Advocacy Update: MBA Warns Against CFPB Reforms on Closing Costs, Title Insurance; FY 2024 Appropriations Update; IRS Suspends Changes to IVES Policy
Congress Passes Stopgap Funding Bill to Avert Government Shutdown
Last week, the U.S. Senate advanced yet another House-passed, two-tiered Continuing Resolution (CR) that once again temporarily averts a government shutdown and extends federal funding – with two new sets of deadlines in March.
• Separate from the new CR, top lawmakers have reportedly closed out negotiations on six separate funding measures (Agriculture-FDA, Energy-Water, Military Construction-VA, Transportation-HUD, Interior-Environment and Commerce-Justice-Science), assigning all of these bills a deadline of March 8, 2024.
• Leaders hope to release text by this weekend and clear these spending bills next week, funding those agencies through Sept. 30, 2024.
President Joe Biden signed the bill on Friday, ensuring that all the various government-supported segments of the mortgage market, including the United States Department of Housing and Urban Development (HUD) (Ginnie Mae and Federal Housing Administration (FHA) included), USDA, and the VA continue to operate uninterrupted through March 8, 2024.
• National Flood Insurance Program (NFIP) authorities are scheduled to expire on March 8, 2024. MBA continues to advocate for an extension of NFIP’s authority to avoid disruptions to the housing market.
What’s next: The rest of the fiscal 2024 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, now have a deadline of March 22, 2024.
• MBA is 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.
FHA and Ginnie Mae Update Manufactured Housing Programs
The Federal Housing Administration (FHA) issued a final rule raising loan limits and establishing an indexing procedure for Title I Manufactured Home Loans.
• The new procedure will annually adjust loan limits for the FHA Title I Manufactured Home Loan Program based on sales data from the U.S. Census Bureau, accounting for inflation. The adjustments will apply to three types of manufactured home loans: Manufactured Home Loan (Home Only), Manufactured Home Lot Loan (Lot Only), and Manufactured Home and Lot Loan (Combination Loan).
• Simultaneously, Ginnie Mae announced revisions to its financial eligibility requirements for lenders seeking approval as Ginnie Mae Manufactured Housing (MH) Issuers, as well as for existing approved Ginnie Mae MH Issuers. Additionally, IMBs will be required to maintain a Risk-Based Capital Ratio.
Why it matters: FHA’s Title I Program guarantees loans made to purchase manufactured homes and can be instrumental in addressing the nation’s affordable housing crisis, particularly in rural areas.
What is next: FHA’s final rule will become effective on March 24, 2024; Ginnie Mae will have various implementation dates for its updates. MBA will continue to advocate for improvements to both the FHA Title I and II programs.
For more information, please contact Darnell Peterson at (202) 557-2922.
FHFA Updates Implementation Plan for Credit Scoring Changes
Last week, the Federal Housing Finance Agency (FHFA) announced updates to the implementation plan for Fannie Mae’s and Freddie Mac’s (the GSEs) adoption of FICO 10T and VantageScore 4.0 scoring models, and the bi-merge reporting requirements.
• Following extensive industry engagement, FHFA will now align the implementation date for the bi-merge credit reporting requirement with the transition to the two new credit score models.
Go deeper: The aligned transition is expected to occur in the fourth quarter of 2025, however, the partner playbook published by the GSEs states that all published dates are subject to future revisions (an indicator that further extensions may be needed). In an effort to support this transition, FHFA will be accelerating the publication date of VantageScore 4.0 historical data to the third quarter of 2024.
• FHFA and the GSEs continue to work towards providing historical data to support the FICO 10T model and will provide an update on that implementation timeline once an agreement on the terms and conditions for that data is finalized.
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 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 FHA, the Department of Veterans Affairs (VA), and the Department of Agriculture.
What’s next: FHFA also announced the next set of stakeholder engagement forums, which will cover Bi-merge Implementation Considerations on March 12 and 26, and Transition Period Loan Delivery Considerations on April 9 and 23. FHFA will provide further details to participants as these sessions approach.
• 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.
Fannie Mae Reintroduces Notice of Potential Defect Process
Last week, in an effort to reduce repurchase requests and support financial resiliency, Fannie Mae reintroduced its Notice of Potential Defect process.
• The Notice of Potential Defect – similar to the retired Loan Quality Defect Notice – gives lenders a 30-day window to correct defects before Fannie Mae proceeds with the existing resolution process. This change comes after extensive engagement between MBA, FHFA, and the GSEs as part of an ongoing effort to improve the quality control process and mitigate the harmful impact of performing loan repurchases.
