcement actions, as well as any proposed legislation designed to create greater transparency at the CFPB.

For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.

House Energy & Commerce Subcommittee Debates Data Privacy

On Wednesday, the House Energy & Commerce Committee’s Innovation, Data, and Commerce Subcommittee held a hearing titled, “Legislative Solutions to Protect Kids Online and Ensure Americans’ Data Privacy Rights.”

• Both Full Energy and Commerce Chair Cathy McMorris-Rodgers (R-WA) and Ranking Member Frank Pallone (D-NJ) spoke in favor of the data privacy bill known as the American Privacy Rights Act (APRA)The APRA would establish a comprehensive framework for a national data privacy standard designed to protect consumer data privacy and security and create new requirements for covered entities.

Why it matters: MBA has identified several problems with the bill’s current text, including 1) an incomplete carveout of Gramm-Leach-Bliley Act (GLBA) covered entities; 2) an exemption from federal preemption for certain provisions contained within specific state privacy laws; 3) the proposal’s private right of action provision; and 4) the proposal’s provision allowing for a request to substitute manual underwriting as an alternative to an evaluation by algorithm for “consequential decisions.”

Go deeper: The U.S. Chamber of Commerce sent a letter to subcommittee leaders before the hearing outlining the proposal’s major drawbacks.

What’s next: Though chances for enactment of major federal data privacy legislation are slim this Congress, MBA will work with its members and industry trade association partners to enumerate our positions on APRA before any full Energy and Commerce Committee (or subcommittee) “mark-up” of the bill (deemed likely in a few weeks).

For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.

Consumer Financial Protection Bureau Comments on Proposed Illinois Community Reinvestment Act Regulations

Last week, the CFPB submitted comments on the proposed Illinois Community Reinvestment Act (ILCRA) regulations to the Illinois Legislature’s Joint Committee on Administrative Rules (JCAR) ahead of JCAR’s hearing on the proposal this week.

• The CFPB supported a provision of the regulations that MBA has opposed: holding lenders accountable for any bias of independent appraisers, including bias on a subjective “should have known” basis. 

Go deeper: CFPB argued that the appraisal provision is consistent with federal Equal Credit Opportunity Act (ECOA) and cited as the authority for this position its statement of interest filed in an alleged case of appraisal bias in Maryland.

• However, MBA filed an amicus brief in that case arguing against CFPB’s views by referencing the abundant and explicit guidance, law, and other regulatory policies designed to appropriately maintain independence. MBA and the Illinois MBA responded this week by noting these points in communications to members of JCAR.

Why it matters: The CFPB has taken active interest in state Community Reinvestment Acts with its November 2023 survey of state laws. MBA and Illinois MBA have continued to provide feedback to JCAR and IDFPR against this section and other issues raised in the letter.

• The final rule of ILCRA will change the tone of future CRA regulations in New York or potentially current longstanding regulations out of Massachusetts.

What’s next: JCAR held its second notice hearing on the ILCRA rules and is expected to take action on the proposal within the month.

For more information, please visit MBA’s State CRA resource page or contact William Kooper (202) 557-2727 or Liz Facemire (202) 557-2870.

Get Involved in MAA Action Week: April 29 – May 3!

MBA’s annual MAA Action Week is arriving soon, April 29 – May 3! Sign up today and promote the importance of advocacy within your company or organization. This industry-wide campaign allows ALL of us to take part and engage in the legislative and regulatory process on issues that directly impact real estate finance professionals. Membership in MAA can make a difference in how YOU and your company drive positive change by adding your voice to our collective efforts.

Why it matters: Advocacy happens 365 days a year. Through regular contact with your lawmakers and their staff members via MAA Calls to Action and other sustained “grasstops” efforts, you can establish yourself as a “go-to” constituent for our industry.

What’s next: Save the date for MAA’s Quarterly Webinar Series hosted by the Legislative & Political Affairs team on Thursday, May 2, at 2:00 PM ET. Hear key policy updates – along with case studies describing how the MBA staff is advocating on behalf of our association’s members to help achieve pro-industry outcomes. More information will be shared in the coming weeks.

For more information, please contact Jamey Lynch, AMP at (202) 557-2818 or Erin Reilly at (202) 557-2751.

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:

Minimizing Risks with GSE Borrower Verifications – April 24
Responding to Cybersecurity Incidents – A Live Demo – April 30
Basics of Commercial Loan Closing and Loan Documentation – May 9
Using Data and Technology to Connect with Today’s Buyers to Increase Homeownership – May 14
Rethink Everything: You “Know” To Be a Next Gen Loan Officer – A Deeper Dive with the Writers & Experts Webinar Series: Show Up on Video – May 14

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.