MBA Advocacy Update: Court Grants Preliminary Approval of NAR Settlement; CFPB Publishes Supervisory Highlights on Mortgage Servicing; MBA Takes Exception to Misleading Press Release

April 26, 2024

Court Grants Preliminary Approval of NAR Settlement

Last Tuesday, the U.S. District Court for the Western District of Missouri granted preliminary approval of the National Association of REALTORS® (NAR) proposed settlement agreement that would end litigation of claims against NAR and most of its members brought on behalf of home sellers related to broker commissions.

Go deeper: Plaintiffs filed a motion last Friday for preliminary approval of the settlement agreement in the Western District of Missouri. The court approved the motion, calling the agreement “fair, reasonable and adequate.”

The plaintiffs’ filing initiated the 60-day period during which all REALTOR®-owned MLSs, brokerages with total residential transaction volume above $2 billion in 2022, and non-REALTOR® MLSs that want to be covered by the settlement must submit an opt-in agreement by June 18.

Go deeper: The practice changes set forth in the settlement agreement are slated to take effect in late July of this year, and class notice will take place no earlier than August 17, 2024. The settlement is still subject to final court approval, which is currently set for November 26, 2024. An estimated timeline of key upcoming milestones is available here.

Read MBA’s March 2024 summary of the settlement and watch the previously-recorded webinar.

Why it matters: Class members are now temporarily enjoined from filing, commencing, prosecuting, intervening in, or pursuing as a plaintiff or class member any claims against NAR or any released party.

This prohibition applies to any and all claims, regardless of the cause of action, arising from or relating to conduct that was alleged or could have been alleged in the Sitzer-Burnett and the other settled Actions based on any or all of the same factual predicates for the claims alleged in those Actions. MBA is diligently working with NAR to pursue next steps and to limit any disruption to members.

What’s next: MBA continues to monitor this landmark settlement and the evolving impact it could have on buyers, sellers and their agents, and in turn on home purchase financing.

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

CFPB Publishes Supervisory Highlights on Mortgage Servicing; MBA Takes Exception to Misleading Press Release

On Wednesday, the Consumer Financial Protection Bureau (the Bureau) published a Spring edition of its Supervisory Highlights focused solely on mortgage servicing. The Bureau’s report generally highlights improper assessments of fees and violations of the loss mitigation process.

The latest Supervisory Highlights report covers examinations that were completed from April 1, 2023, through December 31, 2023.

Go deeper: According to the report, Bureau examiners found that some of the examined servicers either violated the Bureau’s statutory prohibition against unfair, deceptive, and abusive acts and practices, or the servicing provisions of Regulation X. Several highlights include, among others, that servicers:

Assessed unauthorized property inspection fees or late fees, either when such inspections were prohibited by investor guidelines, or the late fees exceeded the amount allowed in the loan agreement.
Failed to waive late fees and charges for consumers that accepted a COVID-19 streamline modification.
Improperly evaluated consumers for a loss mitigation option by sending consumers their approval notice for a streamlined loss mitigation option even though the servicers had not yet determined their eligibility.

Why it matters: The findings appear to involve minor infractions that have been remediated by the servicer. Separately, the Bureau is also expected to conduct potential rulemaking to amend the servicing rules of Regulation X.

More importantly, the Bureau’s press release, titled, “CFPB Takes Action to Stop Illegal Junk Fees in Mortgage Servicing,” continues the Bureau’s frustrating narrative against mortgage servicers by inappropriately ascribing isolated instances of noncompliance as a general state of the industry.
Mortgage servicers constantly updated their processes to provide mortgage forbearance for 8.5 million homeowners during the pandemic and helped transition borrowers to a successful exit. To make these changes, servicers also executed robust risk management practices to ensure compliance with ever-changing servicing guidance.

What they’re saying: MBA’s SVP for Residential Policy and Strategic Industry Engagement, Pete Mills, expressed MBA’s disappointment in a LinkedIn post yesterday, stating,

“The Bureau’s overwrought press release does a disservice to consumers by further sowing fear and distrust of their mortgage servicer. The gathering of infrequent complaints – since remediated – to paint an inaccurate narrative of an entire industry is another unfortunate example of the CFPB using dramatic and harmful rhetoric via press release.”

What’s next: MBA will keep members informed of any updates.

For more information, please contact Pete Mills at (202) 557-2878, Justin Wiseman at (202) 557- 2854 or Brendan Kelleher at (202) 557-2779.