• In a statement addressing these recent moves, MBA President and CEO Bob Broeksmit, CMB, expressed appreciation for Fannie Mae’s announcement and support for a Freddie Mac pilot program that more fundamentally rethinks the process to reduce or eliminate repurchases on performing loans – particularly for small lenders.
• Broeksmit also acknowledged that while Fannie Mae’s early notification aligns with MBA’s recommendations, there is further work Fannie Mae can undertake to improve the loan repurchase process.
Why it matters: MBA has led the industry over the past two years in a constructive engagement with FHFA and the GSEs to develop more effective alternatives to a repurchase request when dealing with minor loan defects on performing loans.
What’s next: MBA will continue to support the development of positive and meaningful changes to the QC process and will remain engaged with FHFA, the GSEs, and members to ensure high quality underwriting and appropriate application of the rep and warranty framework.
For more information, please contact Sasha Hewlett at (202) 557-2805.
House Financial Services Committee Holds Markup
Last Thursday, the House Financial Services Committee held a markup of bills in the various subcommittees on housing, national security, digital assets, and other.
• MBA sent a letter to members of the Committee ahead of the hearing, highlighting its views on the real estate finance industry’s priorities. The markup was shortened to only five bills listed below; click here for the full summary.
Why it matters: The following bills were agreed to and passed out of Committee: H.J. Res 109, a resolution disapproving SAB 121 (by Congressman Mike Flood (R-NE, Rep. Wiley Nickel (D-NC)); H.R. 7280, the HUD Transparency Act of 2024 (Rep. Monica De La Cruz (R- TX) with an amendment offered by Rep. Emmanuel Cleaver (D-MO); H.R. 6864, the HUD Accountability Act of 2023 (Rep. Mike Lawler R-NY); H.R. 7156, the Countering Cyber Crimes Act of 2023 (Rep. Scott Fitzgerald (R-WI), Rep. Greg Meeks (D-NY); and H.R. 7462, The Wildfire Insurance Coverage Study Act (Ranking Member Maxine Waters (D-CA).
What’s next: These markups are an initial step toward bringing these bills to the floor of the House Representatives. MBA will stay engaged on these issues and any others as they progress.
For more information, please contact Rachel Kelley at (202) 557-2816 or Bill Killmer at (202) 557-2736.
MBA Joins Coalition Letter to FCC on Illegal Text Messages
Last Monday, MBA and other trades sent a joint letter in response to the Federal Communications Commission’s (FCC) proposal on targeting and eliminating unlawful text messages. In the letter, MBA urges the FCC to take some of the following actions:
• Require originating providers – in addition to terminating providers – to block texts from a sender after they receive notice from the Commission that the sender is transmitting suspected illegal texts;
• Ensure that agency-mandated or voluntary text blocking identifies only texts that have a clear indicia of illegality and that this blocking is undertaken on a content-neutral, non-discriminatory basis;
• Propose a rule that requires originating providers to provide access to reported “spam” texts to those companies who wish to use the data to find impersonation texts relevant to their company and act on that information to protect their customers; and
• Require prompt and effective redress for erroneous blocking of legal texts.
Why it matters: MBA has weighed in previously on these issues and continues to support the FCC’s efforts to eliminate illegal text messages. Bad actors are increasingly using text messages to impersonate financial services providers with intent to defraud and ultimately causing harm to these institutions and their customers.
What’s next: MBA will continue to monitor this rulemaking and provide any relevant updates.
For more information, please contact Justin Wiseman at (202) 557-2854 or Alisha Sears at (202) 557- 2930.
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.
VA Increases [Marginally] Allowable Fee for Assumptions
Last Tuesday, the VA released a Circular providing an increase to the allowable fee mortgagees/servicers are able to charge borrowers for the processing of VA Loan Assumptions.
• The VA guidance allows for an Assumption Locality Variance, determined by the location of the property, to be charged in conjunction with the $300 base fee. Mortgagees will only be able to apply the assumption locality variance on loan assumptions that close.
Go deeper: While a step in the right direction, the amount allowed to be charged by the Assumption Locality Variance (a range from $686 to $763) still fails to cover the necessary cost associated with underwriting the assumption, which can range from $2,000-$3,000 or more.
