MBA Advocacy Update April 15: VA Releases VASP Program; House Hearings Demonstrate Tax Debate on Expiring Provisions Well Underway

VA Releases VASP Program

On Wednesday, the Department of Veterans Affairs (VA) released its foreclosure prevention solution, the Veterans Affairs Servicing Purchase (VASP) program.

• VASP is a purchase/modification program designed to assist seriously delinquent Veterans for whom existing VA home retention tools do not provide relief due to rising interest rates. To carry out VASP, the VA updated their Servicing Handbook and Home Retention Waterfall.

Go deeper: VASP requires servicers to identify eligible loans, modify them to a 2.5% rate and a 30- to- 40-year term, and then sell the loan to the VA.

• According to the VA, approximately 40,000 Veterans are expected to qualify for VASP initially. Servicers can begin to send VASP submissions to the VA beginning May 31, 2024, and have until October 1, 2024, to carry out the new program.

Why it matters: MBA has been closely following the development of VASP since the October 2022 sunsetting of the COVID-19 Veterans Assistance Partial Claim program. To assist the VA team, MBA previously requested that VA utilize a public process to develop the VASP program to ensure Veterans receive timely payment relief and that servicers can successfully implement the program.

In the absence of VASP and a permanent partial claim, the VA last fall instituted–and servicers implemented–a voluntary foreclosure moratorium that lasts until May 31, 2024.

MBA continues to urge the VA to work with Congress to adopt a VA Partial Claim program. MBA believes that VA’s loss mitigation program should include both VASP and a partial claim to provide servicers and Veterans with durable solutions that help struggling homeowners avoid foreclosure in any market.

What they’re saying: In a press statement, MBA President and CEO, Bob Broeksmit, CMB, said, “Servicers will work diligently to modify their systems and operations and train their staffs to implement the program by the VA’s deadline” and that “MBA will work with the VA to ensure VASP delivers what is promised without placing undue operational and cost burdens on servicers and Veterans.”

• He added, “We appreciate the VA’s release of resources and planned training for the program and call on them to be flexible on timing and receptive to industry feedback on refinements that may be needed.”

What’s next: MBA will remain engaged with the VA team to ensure that servicers receive the necessary information to successfully transfer VASP loans to VA’s contractor and implement the program. MBA will also conduct a comprehensive review of the VASP policy and provide comments to the VA. For more information, please contact Brendan Kelleher at (202) 557-2779.

House Hearings Demonstrate Tax Debate on Expiring Provisions Well Underway

Last week, two House panels – the Ways and Means and Small Business Committees – heard from witnesses discussing the direct effects of either extending or altering key policies contained within the Tax Cuts and Jobs Act (TCJA) that are set to expire in 2025.

Why it matters: Though both hearings reflected a consensus that maintaining a consistent and stable tax code is important for American individual filers and businesses, they also provided platforms to relitigate tax policy disagreements from the Bush, Obama, Trump, and Biden administrations – all with the potential to impact MBA members and their business operations going forward.

• For example, questions at both hearings focused on the importance of the current law Section 199A small business “pass through” deduction against Qualified Business Income (QBI), including a discussion on legislation designed to make the provision permanent.

Go deeper: MBA has been communicating regularly our tax policy concerns on specific issues important to real estate finance, including recent letters to Capitol Hill (found here and here) on issues such as indexing the capital gains exclusion on the sale of a principal residence for inflation and maintaining current law treatment for Section 1031 Like Kind Exchanges, respectively. A full summary of the House Small Business Committee hearing may be found here.

What’s Next: As Congress moves closer to the TJCA 2025 expiration date, conversations on tax policy will intensify and MBA will continue to elevate the industry’s priorities. For more information, please contact Bill Killmer at (202) 557-2736, Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.

MBA Files Amicus Brief Arguing FCRA DOES NOT REQUIRE Credit Furnishers to Resolve Legal Disputes

On Monday, MBA submitted a joint amicus brief in Ritz v. Nissan to the Third Circuit Court of Appeals. MBA argues that credit furnishers do not need to investigate legal disputes under the Fair Credit Reporting Act (FCRA) when investigating the accuracy of reported information.

Go deeper: In the Brief, MBA argues that the text, structure, history, and purpose of FCRA demonstrate that the law requires furnishers and credit reporting agencies (CRA) to only verify factual inaccuracies without needing to resolve legal questions. FCRA’s references to inaccuracies, incomplete information, investigations of disputed information are best understood as referring to factual information.

• Additionally, requiring credit furnishers and CRAs to determine legal disputes would require those entities either engage in determinations for which they have little training or to dramatically increase the number of legal staff. Legal disputes are thus best left to the courts to resolve.