HUD Increases Floodplain Management Standards

Last Monday, the Department of Housing and Urban Development (HUD) published its final rule on Minimum Property Standards for Federal Housing Administration-insured (FHA) properties.

The new policy expands the floodplain of concern, requiring most properties located within it to elevate residential living space an additional two feet to the base flood elevation (the 100-year, or 1-percent-annual-chance flood elevation) for non-critical actions and by adding an additional three feet to the base flood elevation for critical actions.

Why it matters: While MBA and its members support efforts to combat climate change, the costs associated with this rule could result in higher costs or reduced supply, exacerbating affordable housing conditions. MBA had urged HUD to reconsider the rule during the proposed rule stage. A summary of the final rule is available here.

What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “At a time when housing markets across the country continue to suffer from weakening affordability, supply shortages, and rising property insurance costs, we are disappointed that several aspects of the final rule will slow housing production and ultimately increase costs for homeowners, renters, and builders.”

What’s next: The effective date for most properties is January 1, 2025. MBA will continue to work with HUD to limit the impact of these new regulations.

For more information, please contact Matt Jones at (202) 557-2933.

HUD Increases Building Standards for New Construction

On Thursday, HUD published its final rule on Energy Efficiency Building Standards. The new rule will require any new construction with FHA-insured and Department of Agriculture-guaranteed (USDA) financing to use significantly newer building codes that most states have yet to adopt.

MBA previously urged HUD and USDA to reconsider the impact of this proposal on affordable housing.

Why it matters: Newly constructed single-family homes must soon comply with the 2021 International Energy Conservation Code (IECC) in order to be eligible for FHA or USDA financing.

Notably, only five U.S. states have adopted the 2021 code. 32 states are still on the 2009 code or earlier.

What’s next: The rule is effective for building permit applications starting December 2025, which is a delay from the six-month implementation period that was previously proposed.

An additional compliance period (i.e., until December 2026) will be provided in “persistent poverty rural areas” as defined by USDA’s Economic Research Service (essentially persistent poverty census tracts located in rural counties).
MBA will continue to highlight its concerns with the policy – and in particular its implications for housing costs – in conversations with FHA, USDA, the White House, and on Capitol Hill.

For more information, please contact Matt Jones at (202) 557-2933.

MBA Submits Coalition Letter to FCC on Proposed Opt-Out Mechanism for Prerecorded or Artificial Voice Calls

MBA and other trades recently sent a joint letter to the Federal Communications Commission (FCC) explaining why the FCC should deny the National Consumer Law Center’s (NCLC) request to require an opt-out mechanism on all artificial or prerecorded calls.

Under the Commission’s existing Telephone Consumer Protection Act (TCPA) rules, a caller is required to provide an opt-out mechanism when making an artificial or prerecorded telemarketing voice call or an informational call to a residential line.

Why it matters: MBA members respect and carry out customer requests to opt out of receiving artificial or prerecorded voice calls or text messages. However, NCLC’s request to require an automated opt-out mechanism during all calls would impair the ability of consumers to receive important information from the companies with which they do business (such as, suspicious activity alerts, notices of data breaches, past-due alerts, multifactor authentication texts and notices of payments due).

It would also detract from the customer experience, and – particularly in light of the FCC’s recent Revocation Order – provide little, if any, benefit to consumers.

Go deeper: Under the FCC’s rules, when an automated opt-out message is required, it must be played immediately after the caller identifies itself and before any substantive content is presented.

If the called party utilizes the opt out, the caller must immediately hang up and ensure that the called party’s number is added to the company’s internal “do not call” list. This timing provides little, if any, opportunity for the caller to identify the nature or content of the call, potentially encouraging the called party to opt out reflexively before realizing that the message contains useful or important information.
The requirements of the Revocation Order magnify this concern because a consumer’s opt out, by default, applies to all future consented-to messages, not solely to messages within the same category of message to which the opt out was directed.

What’s next: MBA will continue to monitor further developments and will notify members accordingly.

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

Bill Restoring Remote Counseling for Reverse Loans Advances in Massachusetts

On Wednesday, Massachusetts legislators sent legislation to Governor Maura Healey reinstating provisions to permanently allow remote counseling options for reverse mortgage loans. H.4466 is expected to be signed soon by Governor Healey.

Earlier this month, MBA along with Massachusetts Mortgage Bankers Association (MMBA) issued a Mortgage Action Alliance call to action for members to contact their representatives to allow telephone and video counseling for reverse mortgages in Massachusetts to continue.
Thanks to MMBA’s advocacy, language was included in the House version of an emergency funding bill (sections 11 & 12 of H.4466). However, the Senate version did not. The call to action was issued while a six-member conference committee worked to resolve final language differences between the two chambers and to include the House language in a final bill.
The provision in state law, which permitted these forms of consumer counseling on reverse mortgage loans, expired on March 31, 2024, via sunset.

