MBA Advocacy Update: CFPB’s Chopra Testifies on the Hill; VA Addresses Buyer-Broker Commissions Prohibition; More
MBA RESBOG Member Karen Kreutziger Powell Testifies on VA Partial Claim Legislation
On Wednesday, Karen Kreutziger Powell, CEO of Flat Branch Home Loans and an MBA RESBOG member, testified before the House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity. The hearing focused on 12 pieces of pending Veterans-related legislation on issues ranging from home loan modifications to vocational education programs.
Go deeper: The hearing’s first panel featured John Bell, Executive Director, Loan Guaranty Service, U.S. Department of Veterans Affairs (VA), and several other VA employees.
Powell testified on the hearing’s second panel and discussed MBA’s policy positions on a proposal (H.R. 8647, the “VA Home Loan Reform Act”) to grant the VA partial claim program authority. You can find Powell’s written statement here and watch the entire hearing here.
What they’re saying: Powell, in her oral statement, said, “The VA Home Loan Program is a significant benefit earned by Veterans through their sacrifice and service. MBA recognizes the need to make this program more accessible, operationally efficient, flexible, and competitive,”
Why it matters: H.R. 8647 is an important piece of legislation reinstating the VA’s partial claim program authority as a key loss mitigation tool to help struggling Veteran borrowers stay in their homes. While MBA supports the bill’s aims, Powell was able to outline several important changes that need to be made to H.R. 8647 before the bill advances.
MBA recommends several changes to the bill, including a safe harbor for lenders who make good faith compliance efforts and clarifying the nature of the shared burden on VA and lenders to minimize the potential for borrower fraud and abuse.
What’s next: MBA will continue to work with key House Veterans’ Affairs Committee members (and key staff) to push for the needed changes outlined within Powell’s testimony.
For more information, please contact Rachel Kelley at (202) 557 2816 or Madisyn Rhone at (202) 557-2741.
CFPB Director Chopra Offers Semi-Annual Testimony Before House and Senate Authorizers
Appearing before both the House Financial Services (HFSC) and Senate Banking Committees (SBC) last week, Consumer Financial Protection Bureau (CFPB or the Bureau) Director Rohit Chopra fielded questions from lawmakers on various policy initiatives undertaken by his agency. The hearings marked Chopra’s first appearance before Congress since the Supreme Court upheld the constitutionality of the Bureau’s funding mechanism. Of particular interest to lawmakers – in both committees and on both sides of the aisle – was the CFPB’s review of “junk fees,” standards for data sharing and privacy rights, and the impact of AI on financial services.
A summary of both hearings can be found here and here, and a recording of the hearing can be found here.
Why it matters: While Director Chopra defended the work of the Bureau regarding “junk fees” in closing costs, he also offered his view that mortgage lenders were themselves getting “gouged” by these costs – and further opined that the recent increase in closing costs was largely driven by an increased utilization of points to buy down rates by borrowers. Additionally, he addressed the need to rein in the abusive use of mortgage credit trigger leads – equating Fair Credit Reporting Act (FCRA) issues with other key data privacy considerations.
Go deeper: During yesterday’s House hearing, Chopra expressed his support for addressing the abusive use of trigger leads, leading to a direct colloquy with HFSC Chairman Patrick McHenry (R-NC) on the topic. Both of the lead House sponsors of MBA’s preferred legislative approach on trigger leads (H.R. 7297, the “Homebuyers Privacy Protection Act”) emphasized the need to move their proposal forward in order to appropriately tackle the problem. Find Chairman McHenry’s (R-NC), Rep. John Rose’s (R-TN), and Rep. Ritchie Torres’ (D-NY) remarks at the following time stamps:
McHenry-Chopra on trigger leads: 1:14:02-1:15:27
Rose-Chopra on trigger leads: 2:13:56-2:15:10
Torres-Chopra on trigger leads: 3:53:21-3:54:56
What’s next: MBA will continue to advocate for members’ policy interests before the CFPB, as well as continuing to push for the advancement of H.R. 7297 (and its bipartisan Senate companion, S. 3502) prior to the conclusion of the 118th Congress.
For more information, please contact Ethan Saxon at (202) 557-2913, George Rogers at (202) 557-2797, Rachel Kelley at (202) 557 2816, or Madisyn Rhone at (202) 557-2741.
Owen Lee of Success Mortgage Partners, Inc., Nominated to Be 2025 MBA Vice Chairman
MBA on Wednesday announced that Owen Lee, Chief Executive Officer at Success Mortgage Partners, Inc., (SMP) has been nominated to serve as MBA’s Vice Chairman for the 2025 membership year.
Lee will be installed at MBA’s 111th Annual Convention in Denver in October. Per MBA’s bylaws, after serving a year as Vice Chairman, Lee is expected to be Chairman-Elect in the 2026 membership year, before ascending to be the Association’s Chairman in 2027.