Why it matters: In the current high interest rate environment, there has been a significant surge in assumption inquiries and applications for VA assumption loans, necessitating lenders to underwrite these loans at a considerable loss. MBA has advocated for both VA and FHA to raise the allowable fees that lenders can charge for assumptions.
What’s next: MBA will continue to advocate for an increase in the allowable fee associated with processing an assumption for both FHA and VA loans.
For more information, please contact Darnell Peterson at (202) 557-2922.
MBA Provides Comments in Washington State AVM Hearing
On Tuesday, MBA participated in a working session with the Washington State Consumer Protection and Business Committee (the Committee) at the request of the Washington Mortgage Bankers Association (WAMBA). The working session focused on concerns about the industry’s use of automated valuation models (AVMs) and property data collectors (PDCs).
Go deeper: MBA’s comments addressed how AVMs work and what it means for the consumer as well as the status and process of using PDCs in the GSEs’ “value acceptance + property data” offerings. MBA also informed the Committee of the well-established regulatory framework governing the use of technology in the mortgage process.
- The working session was not to consider specific legislation, but to gain an understanding of technology and process, which could result in legislation for the 2025 session.
Why it matters: MBA continues to support its state association partners in educating their policymakers on the use of Artificial Intelligence, Algorithms, and Machine Learning to foster innovation and ensure the legislatures do not disrupt the progress industry has made with these technologies.
What’s next: Washington state is considering legislation to license PDCs for the 2025 session, and MBA’s State Legislative and Regulatory Committee will engage with members in developing a response to any proposed legislation.
For more information please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Hawaii AMC Licensing Bill Update
Last week, the MBA of Hawaii (MBAH) delivered testimony to the House Committee on Finance, which included a requested MBA analysis, in support of legislation (H2641-HD1) to reestablish an appraisal management company (AMC) licensing standards program within the Department of Commerce and Consumer Affairs (DCCA).
• The Hawaii Legislature established the AMC licensing program in 2017, but failed to reauthorize it before adjourning for the year in 2023.
Go deeper: Further complicating matters, the DCCA delayed notification to licensed AMCs, sending communication on August 29, 2023, that the program had already ended (June 30) and that all AMC licenses we no longer valid. Critically, MBAH and MBA are seeking to amend the current version of the bill to include language that would provide a safe harbor for the licensing gap.
Why it matters: The Dodd-Frank Act requires state licensure for lenders to utilize AMCs for Federally Related Transactions.
What’s next: MBA and the Hawaii MBA will continue to seek enactment of the bill with safe harbor language.
For more information please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
State CRA Policy Updates in Maryland, Illinois, and California
In Maryland last week, legislation (HB-1135) to impose CRA-like requirements on IMBs as well as state-chartered banks and credit unions had been scheduled for a hearing but was removed from consideration just before the House Economic Matters Committee convened.
• MBA and the Maryland Mortgage Bankers and Brokers Association developed testimony opposing the bill, which now appears unlikely to pass this year, following the release of a memo estimating a $10 million fiscal impact on the state.
Also last week, MBA staff met with leadership of the Illinois Department of Financial and Professional Regulation (DFPI) to discuss the most recent version of its proposed CRA regulations. MBA reiterated its views expressed in previous comments, including:
• The need to fully consider and incorporate newly finalized federal CRA rules related to state chartered community banks;
• MBA’s objection to the proposal to hold lenders accountable for decisions made by independent appraisers;
• The limited effort to address regulatory burden and to use objective measurement standards, such as HMDA data, for assessing lending activities and establishing annual examination priorities;
• DFPI’s unnecessarily narrow approach that could upend lending to LMI borrowers by limiting CRA credit provided to both the lender and the purchaser in the correspondent lending channel; and
• The need for more analysis regarding the cost to the industry of implementation.
Lastly, MBA continues to partner with the California MBA to oppose any CRA legislation for IMBs. Advocates in Sacramento have been unable to secure the introduction of a bill so far in 2024.
Why it matters: The ultimate failure of the Maryland bill would mark the second consecutive year that the proposed policy has been rejected by the Legislature.
What’s next: MBA will continue to collaborate with its state partners in presenting the industry views and urge continuity with existing CRA requirements in those states that enact laws.
For more information please visit MBA’s State CRA resource page or contact William Kooper (202) 557-2737 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:
• The Role of Public-Private Partnerships for Sustainable Affordable Housing and Community Development – March 5
• 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
• 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
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.
