MBA Advocacy Update: FHFA Proposes GSE Housing Goals; MBA Calls on CFPB to Delay Enforcement Order Database; Calif. AI News
FHFA Proposes GSE Housing Goals for 2025-2027
On Thursday, the Federal Housing Finance Agency (FHFA) proposed the 2025 – 2027 housing goals for Fannie Mae and Freddie Mac (the GSEs).
The goals, required by law, specify benchmark percentages of GSE purchases of single-family mortgages serving low- and very-low-income borrowers and other underserved populations, as well as benchmarks on the number of multifamily unit purchases for those same populations based on U.S. Census tracts.
Go deeper: The housing goals help drive the GSEs’ efforts to achieve their mission of supporting liquidity for affordable homeownership. Director Thompson noted that the proposed single-family benchmarks, which are slightly lower than those set for 2022 – 2024, reflect the dynamics of the persistent challenges seen in the housing market.
The proposed rule would also establish a new process for evaluating compliance with the housing goals that considers the uncertainty and time lags associated with forecasting the market years in advance and retroactively determining actual market levels.
MBA has previously supported the need for such a process and will review the provision to ensure it addresses the friction that goals unaligned with the market can cause.
What’s next: The public is invited to submit comments on the proposed rule within 60 days of publication in the Federal Register. MBA will review the proposed rule in the coming weeks and will continue to engage with FHFA on this and other critical housing issues.
For more information, please contact Sasha Hewlett at (202) 557-2805.
MBA Calls for 60-day Implementation Delay for CFPB Enforcement Order Database
On Wednesday, MBA submitted comments to the Consumer Financial Protection Bureau in response to its Privacy Act filing to create a new system of records to implement the Registry of Nonbank Covered Persons Subject to Certain Agency and Court Orders. MBA focused its comments on the CFPB’s estimates of the compliance burden related to implementing the new database.
The letter expressed significant frustration about a request for comments due today (August 23, 2024,) for implementing a rule that was only published in the Federal Register in mid-July.
The letter also noted that the CFPB has so far failed to release any implementation guidance on how to comply with these new mandates and has not explained how companies may take advantage of the rule’s limited one-time, alternative registration option for certain covered orders that are already published on the Nationwide Multistate Licensing System and Registry (NMLS) Consumer Access.
That guidance was finally released Friday, August 23 – the same day as the comment period ended for this notice. We will provide a summary of this process in next week’s update.
Why it matters: Without implementation guidance, MBA cannot begin to assess the accuracy of the response burden on its member companies. CFPB’s own estimates indicate this proposed data collection would require private entities to spend 271,000 hours to comply with its final rule. These 271,000 hours would be spent to provide data that for real estate finance and many other industries already exists at www.NMLSConsumerAccess.org.
What’s next: The final rule requires first filers to submit data in mid-October, which is an entirely unmanageable timeline in the absence of any information about the new compliance method or access to the new tool.
For more information, please contact Pete Mills at (202) 557-2878 or Justin Wiseman at (202) 557-2845.
Efforts Continue as Industry Advocacy Significantly Narrows Scope of Concerning California AI Bill
Following persistent advocacy led by California MBA and MBA, the California Senate Appropriations Committee last week amended AB 2930, the artificial intelligence (AI) legislation similar to Colorado’s enacted SB 24-205.
Throughout the current legislative session, California MBA and MBA educated members of the Legislature through coalition letters and meetings with staff, all of which culminated in the amendments passed by the committee.
Why it matters: The amendments narrow the scope of AB 2930 by amending the definition of “consequential decisions” to only cover AI-driven decisions relating to employment with respect to pay, promotion, hiring or firing, task allocation limits, or classification of employees for determining material terms or conditions of employment.
The original definition of “consequential decisions” in AB 2930 included decisions in financial services and credit, which meant AI relied on by the industry would have been under this new bill’s regulation.
While the bill still impacts financial services companies as employers, lenders will not face the steep compliance cost of running impact assessments on automated underwriting, credit assessment, and valuation systems they have no control over – and are often required to use.
In addition, lenders will not have to comply with the opt out requirements of the bill that would have forced lenders to manually underwrite at the request of the borrower.
The big picture: Should the California bill be enacted as written – limited to employment-related AI – it could send a cautionary signal to other states about the challenges and unintended of covering routine financial transactions in AI legislation.
What’s next: The California legislative session adjourns on August 31, 2024. While a conference committee is possible once the amended AB 2930 passes the Senate floor, the most likely outcome is that the bill passes as amended.
For more information, please visit the new State Artificial Intelligence resource page at mba.org/stateai or contact William Kooper at (202) 557-2737 or at Liz Facemire at (202) 557-2870.
VA Provides Additional Clarity Around Assumption Secondary Financing
The Department of Veterans Affairs recently issued a circular outlining its requirements for lenders processing VA loan assumptions involving secondary financing.