What they’re saying: Mark Jones, 2024 MBA Chairman and President of Union Home Mortgage, said, “For years, Owen has been one of MBA’s most active members, and I am confident his innate ability to influence, endless energy, and relentless passion in pushing for positive change will lead to successful outcomes for homeowners, renters, and our membership.“
VA Allows Veterans to Pay for Certain Buyer-Broker Charges
On Tuesday, the Department of Veterans Affairs (VA) released Circular 26-24-14, which creates a temporary local variance for charges related to buyer-broker compensation.
Go deeper: Generally, Veterans are prohibited from paying for buyer-broker charges. However, after coordinated advocacy from MBA, NAR and other industry groups, the VA now agrees these changes are necessary for Veterans to remain competitive buyers, given the potential changes to buyer-broker compensation practices resulting from the recent NAR settlement.
This temporary variance allows Veterans to pay “reasonable and customary” amounts if the Veteran is in an area where listing brokers cannot set commission compensation through a multiple listing service, or the listing broker cannot pay for the buyer-broker compensation, and as long as these charges are not included in the loan amount, among other requirements.
Why it matters: MBA has been advocating for this change, including in a letter sent to the VA on April 3, 2024: “As we have previously stressed in our discussions on this issue, MBA urges the VA to amend its regulations to allow Veteran borrowers to pay reasonable and customary fees and commissions to retain agents that will represent their interests in the transaction.”
What’s next: This Circular is being implemented as a stop gap measure in advance of any permanent policy changes. This Circular is effective on August 10, 2024, and is valid until rescinded. MBA will keep members informed of any updates.
For more information, please contact Alisha Sears at (202) 557-2930 or Justin Wiseman at (202)557- 2854.
CFPB Proposes Removing Certain Medical Debt Information from Credit Reports
On Tuesday, the CFPB issued a Notice of Proposed Rulemaking (NPR) amending Regulation V, which implements the Fair Credit Reporting Act (FCRA) concerning medical debts.
The proposed rule would remove a regulatory exception that currently allows creditors to obtain and use information on medical debts for credit eligibility determinations. The proposed rule also includes certain restrictions on credit reporting agencies (CRAs) furnishing consumer reports containing medical debt information to creditors and also includes a ban on repossession of medical devices. MBA’s summary of the proposal is available here.
Why it matters: According to the CFPB, unlike voluntary consumer debt, medical debt often arises unexpectedly and can lead to financial hardships. The CFPB further states that medical debt information is frequently inaccurate on consumer reports due to the complexity of medical billing, insurance, and other third-party reimbursement processes. While it is true that medical debt can be inaccurately reported and is not voluntarily incurred, the logic behind the Bureau’s proposal is confusing.
Go deeper: The Bureau proposal applies to all reported medical debt, not just inaccurate medical debt, and they assert that the removal of all medical debt information will help lenders because it will raise credit scores for borrowers with medical debt, giving lenders more predictive and accurate information to run a credit check and leading to improved underwriting. This argument requires further investigation and analysis to understand and validate.
Our thought bubble: On first blush it appears that this removal will create blind spots and possible downstream credit and reputational risks for lenders. It also may create perverse incentives for borrowers, who are required to list their debts and liabilities on a mortgage application, to not disclose everything.
What’s next: Comments are due by August 12, 2024. MBA plans to submit comments and is interested in members’ thoughts on the proposal.
For more information, please contact Alisha Sears at (202) 557-2930 or Justin Wiseman at (202)557- 2854.
Fannie Mae, Freddie Mac Release Proposed 2025-2027 Duty to Serve Plans
On Tuesday, the Federal Housing Finance Agency (FHFA) published a Request For Input on the GSEs’ proposed 2025-2027 Underserved Markets Plans under the Duty to Serve (DTS) program. These plans provide an overview of the activities outlined by the GSEs to fulfill their Duty to Serve requirements over a three-year period.
Why it matters: The Duty to Serve program holds the GSEs accountable for serving three important markets – rural housing, affordable housing preservation, and manufactured housing.
What’s next: Comments on the proposed plans are due to FHFA by August 12, 2024.
FHFA will hold public listening sessions on each of the three targeted markets – rural housing (July 15, 2024), manufactured housing (July 16, 2024), and affordable housing preservation (July 17, 2024).
MBA will review and further analyze the updated plans in the coming weeks and will continue to work with FHFA on this and other critical housing issues.
For more information, please contact Sasha Hewlett at (202) 557-2805 or Stephanie Milner at (202) 557-2747.
FHFA Announces Publication Date for VantageScore 4.0 Historical Data
FHFA last week announced updates to its Alternative Credit Score Initiative, specifically related to the release of historical data.
Go deeper: As announced in February 2024, FHFA is accelerating the publication date of VantageScore 4.0 historical data. The VantageScore 4.0 historical credit scores are expected to be published to the GSEs’ websites on July 10, 2024. At this time, there is still not a date for the publication of the FICO 10T historical data, but FHFA states that it will be provided as soon as possible.
Why it matters: The implementation of the new credit score models, and a transition to bi-merge, has multiple and wide-raging impacts. A well-coordinated and appropriate execution strategy is needed to minimize disruption and costs to the housing finance system.
