MBA Advocacy Update: Supreme Court Strikes Down Chevron Deference; MBA Leads Coalition Letter on Ginnie Mae Funding; FHFA, HUD News
Supreme Court Strikes Down Chevron Deference
On Friday, the Supreme Court overruled the holding of Chevron v. NRDC and held that courts should not defer to federal agencies’ interpretations of their own statutory authorities when writing regulations.
Go deeper: Previously under Chevron, courts had to defer to an agency’s interpretation of an ambiguous statute as long as its interpretation was reasonable. While the Supreme Court had been weakening Chevron and increasingly skeptical of agency interpretations in recent years, especially for so-called “major questions,” this is a very significant development. Going forward, courts must apply their independent interpretation of ambiguous statutory language.
MBA will follow up with a summary of the case and will continue to analyze any possible impacts to mortgage-related regulations.
Why it matters: This decision upends decades of administrative law precedence and will make it much easier to challenge agency regulations. Notably, such challenges to rules can come from industry groups as well as groups or individuals that believe certain rules may be too industry-friendly.
This may also change the incentives and discourage administrative agencies from engaging in the costly and time-consuming process of writing notice-and-comment regulations – regulations that our industry sometimes relies on to make sense of poorly-worded statutes.
What’s next: It remains unclear whether the Supreme Court or lower courts will develop and apply a new test for interpreting federal agencies statutory authority. For the moment, the Chevron standard is gone without a replacement. Thus, it appears this decision will lower the bar for challenging any regulations and future regulations will likely come under heavier scrutiny.
For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557-2930.
MBA Leads Coalition Letter to Key Appropriators Seeking Full Ginnie Mae Funding
On Monday, an MBA-led coalition of major housing trade groups sent a letter to four key House and Senate appropriators urging full funding of the $67 million Fiscal Year (FY) 2025 request for Ginnie Mae’s salaries and administrative expenses at the Department of Housing and Urban Development (HUD).
The letter underscored the vital role Ginnie Mae plays guaranteeing securities backed by Federal Housing Administration (FHA), Rural Housing Service (RHS), and Veteran Affairs (VA) single-family home loans, along with the need for the agency to be given the resources it needs to focus on its core mission, i.e., marketing Ginnie securities to global investors and conducting oversight of its 300-plus issuers.
Why it matters: The letter emphasized the need for the full appropriation request to help Ginnie Mae proactively work on initiatives to enhance market liquidity for issuers, to support issuers’ ability to make principal and interest advances to investors when borrowers are delinquent, and to buy loans out of pools in order to perform essential loss mitigation.
Go deeper: Importantly, the letter also asks appropriators to include language in the Transportation and HUD (T-HUD) “committee report” designating funds for the specific purpose of pursuing enhanced liquidity within the Ginnie Mae program. Moreover, the letter asks that HUD’s Office of General Counsel (OGC) be given its full funding level request – so the OGC team can capably assist Ginnie Mae in pursuing its preferred market liquidity options.
What’s next: MBA will continue to advocate with lawmakers for our industry’s FY25 federal funding priorities – including Ginnie Mae’s needs. House floor consideration of the T-HUD appropriations bill is expected in the coming weeks; parallel Senate action will follow later in the year.
For more information, please contact Bill Killmer at (202) 557-2736 and Pete Mills at (202) 557-2878.
House Data Privacy Legislative Markup Abruptly Cancelled
On Thursday, a planned House Energy and Commerce (E&C) Committee markup, including consideration of H.R. 8818, the American Privacy Rights Act (APRA), was cancelled moments before it was supposed to begin. The bill’s principal author, Committee Chair Cathy McMorris Rodgers (R-WA), expressed her displeasure at the abrupt shift in plans, noting she would “regroup and continue to fight” to move her bill.
Go deeper: A number of E&C Republicans made it clear to Rep. Rodgers that she would not garner a supportive majority of her own party’s members on the panel should the bill, as drafted, be put to a vote.
Why it matters: MBA joined a broad coalition of other financial services trade groups in a letter expressing opposition to the bill in its current form – citing the ambiguity of the Gramm-Leach-Bliley Act (GLBA) exception provided in the legislation.
What’s next: Given the opposition to APRA from key House Republicans – including the House Speaker and Majority Leader – it is unclear if or when Rodgers may be able to revive interest in advancing her proposal – absent significant changes.
For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.
Fed Governor Bowman Discusses Rates, Basel III in London Speech
On Tuesday, Federal Reserve Governor Michelle Bowman gave a speech at the Policy Exchange in London on recent developments in monetary policy and bank capital reform.
