Advocacy Update: Spending Bill Signed into Law, MBA Praises Some Biden Administration Affordability Actions, Warns Against CFPB Mortgage “Reforms”
President Joe Biden signed a a government funding bill into law on Saturday, postponing fears of a government shutdown for now.
“This bipartisan agreement prevents a damaging shutdown and allows more time for Congress to work toward full-year funding bills,” Biden said in a statement. “That’s good news for the American people. But I want to be clear: this is a short-term fix—not a long-term solution.”
Senate Majority Leader Charles Schumer, D-N.Y., noted the law keeps important programs for veterans, for the environment and for housing funded.
MBA Praises Some Biden Administration Affordability Actions, Warns Against CFPB Mortgage “Reforms”
Ahead of Thursday night’s State of the Union address to Congress, the Biden administration released a fact sheet on legislative and regulatory proposals it believes will increase ownership and rental housing supply, lower costs, and improve access to homeownership. Many of the proposals were mentioned during President Joe Biden’s address.
Go deeper: The Administration’s fact sheet outlined several action items–many of which require action from Congress–including homebuyer and seller tax credits, grants to facilitate the construction of more rental housing, downpayment assistance, expanding the volume of Low-Income Housing Tax Credit (LIHTC) allocations, and efforts to lower costs for renters.
Why it matters: Of deep concern to MBA and its members, the Administration said that the Consumer Financial Protection Bureau (CFPB) will pursue rulemaking and guidance to address purportedly “anticompetitive closing costs imposed by lenders on homebuyers and homeowners,” including title insurance.
What they’re saying: Shortly after the fact sheet’s release, MBA President and CEO Bob Broeksmit, CMB, in a press statement expressed significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition, cautioning, “Suggestions that another revamp of these rules is needed depart from the legal regime created by Congress in the Dodd-Frank Act and will only increase regulatory costs and make it untenable for smaller lenders to compete.”
• Broeksmit was supportive on the Administration’s focus on increasing single-family and multifamily housing supply and urged the Senate to pass the bipartisan “Tax Relief for American Families and Workers Act of 2024” (H.R. 7024), which passed the House earlier this year and would add 200,000 additional rental units over the next two years.
• As mentioned at the top, Broeksmit also released a statement Friday afternoon warning the CFPB that MBA will “vigorously oppose politically motivated proposals that only increase regulatory costs, reduce competition, or otherwise make it more difficult for Americans to get the credit necessary to achieve homeownership.”
What’s next: MBA will further analyze the initiatives as more information is released and will continue to work with the Administration and Congress on effective solutions that bolster housing supply, improve affordability for both renters and borrowers, and improve access to sustainable homeownership.
For more information, please contact Bill Killmer at (202) 557-2736, Pete Mills at (202) 557-2878 or Mike Flood at (202) 557-2745.
Basel III Proposal a Focus During Fed Chairman Powell’s Congressional Hearings
Last week, Federal Reserve Board Chair Jerome Powell testified before the House Financial Services and Senate Banking Committees, respectively. Find the summaries of his semiannual testimonies to each Committee here and here.
Why it matters: An overwhelming majority of questions Powell received from lawmakers centered on monetary policy and interest rates and the Fed’s views on the Basel III “Endgame” proposal (including specific mortgage-related elements of the proposed rule). Of note, Powell said, “My view is that it will be appropriate to make material and broad changes to that [Basel III] before we finalize it,” suggesting that a re-proposal may be a plausible option.
During both the House and Senate hearings, Powell received a series of other questions from lawmakers on topics such as: mortgage credit availability to lender’s mortgage insurance (LMI) cohorts, the cost and availability of homeowners’ insurance, the commercial real estate sector, non-bank lending, the federal deficit, bank mergers, and housing affordability.
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 in meetings with the banking agencies and the Treasury Department and will be prepared to comment on the QIS.
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.
Congress on Track to Avoid Partial Government Shutdown
On Wednesday, the U.S. House advanced a Fiscal Year (FY) 2024 “minibus” appropriations package consisting of six separate funding measures (including the United States Department of Housing and Urban Development (HUD) – the most recent congressional step to avert a partial government shutdown. The measure passed by a strong bipartisan vote of 339-85, funding the impacted agencies through Sept. 30, 2024. The Senate also passed the package.
What they are saying: MBA’s Broeksmit in a press statement said, “We especially support the government spending to boost homeownership opportunities and affordable rental housing. This includes a much-needed increase in funding for Ginnie Mae salaries and expenses, dedicated funding for Federal Housing Administration (FHA) IT modernization, backing for homeownership counseling, requiring HUD to take actions to increase FHA multifamily lending for new construction and rehabilitation, and $100 million in grants to encourage localities to remove legal and regulatory barriers that impede housing development.”
