MBA Advocacy Update: Fed Keeps Rates Steady; FHFA Releases Annual Scorecard; MBA-Supported Tax Package Passes House
Federal Reserve Maintains Federal Funds Rate
The Federal Reserve held the federal funds rate at a target range of 5.25-5.50% on Wednesday.
Why it matters: The FOMC emphasized that, “the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans.”
What they are saying: MBA’s SVP and Chief Economist Mike Fratantoni noted, “To no surprise, the FOMC held rates steady at its January meeting. However, the statement did indicate some fairly significant changes regarding the expected direction of future policy, confirming that the next move will likely be a cut.
Go deeper: “The statement also indicated that the Fed expects to continue trimming its balance sheet, allowing for the same pace of passive runoff of their Treasury and MBS holdings,” Fratantoni noted. “This is despite the fact that some Fed officials have recently indicated a desire to begin to slow the pace of runoff. The combination of strong consumer demand and somewhat lower mortgage rates should support a more robust spring housing market this year.”
For more information, please contact Mike Fratantoni at (202) 557-2935.
FHFA Releases Annual Scorecard for Fannie Mae and Freddie Mac
Last week, the Federal Housing Finance Agency (FHFA) released its 2024 Scorecard for Fannie Mae and Freddie Mac (the GSEs) and Common Securitization Solutions. The 2024 Scorecard builds on progress made last year and focuses on two equally-weighted areas: promoting sustainable and equitable access to affordable housing, and operating in a safe and sound manner.
Go deeper: The 2024 Scorecard highlights specific single-family objectives, including exploring opportunities to further sustainable homeownership through measures that support first-time and mission-oriented homebuyers, identifying opportunities to mitigate risk in the evolving single-family property insurance market, taking meaningful actions to achieve the goals and objectives of the Equitable Housing Finance Plans, and planning for implementation of the approved credit score models, informed by stakeholder outreach.
Notably, the scorecard states that the GSEs will explore opportunities to harmonize their processes supporting the Single-Family Selling Representations and Warranties Framework, including defect identification, remedies, and repurchase alternatives. This reflects a key advocacy issue MBA has pursued over the last year.
The Scorecard also requires the Enterprises to consider the impact of their objectives in all geographies, including rural areas.
Why it matters: The Scorecard outlines FHFA’s expectations for the GSEs’ priorities in the coming year. These priorities, in turn, influence the GSEs’ operations across a wide range of policy areas and business activities.
What’s next: MBA will continue to work with the GSEs as they implement the Scorecard initiatives and, over the long term, continue to pursue the necessary conditions to exit conservatorship.
For more information, please contact Sasha Hewlett at (202) 557-2805.
House Passes Tax Package with LIHTC Enhancements
Last Wednesday, the U.S. House of Representatives passed the bipartisan “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024) by a significant margin (357-70).
The package, agreed upon earlier this month in negotiations between House Ways and Means Chairman Jason Smith (R-MO) and Senate Finance Committee Chairman Ron Wyden (D-OR), includes important Low-Income Housing Tax Credit (LIHTC) program enhancements, an extension of the Research and Development tax credit, a revised Child Tax Credit, disaster relief, tax relief to help facilitate commerce between the U.S. and Taiwan, as well as provisions that favorably address business interest deductibility, small business expensing, and bonus depreciation.
Go deeper: MBA strongly supported the bill’s housing provisions that are targeted towards the increased production of affordable rental units nationwide in letters to Capitol Hill, various coalition letters, and in Mortgage Action Alliance (MAA) Call to Actions.
Why it matters: H.R. 7024 restores a LIHTC ceiling increase from 9 percent to 12.5 percent for calendar years 2023 through 2025, thereby allowing states to allocate more credits for affordable housing projects, and temporarily lowers the Private Activity Bond (PAB) threshold test from 50 percent to 30 percent for 4 Percent LIHTC property projects with an issue date before 2026.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit said, “MBA is pleased the House has passed this bipartisan bill that increases the availability of LIHTC. The enhancements to the LIHTC program will improve the supply and affordability challenges in the rental market by producing an estimated 200,000 additional rental units over the next two years.”
What’s next: MBA is engaged with Senators on both sides of the aisle and will continue to lobby for the bill to pass the upper chamber as soon as possible.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2736.