Governor Bowman’s remarks focused on the Federal Reserve’s response to inflationary pressures following the pandemic and the interest rate hikes in 2022 and 2023 to curb inflation.
She also discussed various aspects of the Basel III Endgame proposal, criticizing it for exceeding international standards and calling overall for a balanced approach to bank capital standards that includes making revisions to the original proposal to mitigate adverse impacts.
Why it matters: MBA and its members have substantial concerns that, without significant changes, the Basel III Endgame proposal 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.
Go deeper: MBA’s comment letter on the proposal is here.
What’s next: The banking agencies are expected to release the results of a belated quantitative impact study (QIS) and possibly seek comment on those results. MBA continues to raise concerns with the proposal and offer recommendations in meetings with the banking agencies and the Treasury Department and will be prepared to comment on the QIS.
For more information, please contact Fran Mordi at (202) 557-2860.
House Committee on Veterans’ Affairs Marks Up Partial Claim Legislation
On Thursday, the Committee on Veterans’ Affairs’ Economic Opportunity (EO) Subcommittee considered several pieces of legislation, including H.R.8647, the VA Home Loan Reform Act. The bill would authorize a permanent partial claim loss mitigation option for the Department of Veteran’s Affairs Home Loan program.
MBA supports the urgent need for a partial claim program to provide distressed Veteran homeowners with the same loss mitigation options employed by other government-backed housing programs. MBA has testified before the EO Subcommittee twice during 2024 (see statements here and here) to discuss the need for such an authorization. This week, MBA communicated its concern that the most current draft of H.R. 8647 would need several targeted changes to garner our association’s full support.
MBA outlined its position in a letter to EO Subcommittee and full Veterans’ Affairs committee members here. Watch a livestream of the full mark-up here.
Why it matters: The current legislation:
fails to include a definitive statement that a partial claim would not be considered a claim against the guaranty;
includes a provision requiring a borrower to enter a monthly repayment plan or face potential interest charges for failing to do so;
limits the amount of a partial claim to not exceed 20% (in contrast to other government-backed housing programs); and
implements a mandatory, and therefore inflexible, sequence of loss mitigation procedures.
What’s next: MBA will continue to advocate for these important changes to the legislation in the coming weeks – prior to any full committee and/or House floor consideration.
For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.
Ginnie Mae Announces HMBS 2.0 Term Sheet for Public Comment
On Thursday, Ginnie Mae announced the release of its highly anticipated HMB2 2.0 term sheet for public comment, marking a significant step towards implementing the proposed Home Equity Conversion Mortgage (HECM) – Backed Securities program.
Why it matters: If implemented, the proposed program could alleviate liquidity constraints for HMBS issuers by facilitating the re-pooling of active and non-active buyouts into new custom, single-issuer pools. HMBS 2.0 will permit the pooling of HECMs with an outstanding unpaid principal balance (UPB) of no less than 98 percent and no greater than 148 percent of MCA. HMBS 2.0 will also provide issuers with an incremental source of servicing income to ensure that customer service operations can sustainably meet the needs of borrowers requiring assistance.
What’s next: July 31, 2024, is the deadline for comments on the term sheet. MBA encourages HMBS Issuers to share their feedback on the structure of the HMBS 2.0 program for our planned comment letter. This collaborative effort is essential in crafting a program bolsters issuer liquidity while protecting taxpayers’ interests.
For more information, please contact John McMullen, AMP, at (202) 557-2706.
MBA Urges HUD to Modify Cybersecurity Incident Requirements
On Thursday, MBA submitted comments in response to HUD’s recent Mortgagee Letter mandating that lenders report significant cybersecurity incidents to FHA within 12 hours and provide a detailed report of the incident.
MBA urged the FHA to align its reporting timeline with Ginnie Mae’s 48-hour requirement until a universal reporting timeline is established by the broader federal government.
Why it matters: As the mortgage industry continues to face new threats in the cybersecurity landscape, it is crucial for governmental authorities to provide clear, aligned, and practical requirements and guidance.
What’s next: MBA will continue to engage with HUD and other federal regulatory agencies to achieve aligned cybersecurity standards.
For more information, please contact Darnell Peterson (202) 557- 2922 or the MISMO team at info@mismo.org.
Agencies Approve Final Rule on Automated Valuation Models
Last week, the Office of the Comptroller of the Currency (OCC), along with five other regulators, announced the release of the final rule implementing the quality control standards required by the Dodd-Frank Act for the use of automated valuation models (AVMs).
