Advocacy Update: MBA Leads Trigger Leads Coalition Letter; FY 2025 Budget Request; Realtors Reach Settlement in Commissions Litigation
MBA Leads Joint Trades Letter Urging Congress to Act on Trigger Leads Legislation
MBA led a diverse coalition of 22 industry trade groups, consumer and housing advocates, and individual mortgage lenders in penning a letter to the Chairs and Ranking Members of the House Financial Services and Senate Banking Committees urging them to support and “mark-up” the Homebuyers Privacy Protection Act (S. 3502, introduced by Senators Jack Reed (D-RI) and Bill Hagerty (R-TN), and H.R. 7297, introduced by Rep. John Rose (R-TN) and cosponsored by Rep. Ritchie Torres (D-NY)).
These identical, bipartisan bills, both introduced within the past few months, would restrict the use of mortgage credit trigger leads to limited circumstances during a real estate transaction.
Why it matters: This large and diverse coalition of groups signing the letter underscores the broad base of support – and increasingly urgent need – for these key congressional authorizing committees to act to curb trigger leads abuses.
What’s next: MBA will continue to call on the House and Senate to pass this MBA-supported legislation 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.
Biden Administration Releases FY 2025 Budget Request
On Monday, the Biden administration released its Fiscal Year 2025 (FY25) budget proposal.
The Administration is requesting $72.6 billion in discretionary budget authority for the Department of Housing and Urban Development (HUD), (a 0.95 percent decrease from what it proposed in FY24 but still well above the enacted level), including $10 billion in mandatory funding for a new First-Generation Down Payment Assistance program to help address racial and ethnic homeownership and wealth gaps. There are modest increases in administrative funding for the Federal Housing Administration (FHA) Veterans Affairs (VA), and Ginnie Mae.
MBA’s summary of the budget is here.
Go deeper: The White House’s budget offers no specific recommendations related to the conservatorship status of Fannie Mae and Freddie Mac (the GSEs) other than encouraging them to continue building capital while meeting affordable housing objectives.
On the tax policy front, the Administration proposes increasing the corporate tax rate to 28 percent, establishing a 25 percent minimum tax on those with wealth exceeding $100 million, imposing limits on tax deferral for 1031 “like-kind” exchanges, and various proposals intended to stimulate both affordable housing supply and accessibility.
Why it matters: Each year, the President’s budget request, otherwise known as its “wish list,” provides a blueprint for the Administration’s priorities as Congress traditionally kicks off its appropriations process for the new fiscal year. The proposed budget, which carries no force of law, is not expected to gain momentum in Congress, but is an opening salvo in tax and spending talks with Republicans.
What’s next: MBA will continue to work with the Administration and Congress on FY 2025 appropriations, with a focus on effective solutions that bolster housing supply, improve affordability for both renters and borrowers, increase access to sustainable homeownership, and lead to positive outcomes for MBA members and their businesses.
For more information, please contact Matt Jones at (202) 557-2933.
Realtors Reach Settlement in Commissions Litigation
On Friday, the National Association of Realtors (NAR) agreed to settle a series of lawsuits by paying $418 million in damages and eliminating its rules on “cooperative” commissions.
The New York Times reported that “the settlement bans NAR from establishing any sort of rules that would allow a seller’s agent to set compensation for a buyer’s agent, a practice that critics say has long led to ‘steering,’ in which buyers’ agents direct their clients to pricier homes in a bid to collect a bigger commission check. And on the online databases used to buy and sell homes, the M.L.S., the settlement requires that any fields displaying broker compensation be eliminated entirely. It also places a blanket ban on the longtime requirement that agents subscribe to multiple listing services in the first place in order to offer or accept compensation for their work.”
Go deeper: Last November, a Kansas City jury found that NAR, HomeServices of America, and Keller Williams Realty colluded to inflate or maintain high commission rates using the Broker Buyer Commission Rule (the Rule). The defendants were ordered to pay $1.78 billion in damages. There are other cases across the country that make similar allegations against NAR, different M.L.S., and real estate brokerage companies.
Pending injunctive relief and the outcome of other compensation lawsuits, damages from the lawsuits could have exceeded more than $5 billion.
MBA’s August 2023 summary of the real estate compensation lawsuits can be found here.
Why it matters: Depending on the outcome and full details of the reported settlement, the immediate impact on the home sales process and the mortgage industry is likely to evolve, with new approaches to the negotiation and payment of buyer agent commissions.
What’s next: Full details of the apparent nationwide settlement are not yet public, and reporting suggests the soonest the settlement would go into effect is June 2024.
MBA will monitor the outcome as well as the likelihood of new approaches to buyer agent commissions that develop as a result. The settlement still needs to be approved by the judge in the case and is subject to a challenge. MBA will also engage with FHA, the VA, and Fannie Mae and Freddie Mac about any possible guideline changes that may be needed in the future.
For more information, please contact Pete Mills at (202) 557-2878 or Justin Wiseman.
Senate Banking Committee Holds Hearing on Housing Affordability
On Tuesday, the Senate Banking, Housing and Urban Affairs Committee held a hearing titled, “Examining Proposals to Address Housing Affordability, Availability, and Other Community Needs” to highlight bipartisan housing legislation. A summary of the hearing can be found here.
Why it matters: Senator Reed (D-OH) placed into record the aforementioned trigger leads coalition letter led by MBA and signed by 22 organizations and companies in support of S.3502, the Homebuyers Privacy Protection Act. Watch Senator Reed’s remarks here (1:16:09-1:16:44).