• Per the terms of the most recently enacted Continuing Resolution (CR), National Flood Insurance Program (NFIP) authorities are scheduled to expire on March 22, 2024. MBA continues to advocate for an NFIP extension to avoid disruptions to the housing market. In the short-term, enactment of this first “tranche” of FY 2024 appropriations bills before midnight Friday will ensure that all the various Ginnie Mae-securitized, government-supported segments of the mortgage market will continue to operate uninterrupted.
Go deeper: A failure to enact all t12 of the individual FY 2024 appropriations bills by the end of April would trigger an “across the board” one percent funding cut – impacting all federal programs – under the terms of the Fiscal Responsibility Act enacted last year.
What’s next: The rest of the FY2024 measures, including more contentious bills that would fund the Pentagon, the Department of Homeland Security and the Departments of Labor, Health and Human Services and Education, have a deadline for enactment of March 22, 2024, under the terms of the current CR.
• MBA remains engaged in all relevant conversations regarding government funding and the NFIP and will provide ongoing updates.
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.
IRS Suspends Changes to Income Verification Express Services (IVES) Policy
On Wednesday, the Internal Revenue Service (IRS) announced that it is suspending changes previously announced on Jan. 2, 2024, that would have limited the use of Income Verification Express Services (IVES) solely to mortgage originations starting on June 30, 2024. MBA has played a key role on this issue with the IRS, industry stakeholders, and the Senate Finance and House Ways and Means Committees.
See MBA’s January 2024 letter here.
Why it matters: The taxpayer information contained within IVES has use cases broader than mortgage origination, including servicing, quality control, and loan modifications. The IRS rolled out the changes in January 2024 without input from industry. In announcing the suspension of the new policy, the IRS indicated they would seek greater input from affected parties as they evaluate changes.
What’s next: MBA will continue to educate and advocate with the IRS regarding the use of tax transcripts, including continued efforts to reform the real-time Application Programming Interface (API) desired by the industry. MBA will also continue to engage with Congress on the potential for any needed IVES-related legislation.
For more information, please contact Rick Hill at (202) 557-2718 and George Rogers at (202) 557-2797.
Ginnie Mae Implements Cyberattack Reporting Requirements for Issuers
Last Monday, Ginnie Mae announced the implementation of its cybersecurity incident reporting requirements.
• Effective immediately, all Issuers and their subservicers are required to report significant cybersecurity incidents. Within 48 hours of detection, Issuers must notify Ginnie Mae via email, providing details reporting the incident’s date/time, a summary, and designated points of contact. Once notified, Ginnie Mae will coordinate with the designated contact to gather additional information and determine the necessary course of action. Ginnie Mae defines a cyberincident as an event compromising information confidentiality, integrity, or availability, or violating security policies, potentially hindering an Issuer’s ability to fulfill its obligations under the Guaranty Agreement.
• Ginnie Mae is actively enhancing its information security protocols and business continuity measures to ensure comprehensive protection and reporting standards.
Why it matters: A recent increase in cybersecurity incidents against mortgage related companies has the industry on high alert. An incident that impacts issuers could jeopardize the timely remittance of principal and interest to Ginnie Mae investors.
What’s next: MBA will continue to engage with regulators on this increasingly important issue for members and consumers.
For more information, please contact Darnell Peterson at (202) 557-2922.
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 Chief Deputy Whip Guy Reschenthaler (R-PA), key House Financial Services Committee members Bill Huizenga (R-MI) and 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.
• 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.
Fannie Mae Announces 12-Month Asset Verification Report in DU
Last week, Fannie Mae announced new capabilities in Desktop Underwriter (DU) to further streamline the mortgage origination process and provide repurchase risk relief.
• Effective March 29, 2024, Fannie Mae single-family lenders can use a single 12-month asset verification report in the DU validation service to identify recurring deposits in the applicant’s digital bank statement data to automatically validate income, employment, and assets.
Go deeper: The same report can be used to identify and consider the applicant’s positive rent payment and cash flow history, which may benefit more qualified borrowers who have limited or no credit history.
• These enhancements could potentially improve loan quality control, reduce cycle times, and lower cost savings. Fannie Mae also notes another benefit of these enhancements, the ability to achieve Day 1 Certainty, which may increase loan quality and reduce repurchase risk.
Why it matters: MBA has led the industry over the past two years and engaged with Fannie Mae and Freddie Mac (the GSEs) as they work to improve the quality control process specifically as it relates to repurchase demands.