Under this rule, institutions using AVMs must establish policies, practices, procedures, and control systems to ensure that AVMs used for determining mortgage collateral value meet quality control standards. The rule aligns with MBA’s support for a principles-based approach. Additionally, the rule mandates that mortgage lenders and secondary market investors apply random sample testing and reviews to their AVMs.
What’s next: MISMO, MBA’s industry standard setting group, is currently creating a working group to address AVM standards.
For more information, please contact Darnell Peterson (202) 557- 2922.
FHFA and HUD Inspectors General Testify Before House Housing Panel
On Wednesday, the House Financial Services Committee’s Housing and Insurance Subcommittee held an oversight hearing with testimony from Inspectors General Rae Oliver Davis (HUD) and Brian M. Tomney (FHFA).
Republicans, led by Subcommittee Chair Warren Davidson (R-OH), focused on their party’s view of HUD’s programmatic inefficiencies. Democrats, led by Subcommittee Ranking Member Emanuel Cleaver (D-MO), emphasized the need for more resources for HUD and highlighted the Biden administration’s progress on housing affordability.
Go deeper: Lawmakers on both sides of the aisle supported the Office of the Inspector General’s (OIG) efforts to improve HUD’s program implementation and enforcement activities, but had differing views on which programs were in need of reform.
Republicans focused on a series of FHFA rulemakings, particularly the transition from “tri-merge” to “bi-merge” credit reporting and Freddie Mac’s second mortgage pilot program. Democrats requested reviews of HUD housing assistance and grant programs, as well as the need for enhanced monitoring for public housing hazards. Find a full hearing summary here.
What’s next: MBA will continue to advocate for policies at HUD and FHFA (including their respective OIG offices) that benefit homeowners, renters, and member companies.
For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.
North Carolina Passes H228 Related to Threshold Calculation Index
On Wednesday, the North Carolina Legislature passed H228, which will change the state’s “threshold” calculation to rely on the Average Prime Offer Rate (APOR). This legislation updates the state calculation which previously relied on the greater of Fannie Mae’s or Freddie Mac’s Required Net Yield Index. Freddie Mac retired its index years ago, Fannie recently retired its on June 3, 2024, which necessitated the need for the legislation.
Go deeper: North Carolina joins Georgia this year in updating state law to rely on APOR, thus providing alignment with Federal definitions and allowing lenders to apply federal compliance standards to the state requirements.
Why it matters: Georgia and North Carolina were two of five states relying on the Fannie or Freddie Required Net Yield Index. 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 loan terms consumers need.
What’s next: Arkansas, Minnesota, and South Carolina also relied on the Fannie or Freddie index by statute. MBA’s state partners are working with the regulators or attorneys general in their respective states to find opportunities to resolve this issue.
Considering the gap in Fannie’s retirement and a statute change, the South Carolina Department of Consumer Affairs issued Administrative Opinion No. 23.20-2401 near the end of May, effectively changing its index reliance to APOR.
MBA and its state partners will support all three states as they pursue legislation.
For more information, please contact William Kooper (202) 557-2737 or Liz Facemire at (202) 557-2870.
MBA-Supported Legislation to Reinstate Hawaii AMC Licensing Signed into Law
Hawaii Governor Josh Green, M.D., recently signed Act 80, HB 2641, which reestablishes an appraisal management company (AMC) licensing standards program within the Department of Commerce and Consumer Affairs (DCCA).
The Hawaii Legislature had created the program in 2017, but it failed to reauthorize it before adjourning for the year in 2023. Further complicating matters, the DCCA delayed notification to licensed AMCs, finally sending communication last August that the program had ended June 30, and that all AMC licenses we no longer valid.
Go deeper: The MBA of Hawaii (MBAHI) and MBA sought to include language to provide a safe harbor for the gap in licensing authority through testimony and other advocacy efforts. However, the Legislature was unwilling to accept responsibility for the lapse in licensing. With Act 80 signed into law, the program will re-start licensing September 1, 2024. Importantly, the law does not include a sunset provision which will eliminate future lapses in AMC licensing.
Why it matters: Dodd-Frank requires state licensure for lenders to utilize AMCs for Federally Related Transactions.
What’s next: MBA, MBAHI, and other trades will provide support to DCCA as they re-establish the AMC program.
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:
Loan Servicing Transfers that Deliver Results – July 11
Adding Reverse Mortgages to Your Business Line: The Roadmap – July 23
Rethink Everything: You “Know” To Be A Next Gen Loan Officer – A Deeper Dive With the Writers & Experts Webinar Series: Advocacy – August 1
What Value Will AI Bring to the Mortgage Industry? – August 13
Benchmarking & Performance Ratios Mortgage Bankers Must Know – August 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.