What’s next: Beyond trigger leads, committee members discussed the need to move forward with a markup of several other bipartisan housing bills on a broad range of topics including: FHA’s single- and multifamily programs, the USDA’s Rural Housing Service (RHS) program, downpayment assistance for first generation homebuyers, and many others. MBA will keep members updated on any potential progress on these housing-related issues.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
Senators Reintroduce the Downpayment Towards Equity Act
On Tuesday, Senators Raphael Warnock (D-GA) and Sherrod Brown (D-OH) reintroduced S.3930, the Downpayment Towards Equity Act. The legislation authorizes $100 billion in downpayment assistance grants to first-generation homebuyers and is designed by the authors to address multigenerational inequities in access to homeownership and narrow the racial homeownership gap.
Why it matters: The new bill advances the goals of MBA’s Building Generational Wealth through Homeownership Initiative and, importantly, includes “safe harbor” liability protections for lenders who issue loans under the program – a condition leading to MBA’s support for the measure.
What’s next: The legislation, which was referred to the Senate Banking Committee and mentioned at the housing hearing mentioned previously, could be considered by the panel along with other housing affordability measures.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
Policy Desk Alert: USDA Announces Servicing Guideline Revisions
Last week, the U.S. Department of Agriculture (USDA) announced revisions to the Servicing Chapters of the Rural Development’s Single-Family Housing Guaranteed Loan Program Handbook. The aim of these changes is to streamline and simplify the mortgage recovery advance (MRA) process used to aid borrowers who have had a forbearance or other loss mitigation solution ahead of an upcoming final rule on the program’s servicing options.
Specifically:
The proposed changes to Chapter 17: Servicing Performing Loans – mostly focus on technical changes to account for the MRA.
The proposed changes to Chapter 18: Servicing Non-Performing Loans – made several changes to USDA’s loss mitigation program, including adding the MRA loss mitigation option.
The proposed changes to Chapter 19: Loss Claims – made technical changes to account for the MRA.
Why it matters: These servicing amendments are the first proposal to use the new USDA 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 has advocated for adoption of these tools by the government housing programs and welcomes the use of the Policy Desk as a tool to foster collaboration with industry stakeholders and provide greater transparency in the policy development process.
What’s next: MBA plans to submit comments in response to these changes by the April 12, 2024, deadline.
For more information, please contact Brendan Kelleher at (202) 557-2779 or Gabriel Acosta at (202) 557-2881.
MBA Submits Recommendations for FHA’s Permanent Loss Mitigation Waterfall
On Wednesday, shortly following the FHA’s release of its new Payment Supplement program, MBA submitted several recommendations to FHA for a permanent loss mitigation waterfall to help borrowers avoid foreclosure. MBA recommended that FHA preserve the loss mitigation flexibilities available to servicers and borrowers after the COVID-19 Recovery Loss Mitigation Waterfall expires in April 2025.
Among several recommendations, MBA suggested that FHA:
Align guidance closely with Fannie Mae and Freddie Mac, specifically as it relates to hardship documentation and forbearance terms;
Ensure access to streamline loss mitigation solutions for seriously delinquent borrowers;
Create one waterfall that provides access to the same loss mitigation solutions for all borrowers regardless of reason for hardship;
Preserve the standalone partial claim as a valuable tool to assist borrowers in the servicer’s loss mitigation toolkit; and
Release any overhaul to its permanent loss mitigation waterfall to the Drafting Table for stakeholder review.
Why it matters: After more than three years of updates to technology, borrower communications, and processes, servicers have provided distressed borrowers with opportunities to receive payment relief using the COVID-19 Recovery Loss Mitigation Waterfall. Simply put, it worked and should be preserved.
Go deeper: These changes are important and impactful, but in the near-term servicers are focused on implementing the new Payment Supplement program, a novel use of a partial claim to temporarily reduce a borrower’s monthly payment, until January 2025. Providing sufficient implementation time for servicers is necessary to ensure sustainable performance of the loss mitigation solutions.
What’s next: MBA will communicate any developments to the Loan Administration Committee.
For more information, please contact Brendan Kelleher at (202) 557-2779 or Gabriel Acosta at (202) 557-2881.
New Hampshire Enacts Broad Data Privacy Bill, SB 255
New Hampshire Governor Chris Sununu recently signed SB 255, making New Hampshire the 14th state to enact broad data privacy laws. The majority of the law will take effect January 1, 2025, and importantly exempts financial institutions and data subject to the federal Gramm-Leach-Bliley Act (GLBA).
Why it matters: New Hampshire recognizing the current standard of data protection provided under the GLBA ensures the industry can continue to process information pursuant to existing guidelines while instituting much needed regulation in other industries. Without the reference to this existing national standard, the cost of state-by-state patchwork compliance regimes would increase costs for lenders and consumers and reduces competition.
What’s next: Since 2018, broad data privacy legislation has been gaining traction across the states and this trend is expected to gain momentum. While these bills are often not intended to target the mortgage industry specifically, it is important for member companies and state and local association partners to continue to coordinate with MBA to help educate policymakers on the importance of the GLBA exemption to our industry.
For more information, please visit our State Data Protection Issues resource page or 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:
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
Basics of Commercial Loan Closing and Loan Documentation – May 9
Introduction to Commercial Mortgage Backed Securities – May 23
Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – June 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 at (202) 557-2931.