• In a statement last week, MBA’s Broeksmit expressed appreciation for the reintroduction of Fannie Mae’s Notice of Potential Defect Form and called for further action to be taken to improve the loan repurchase process and substantially reduce or eliminate repurchases on performing loans. The new DU capabilities could provide the additional relief MBA seeks. Freddie Mac also has a pilot program to mitigate repurchase risk.
What’s next: Based on the results of these initiatives, MBA will encourage ongoing alignment between the GSEs on rep and warrant matters and will continue to support the development of positive and meaningful changes to the QC process.
For more information, please contact Sasha Hewlett at (202) 557-2805.
USDA RHS Releases Policy Preview Tool for Industry Feedback
The USDA Rural Housing Service (RHS) released its latest initiative on Tuesday: the Policy Desk tool. Similar to the FHA Single Family Housing Drafting Table, this tool allows stakeholders to review proposals and offer input before implementation. MBA applauds RHS for adopting this drafting table-like tool, reflecting the longstanding advocacy for such a resource.
Why it matters: The launch of the USDA RHS Policy Desk tool enables stakeholders to review and provide feedback on proposed changes, encouraging transparency and collaboration.
For more information, please contact Darnell Peterson at (202) 557-2922.
VA Proposes Changes to VA IRRRL Recoupment Period
Thursday, the Department of Veterans Affairs (VA) released a supplemental notice of proposed rulemaking (SNPRM) concerning its VA interest rate reduction refinancing loans (IRRRLS) proposed rule, initially issued in November 2022. The SNPRM proposes changing the start time of the recoupment period (36 months) of fees repaid to veterans from the note date, as originally proposed, to the date of the first payment.
Go deeper: In MBA’s December 2022 comments in response to the proposed rule, it did not address the start date of the recoupment timeline but did encourage the VA to remove the recoupment requirement in instances where the Veteran receives certain benefits such as when the new loan refinances an adjustable-rate mortgage into a fixed-rate loan or when the new loan’s term is less than the remaining term on the original loan by at least 10 years.
Why it matters: The VA IRRRL program enables our Veterans a low-cost, expedited path to reduce their interest rate and lower their monthly payments when market rates decline.
What’s next: The MBA Government Loan Production Subcommittee will plan a call to gather member feedback. Comments are due by May 6, 2024.
For more information or to participate, please contact Darnell Peterson at (202) 557-2922.
MBA Raises Significant Concerns on the Re-Proposed Illinois CRA Rules
On Wednesday, MBA submitted comments on the re-proposed Illinois CRA rules to the Illinois Department of Financial and Professional Regulation (IDFPR) and the Legislature’s Joint Committee on Administrative Rules (JCAR). This is the third official commentary submitted by MBA to IDFPR during the rule making process and echoes concerns MBA and Illinois Mortgage Bankers Association (ILMBA) have made through direct meetings with IDFPR and JCAR staff over the last three years (since the IL CRA law was enacted).
Go deeper: The significant concerns raised in this letter start with the continued change in regulatory direction by IDFPR because the revisions diverge from: the language of the Illinois CRA statute; IDFPR’s own public commentary about “alignment” of its rule with existing state and federal CRA regulations; and the proposed rules released for comment in December 2022.
• Despite continued engagement by the industry, the re-proposal retains problematic elements of previous versions to which MBA and ILMBA objected, including conflicting language on third party originations and holding lenders accountable for appraisal bias. IDFPR also has rejected MBA’s suggestion to rely on Home Mortgage Disclosure Act (HMDA) lending data as the independent objective metric for establishing annual examination priorities for IMBs.
Why is this important: MBA continues to believe the CRA construct should not apply to IMBs, which do not take deposits. To the extent states enact CRA for state licensed and chartered entities, those rules should align with the Massachusetts rules for IMBs and federal rules for banks.
What’s next: MBA and the Illinois MBA will continue to collaborate and push for changes in these proposed rules. The rules will be discussed at the JCAR hearing on Tuesday, March 12.
For more information, please visit MBA’s State CRA resource page or contact William Kooper (202) 557-2727 or Liz Facemire (202) 557-2870.
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: 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.
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:
• A Crisis of Identity in Lending – Best Practices for Securing the Borrower Experience – March 12
• Increasing Your Overall Productivity Through Special Purpose Credit Programs (SPCP) – March 13
• 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
• Rethink Everything You “Know” To Be A Next Gen Loan Officer (Personal Branding) – March 19
• The Intersection of Pricing Concessions and Fair Lending – April 4
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.