REGISTER: MBA’s National Advocacy Conference on March 19-20; Great Speaker Lineup Confirmed!
Join us in Washington, D.C. to meet with key policymakers, network with colleagues across the industry, and hear from policy experts on the topline issues impacting the industry.
Confirmed speakers for the conference include: Senate Banking Committee members Jack Reed (D-RI) and Katie Britt (R-AL), House Majority Deputy Whip Guy Reschenthaler (R-PA), key House Financial Services Committee member Brittany Pettersen (D-CO), HUD Chief of Staff Julienne Joseph, and renowned political pundit Charlie cook.
An exclusive reception will be held on Tuesday, March 19, at the National Museum of Women in the Arts. Lend your voice to our efforts and bring your expertise and experiences to the table.
Register by Monday, February 5, and save $100. Check out MBA’s group passes pricing.
Why it matters: Your participation at NAC ensures that members of the 118th Congress and the administration understand how proposed legislation affects your employees, your end users, and the communities you (and they) serve.
What’s next: MBA will continue to advocate for issues impacting the real estate finance industry.
For more information, please contact Jamey Lynch, AMP, at (202) 557-2818.
Rare Bipartisan Agreement: Basel III Endgame Proposal’s Lack of Analysis Is Troubling
Last Wednesday, the House Financial Services Committee’s Subcommittee on Financial Institutions and Monetary Policy held a hearing on the lack of economic analysis accompanying the Biden Administration’s overhaul of bank capital requirements, also known as the Basel III “Endgame” proposal. Considering the proposal’s significant impact on the availability of affordable credit for homebuyers, small businesses, farmers, and municipalities, lawmakers on both sides of the aisle made clear the rule’s inadequate economic analysis is troubling.
The full hearing summary can be found here; a recording can be found here.
Why it matters: MBA and its members have substantial concerns that, without significant changes, the NPR will undermine real estate finance market stability, further diminish housing affordability and reduce the opportunities that consumers have to access mortgage credit – particularly among first-time homebuyers and in communities that are traditionally underserved. Key concerns for single-family housing finance include proposals that would unnecessarily raise capital requirements on high LTV loans held by banks, mortgage servicing assets, and warehouse lines of credit provided to independent mortgage banks.
Go deeper: MBA’s comment letter on the proposal is here.
What’s next: Several Democrats have continued to raise concerns about the proposed rule’s mortgage-related provisions. Several Republicans have asked the Government Accountability Office (GAO) to examine the role U.S. federal banking agencies played with the Basel Committee on Banking Supervision to develop the proposal. MBA will continue to engage with regulators and elected officials.
For more information, please contact Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2736.
REGISTER: MBA’s State and Local Workshop on March 18-19
Join us in Washington, D.C. the day before the National Advocacy Conference to collaborate with industry peers on shared challenges and priorities and receive actionable advice to grow your state or local association’s member base.
Why it matters: In today’s challenging market, it’s more important than ever that state and local associations are helping members not just survive, but grow.
What’s next: Register before February 5 and save $100. Take advantage of savings and maximize your impact when you register for both the State and Local Workshop and the National Advocacy Conference.
For more information, please contact Anthony Siller at (202) 557-2944.
Senate Budget Committee Holds Housing Hearing
Last Wednesday, the Senate Budget Committee hearing titled, “A Blueprint for Prosperity: Expanding Housing Affordability” to review federal housing programs and their impact on both affordability and the federal budget. A summary of the hearing can be found here.
Why it matters: Senators engaged with the witnesses regarding the delivery of federal and state housing programs through grants, tax credits, and federal regulations to better understand their economic and budgetary impact. Several Senators cited legislation they are working on to combat housing costs and to increase supply. Republicans emphasized the rising cost of housing programs and the lack of oversight of federal spending, while Democrats mentioned the need to protect renters and promote access to housing.
What’s next: While timing on a vote has yet to be determined, Senate passage of the “Tax Relief for American Families and Workers Act of 2024” would enhance the LIHTC program. The other legislative proposals mentioned are unlikely to be voted on by the Senate.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913
Key Senate Banking Subcommittee Holds Hearing on AI and Housing
Last week the Senate Banking Committee’s Subcommittee on Housing, Transportation, and Community Development held a hearing titled, “Artificial Intelligence and Housing: Exploring Promise and Peril.” A summary can be found here.