The updated guidelines address several key aspects of secondary financing, including the requirement for a subordinate lien position, necessary documentation, underwriting of the monthly payment, prohibition on cash back, and interest rate considerations.
Go deeper: The circular clarifies that secondary financing can be used to cover closing costs or amounts due to the seller, but not to provide cash back to the assumer. Additionally, if the secondary financing is not assumable, the holder of the VA-guaranteed loan must advise the assumer that this could limit their ability to sell the property to another creditworthy buyer through an assumption in the future.
Why it matters: Secondary financing is utilized during the assumption of a loan when the borrower does not have the funds to cover the down payment, closing costs, or other required amounts due at the time of the transaction.
What’s next: MBA will continue to engage with the Federal Housing Administration (FHA) and VA on increasing the origination fee cap to reflect the current cost of processing a loan assumption.
For more information, please contact Darnell Peterson at (202) 557-2922.
Participate in the MAA Advocacy in August Campaign
MBA’s “Advocacy in August” campaign is well underway, with industry advocates and MAA members taking action on current real estate finance policy priorities, including meeting with elected officials.
It’s not too late to get involved! MBA’s Legislative and Political Affairs team will help coordinate in-person and virtual meetings in your elected officials’ home states or districts.
For more information and to participate, please contact Jamey Lynch at 202-557-2818.
Register for MAA’s Next Quarterly Webinar on September 17
MBA’s Legislative and Political Affairs Team is inviting you to our upcoming Pre-Election Update on National Voter Registration Day, September 17, at 3:00 PM ET. Join us as we dive into the policy implications that could flow from the upcoming 2024 elections and impact our industry.
Why it matters: This webinar will offer a comprehensive overview of the current legislative landscape and forecast potential political changes that could impact your business and the broader industry.
What’s next: Register with code MAA2024 to receive complimentary access to this webinar.
For more information, please contact Erin Reilly at (202) 557-2751 or Margie Ehrhardt at (202) 557-2708.
[WATCH]: mPower Moments: On Finding Your Passion with HUD’s Julienne Joseph
mPower Founder Marcia M. Davies sits down with Julienne Joseph, Senior Counsel and Chief Advisor to Acting HUD Secretary Adrianne Todman, for an inspiring conversation on her career journey and the various roles she has held before HUD, including her tenure at MBA.
Go deeper: Throughout the conversation, Joseph discusses her passion for housing equality and the work she has done to improve the housing finance system, including working on numerous policies such as FHA’s calculation of student debt and the mortgage insurance premium (MIP) cut. She also highlights the importance of having empathy within the workplace and how that can be a superpower to possess when working with the communities she serves.
For more information, please contact Marcia Davies (202) 557-2707.
Calling All Lenders: Join MISMO’s Inaugural Lender Forum on August 27
On August 27, MISMO is hosting its inaugural Lender Forum. The gathering is an opportunity for lenders of all sizes to come together to discuss challenges specific to business, operational, and implementation issues facing our industry.
The first meeting will be facilitated by Eric Armstrong of Mr. Cooper, Kevin Bowen of Chase, and Suzanne Garwood of Chase. Attendance is complimentary, and discounts to attend the remainder of the MISMO Fall Summit are available.
Why it matters: This new series—for lenders only– will provide a regular platform for collaboration on specific issues that can be solved through the adoption and implementation of industry standards.
What’s next: The first meeting will be held on August 27 at 1:30 PM ET and online via Zoom. Topics of conversation over the coming months will include navigating the current regulatory environment, use of emerging technologies, including artificial intelligence (AI), and how to manage associated risks, requirements associated with FHFA’s imminent credit score changes, and much more.
For more information, and to register please contact info@MISMO.org.
Register for MAA’s Next Quarterly Webinar on September 17
MBA’s Legislative and Political Affairs Team is inviting you to our upcoming Pre-Election Update on National Voter Registration Day, September 17, at 3:00 PM ET. Join us as we dive into the policy implications that could flow from the upcoming 2024 elections and impact our industry.
Why it matters: This webinar will offer a comprehensive overview of the current legislative landscape and forecast potential political changes that could impact your business and the broader industry.
What’s next: Register with code MAA2024 to receive complimentary access to this webinar.
For more information, please contact Erin Reilly at (202) 557-2751 or Margie Ehrhardt at (202) 557-2708.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family 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:
Analyzing the Commercial/Multifamily Borrower’s Balance Sheet and REO Schedule – August 27
Understanding the New FHFA and HUD ROV Policy: Implications and Implementation – August 27
Understanding Consumers, Buyers, and Uses of Accessory Dwelling Units – August 29
Benchmarking & Performance Ratios Mortgage Bankers Must Know – September 5
Uncovering Insurance Servicing Risks: Safeguarding Your Operations – September 11
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.