MBA appreciates the consideration of stakeholder feedback and hopes to get more information from FHFA on other issues, including the possible release of the results from the testing FHFA conducted to approve the scores, and plans for coordination with other stakeholders including Federal Housing Administration (FHA), the VA, and the Department of Agriculture.
What’s next: FHFA will hold a stakeholder engagement forum titled, “Overview of Historical Credit Scores,” on June 25, 2024.
Representatives from FHFA, Fannie Mae, and Freddie Mac will provide details on the credit scores that will be published, the associated previously published MBS, CRT, and Loan Performance datasets, and the ways in which these datasets can be accessed.
MBA will continue to work with FHFA and other trade associations to ensure that unintended consequences are mitigated and that costs, complexity, consumer impact, and policy implications are taken into consideration throughout the transition process.
For more information, please contact Sasha Hewlett at (202) 557-2805.
MBA Shares Concerns on FHFA’s Proposed “First-Generation Homebuyer” Definition
MBA recently submitted comments in response to the FHFA’s Request for Information on the GSEs’ Equitable Housing Finance Plans. MBA’s comments centered on the proposed definition of a “First-Generation Homebuyer.” While MBA supports the initiative to reduce homeownership barriers, it is concerned that the definition is too restrictive, potentially excluding many underserved borrowers.
Go deeper: MBA also expressed concerns about the data collection burden and liability risks tied to certifying first-generation status, advocating that lenders should not be required to verify self-attested information. Additionally, MBA emphasized the importance of improving access to Special Purpose Credit Programs (SPCPs) for smaller lenders to promote housing equity and reduce the racial wealth gap.
Why it matters: FHFA has noted that this information will lay the groundwork for determining “first-generation” status in the future should first-generation mortgage offerings be introduced.
What’s next: The MBA will continue to monitor and communicate developments with FHFA and GSEs through the relevant MBA Residential Loan Production Committee and Secondary and Capital Markets Committee.
For more information, please contact Sasha Hewlett at (202) 557-2805.
Senate Budget Committee Holds Hearing on “Tax Fairness”
On Wednesday, three private sector witnesses testified on tax code “loopholes,” tax treatment of capital gains, Section 199A deduction for pass-through businesses, financial transactions tax, stock buybacks, inequality, and provisions in the Tax Cuts and Jobs Act of 2017 (TCJA) that expire next year.
The witnesses were Joseph Stiglitz, Ph.D., who was awarded the Nobel Memorial Prize in Economics, Ms. Sarah Anderson, and the Hon. Michael Faulkender, Ph.D.
Discussion and questions from the Senators broke along party lines with messaging directed more at the upcoming elections than toward in-depth assessments of the issues. Generally, Democrats criticized tax cuts for the wealthy and discussed the need for more revenue for important government programs, while Republicans focused on the benefits of lower taxes and the need to cut government spending. A full summary of the hearing is here.
Go deeper: Chair Sheldon Whitehouse (D-RI) and Dr. Stiglitz criticized the tax code for contributing to real estate speculation and alleged, for example, that the 20% pass-through deduction for small businesses has helped large real estate investors get big tax breaks.
Senator Jeff Merkley (D-OR) discussed the high cost of housing and the need to reign in hedge funds from buying up large amounts of both single-family and multifamily housing. Ranking Member (and former Chair of the Senate Finance Committee) Chuck Grassley (R-IA) said Congress should examine both tax loopholes and excessive government spending.
What’s next: The hearing offered a preview of the elements that will frame the coming tax policy debate next year. MBA will continue to be closely engaged with elected officials – in both the House and Senate – on tax matters as the expiration of the TCJA approaches.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
Federal Reserve Keeps Rates Unchanged
The Federal Reserve held the federal funds rate at a target range of 5.25-5.50% on Wednesday.
Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
MORPAC Action Week Launches National Campaign
Earlier this month, MBA’s Political Action Committee (MORPAC) kicked off its annual fundraising campaign (“Action Week”) with nearly 30 MBA member companies participating.
Roughly 500 eligible industry professionals collectively pledged more than $206,000 to MORPAC – $50,000 over the previously-stated fundraising goal. MORPAC also hosted its four-part PAC Speaker Series event with the executive/political directors from the national party campaign committees, who covered a targeted set of key U.S. House and Senate races around the country – and the possible impact those races could have on the 119th Congress.
Why it matters: MORPAC is our industry’s federal PAC and a vehicle used to help our members engage in the political process through demonstrated support for candidates whose policies align with those preferred by the real estate finance industry.
What’s next: MORPAC will continue to mobilize support to hit our readjusted $2 million fundraising goal for the 2024 election cycle. From MBA to you – thank you for all you do to support our advocacy efforts!
For more information on how to run a successful MORPAC campaign, 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:
Adding Reverse Mortgages to Your Business Line: The Value Proposition – June 20
Unpacking the Costs and Current State of Homeowners Insurance – June 20
Fundamentals of Loss Mitigation for Residential Servicers – June 25
What is the True ROI for Digital Closings? – June 25
Loan Servicing Transfers that Deliver Results – July 11
Adding Reverse Mortgages to Your Business Line: The Roadmap – July 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 Upbin or (202) 557-2931.