Why it matters: MMBA’s efforts to retain flexibilities proven through the pandemic provide another advancement for our industry to operate safely and efficiently while meeting consumer where they are located. Any instance of embracing remote policies moves the mortgage industry into a more flexible workforce that adapts to changing consumer demands and expectations.

What’s next: MBA will continue to support MMBA in its efforts to ensure Governor Healey signs the legislation with these sections intact.

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

Kentucky and Nebraska Enact Broad Data Privacy Laws

This month, both Kentucky and Nebraska enacted broad data privacy bills: Kentucky Governor Beshear signed the Kentucky Consumer Data Protection Act (KCDPA) on April 4th, and Nebraska Governor Pillen signed the Data Privacy Act (DPA) on April 17th.

Sixteen states have now enacted broad data privacy laws. KCDPA will take effect on January 1, 2026, while Nebraska’s DPA will take effect January 1, 2025. Importantly, both laws exempt financial institutions, affiliates of financial institutions, and data subject to Gramm-Leach-Bliley Act (GLBA).

Why it matters: The Kentucky and Nebraska bills recognize the current standard of data protection provided under the Federal GLBA, ensuring our industry can continue to process information pursuant to existing federal data protections while instituting much needed regulation in other industries. Without provisions acknowledging the current federal standard, state bills could create a messy state-by-state patchwork of rules that will increase costs for consumers and may lead to lower competition in the market.

What’s next: Since 2018, broad data privacy legislation has been gaining traction across the states and this trend is expected to gain momentum. It is important for member companies and state and local association partners to continue to coordinate with MBA to help educate policymakers on the importance of the GLBA exemption to our industry.For more information, please visit our State Data Protection Issues resource page or contact William Kooper (202) 557-2727 or Liz Facemire (202) 557-2870.

Georgia Law Changes “Bona Fide Discount Point” Definition

On Tuesday, Georgia Governor Brian Kemp signed HB 876, which will change the state’s “bona fide discount point” definition to rely on the Average Prime Offer Rate (APOR).

HB 876 (see page 43) updates a definition that previously relied on the greater of Fannie Mae or Freddie Mac’s Required Net Yield Index. Freddie Mac retired its index years ago, and Fannie Mae recently announced it will be retiring its index by June 3, 2024. Georgia’s legislation to address this issue will take effect June 1, 2024, ahead of the retirement.
Georgia’s move to APOR provides alignment with Federal definitions and allows for lenders to apply federal compliance standards to the state in lieu of updating practices to a new index.

Why it matters: Georgia was one of four states relying on the Fannie/Freddie Required Net Yield Indices. Without addressing this pending conflict in statute, lenders would not be able to remove discount points from the high-cost calculation tests and potentially not provide the best possible loan terms for consumers.

What’s next: Arkansas, North Carolina, and South Carolina also rely on the Fannie Mae or Freddie Mac index by statute. MBA and its state partners are working with regulators and attorneys general in these respective states to find opportunity to resolve this issue prior to June 3, 2024.

For more information, please contact William Kooper (202) 557-2727 or Liz Facemire (202) 557-2870.

Georgia Law Changes “Bona Fide Discount Point” Definition

On Tuesday, Georgia Governor Brian Kemp signed HB 876, which will change the state’s “bona fide discount point” definition to rely on the Average Prime Offer Rate (APOR).

HB 876 (see page 43) updates a definition that previously relied on the greater of Fannie Mae or Freddie Mac’s Required Net Yield Index. Freddie Mac retired its index years ago, and Fannie Mae recently announced it will be retiring its index by June 3, 2024. Georgia’s legislation to address this issue will take effect June 1, 2024, ahead of the retirement.
Georgia’s move to APOR provides alignment with Federal definitions and allows for lenders to apply federal compliance standards to the state in lieu of updating practices to a new index.

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

MBA’s annual Mortgage Action Alliance (MAA) Action Week is next week, 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:

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
Fundamentals of Secondary Marketing: Broad Concepts Every Mortgage Professional Should Know – May 15
Introduction to Commercial Mortgage Backed Securities – May 23

MBA members can register for any of the above events and view recent webinar recordings by clicking here.

For more information, please contact David Upbi n or (202) 557-2931.

Tags:

Back to Full Issue