Why it matters: This case may create a further circuit court split on this issue. MBA previously filed an amicus brief on the same issue in the Eleventh Circuit in the case Holden v. Holiday Inn.

What’s next: MBA will continue to monitor this lawsuit and provide updates as needed.

For more information, please contact Alisha Sears at (202) 557-2930 or Justin Wiseman at (202) 557- 2854.

FHFA and CSBS Announce IMB Information Sharing Arrangement

On Wednesday, the Federal Housing Finance Agency (FHFA) and the Conference of State Bank Supervisors (CSBS) signed a Memorandum of Understanding (MOU) “designed to facilitate information sharing with respect to nonbank mortgage companies.”

• Because the MOU was not published, few specific details are available regarding how the organizations will structure their collaboration, including whether confidential supervisory information is part of the agreement.

Go deeper: The joint press release established a clearer scope of authority for CSBS. Specifically, the release noted that state financial regulators are the primary regulators of IMBs and that while each supervisory agency maintains specific authorities related to the mortgage industry, only state financial regulators have complete prudential authority over nonbank mortgage companies.

Why it matters: Interagency coordination can help to streamline and eliminate duplicate requirements among regulators, but it is important that any information sharing in this case be limited each organization’s specific operational needs and respectful of the confidentiality of the entities that provide information to regulators.

What’s next: MBA will review the MOU when available and provide members with additional details.

For more information, please contact William Kooper at (202) 557-2737 or Sasha Hewlett at (202) 557-2805.

MBA, ABA Highlight Concerns with FEMA’s Proposed New Flood Insurance Form

Last Monday, MBA and ABA submitted a joint comment letter in response to the Federal Emergency Management Agency’s (FEMA) proposed changes to its Standard Flood Insurance Policy form.

• FEMA proposes to create a new form – the Homeowner Flood Form – to supersede the existing Dwelling Form for homeowners of one-to-four family residences.

Go deeper: The letter urges FEMA to work with federal prudential regulators and federal housing programs before finalizing the proposal to ensure that the implementation and utilization of the new form is consistent with lender and servicer obligations under the Federal Disaster Protection Act and investor/guarantor requirements.

Why it matters: While the new form is generally more user-friendly, some changes, such as revising the definition of “Flood”, will present operational and compliance challenges that may require updating private insurance policies to ensure they are “at least as broad as” coverage under the new form.

What’s next: MBA will remain engaged with FEMA, federal housing agencies, and regulators to ensure these concerns are addressed prior to finalization of the new form.

For more information, please contact Sara Singhas at (202)557-2826.

MAA Issues Call to Action to Oppose Illinois Study to Establish CRA Exam Standards

On Wednesday, MBA’s Mortgage Action Alliance (MAA) issued a Call to Action asking Illinois members to urge their state senators to oppose a bill (SB 3235) that would mandate the Illinois Commission on Equity and Inclusion (Commission) conduct a mortgage lending “Disparity Study.”

• The Study was originally included in the second notice of proposed regulations to implement the Illinois Community Reinvestment Act (ICRA) in late 2023 by the Department of Financial and Professional Regulation (DFPR).

Go deeper: MBA objected to the Study at the time because DFPR did not offer it as part of a public comment process and because the regulatory proposal included no assurances it would be conducted independently. The Study was subsequently removed from the re-proposed ICRA regulations, but it has now been proposed through SB 3235 with the same problematic language and direction.

• The Commission has no known experience or expertise in financial services or real estate finance and it is inappropriate to task it with conducting a mortgage lending study. Further, the legislation fails to ensure the Study would be conducted by an organization with a non-advocacy mission.
• The bill offers no opportunity for industry feedback on the Study’s results nor does it instruct the Commission to explain any potential causes or context for disparity or legally compliant ways to address them.

Why it matters: SB 3225 would require the Study’s findings be implemented into ICRA examination criteria, which ultimately could change these exams from an LMI-based assessment to one based on race.

• Additionally, because the Study will not address causes of any disparity, DFPR may improperly incorporate its results into CRA exams. Rather than providing a means to improve CRA exam results of member companies, the Study supports a punitive enforcement-based approach towards supervision of licensees.

What’s next: MBA will continue to support efforts to expand access to credit while opposing efforts that add compliance costs without resolving any of the underlying barriers to credit.

For more information, please contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870. For more information about MAA, please contact Jamey Lynch (202) 557-2818.

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:

Rethink Everything: You “Know” To Be a Next Gen Loan Officer – A Deeper Dive with the Writers & Experts Webinar Series: Social Media – April 17
Climate-Change Disclosure Rules and Impact on Mortgage Lending – April 18
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

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.