Why it matters: Senators on both sides of the aisle stated their belief that the use of Artificial Intelligence (AI) can help to improve access to credit and housing. However, there also was bipartisan agreement that there are risks and concerns that should be examined, including: (1) the potential for bias and discrimination; (2) the need for transparency and accountability; (3) understanding decision-making; (4) data privacy; and (5) competition.
What’s next: As Congress – and several state legislatures – wrestle with the potential costs and benefits of AI – particularly generative AI – MBA will continue to actively monitor the debates and provide real estate finance industry insights to help forge sound policy developments.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
MBA Files Amicus Brief with Supreme Court on NBA Preemption of State Interest on Escrow Laws
On January 25, MBA submitted a joint trades Amicus Brief in Cantero v. Bank of America with the U.S. Supreme Court, supporting the Second Circuit Court of Appeals decision which held that the National Bank Act (NBA) preempted a New York law which mandated a two percent interest payment on mortgage escrow accounts.
Go deeper: In the brief, MBA supports the position that state interest on escrow laws are preempted by the NBA, as determined by the Second Circuit in a split from a prior ruling in the Ninth Circuit.
The brief concludes state interest on escrow laws are preempted by analyzing the preemption framework following the Dodd-Frank Act as well as the difficulties that would arise if every instance of preemption required an analysis of the degree of interference with the exercise of a banking power.
Why it matters: The Supreme Court will address a circuit split between the Second Circuit’s decision in Cantero and the Ninth Circuit’s decision in Flagstar v. Kivett on NBA preemption of state interest on escrow laws.
In Flagstar, the Ninth Circuit found that a similar interest on escrow account law was not preempted by the NBA. MBA has been involved in these cases for a long time, starting with Lusnak in the Ninth Circuit. These efforts demonstrate MBA’s commitment to supporting consistent legal frameworks governing lending where possible.
What’s next: Oral arguments are set for February 27, 2024. MBA will inform members when a decision is reached.
For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557- 2930.
Trade Groups File Lawsuit on CA Corporate Climate Data Accountability Legislation
Last Tuesday, the U.S. Chamber of Commerce, California Chamber of Commerce, American Farm Bureau Federation, Los Angeles County Business Federation, Central Valley Business Federation, and Western Growers Association filed a lawsuit against the California Air Resources Board over its recently enacted California Corporate Climate Data Accountability legislation (SB 253 & SB 261).
SB 253 mandates a Scope 3 “value chain” reporting requirement, which far exceeds the U.S. Securities and Exchange Commission (SEC) proposed rule on climate disclosure released in March 2022.
The lawsuit states, “Both laws unconstitutionally compel speech in violation of the First Amendment and seek to regulate an area that is outside California’s jurisdiction and subject to exclusive federal control by virtue of the Clean Air Act and the federalism principles embodied in our federal Constitution.”
Go deeper: The case has been filed in Federal court, with an argument that centers on the worldwide reach of these bills, noting that a California Assembly member stated that the objective of the bill was to regulate conduct “not just in California, but around the world.”
In September, MBA and California MBA issued a MAA call to action that urged Governor Gavin Newsom to veto these bills. Despite eventually enacting these bills, Governor Newsom did include a signed letter citing the need to watch for the cost to California businesses, which may provide an avenue to reign in the cost of these efforts before the implementation of Scope 3.
Why it matters: This new type of data tracking will be costly to comply with as it is not based on known data, known industry averages or reliable secondary data.
This lawsuit will inform other states who have been discussing this type of legislation as the reach of these bills should be within their jurisdiction.
What’s next: MBA will continue to support CMBA’s efforts to mitigate the risk associated with these bills, specifically Scope 3 of SB 253, and will follow this complaint closely.
For more information, please contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870.
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:
Revisiting Your Servicing Retained Versus Released Decision – February 15
Private Credit Finance 201: A Deep Dive into Debt Funds and Their Impact to Commercial Real Estate Lending – March 6
A Crisis of Identity in Lending – Best Practices for Securing the Borrower Experience – March 12
Who Are Today’s Borrowers? A Look at the Lending Preferences and Expectations of Today’s Consumers – March 14
Making Sense of Multifamily Finance – March 14
Builder’s Risk Insurance: Analysis & Perspectives – March 20
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.
