MBA Advocacy Update

FSOC Mortgage Servicing Report Out

The Financial Stability Oversight Council (FSOC) held a meeting Friday that included a presentation and vote on a Council report on nonbank mortgage servicing.

Why it matters: The report is expected to make numerous legislative and regulatory recommendations to address perceived risks posed by the growth of IMB servicers. While certain recommendations could be beneficial by providing liquidity support to IMBs, others – such as even higher capital standards – could be detrimental. MBA strongly opposes ill-conceived regulations that do not recognize the unique aspects of the IMB business model. 

  • Read our recent letter to Treasury Secretary Janet Yellen on this topic.

What’s next: MBA will provide a report summary in the coming days and will engage with the FSOC agencies to identify effective solutions that do not undermine the IMB business model.

For more information, please contact Pete Mills at (202) 557-2878.

MBA Expresses Concern with VASP Implementation

MBA expressed concern with the implementation timeline of the recently released Veterans Affairs Servicing Purchase (VASP) program in a letter to the Department of Veterans Affairs (VA). 

MBA’s letter makes two recommendations: 1) to set clear expectations with Veterans that servicers are working diligently to implement the VASP program before the mandatory compliance deadline, and 2) extend the mandatory compliance deadline beyond October 1, 2024, (not May 31) to provide six months once complete guidance is available.

Go deeper: VASP is VA’s loss mitigation response to today’s high-interest rate environment. With VASP, servicers can provide distressed borrowers with a below-market 2.5% interest rate modification, with VA purchasing the loan. Execution of VASP requires a complex servicing transfer process and new loss mitigation guidance.

Why it matters: VA’s recent press release suggested that VASP will be available for all 40,000 Veterans beginning May 31, 2024, thereby creating an expectation for Veterans and the public that servicers will have VASP up and running by the end of the month.

However, key operational and technical questions remain, and servicers are concerned with the lack of guidance available to implement the VASP program by the October 1 mandatory compliance deadline, particularly guidance for servicing transfers and loss mitigation (that only became available last week). 

What they’re saying: As stated in the letter, “Mortgage servicers are committed to the successful launch and long-term viability of the VASP program and realize its potential to help struggling Veterans. Achieving these goals and setting up an effective VASP program will require all stakeholders to execute a complex loss mitigation and servicing transfer process.” 

What’s next: MBA will remain engaged with the VA team to ensure that servicers receive the necessary information to successfully transfer VASP loans to VA’s contractor and carry out new required loss mitigation guidance to limit the operational gaps that exist. MBA continues to pursue regularly scheduled meetings to discuss the necessary details for implementation.

For more information, please contact Brendan Kelleher at (202) 557-2779.

Senate Banking Committee Holds Hearing on Financial Services and Rental Housing Fees

On Friday the Senate Banking Committee held a hearing titled, “Consumer Protection: Examining Fees in Financial Services and Rental Housing.”

This lightly-attended hearing was largely focused on so-called “junk fees” in the form of credit card “late” fees and checking account overdraft fees. The Consumer Financial Protection Bureau’s (CFPB) enforcement actions were another primary hearing topic – along with discussions about the range of fees that multifamily tenants may face (in addition to their rent).  

A full summary of the hearing may be found here.

Why it matters: The CFPB has criticized rental application and payment fees, mortgage closing costs, discount points, title insurance, and other regulated fees and costs as being designed to prey upon consumers and maximize company profits.

What’s next: MBA will continue to educate both regulators and lawmakers that products or services required by one specific government agency – and/or disclosed pursuant to law – should not be called into question by the CFPB.  

For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.

MBA Joins Coalition Applauding Launch of Bipartisan Congressional Real Estate Caucus

Last week, MBA joined nearly a dozen other groups thanking U.S. Reps. Mark Alford (R-MO), Lou Correa (D-CA), Tracey Mann (R-KS), and Brittany Pettersen (D-CO) for launching the Bipartisan Congressional Real Estate Caucus. In the joint statement from the trade groups applauding the announcement, MBA specifically thanked the four House Members for “stepping up to lead the group” and helping “more Americans achieve their dream of housing choice – be that sustainable homeownership or affordable rental opportunities.”  

Why it matters: Due to the lack of adequate housing supply, there is an eagerness for housing development in specific markets across the country.  The Real Estate Caucus’s efforts will attempt to draw congressional attention to policies that support and promote the growth of the real estate industry.  

What’s next: MBA will continue to work with our coalition partners – and the newly formed Caucus – to advocate for the enactment of policies that address housing affordability challenges and encourage sustainable real estate development.  

For more information, please contact Bill Killmer at (202) 557-2736.

FHFA Releases 2022 Guarantee Fee Report

The Federal Housing Finance Agency (FHFA) released its annual report on single-family guarantee fees (g-fees) charged by the Fannie Mae and Freddie Mac (the GSEs).

The report, which covers 2022 loan acquisitions, shows average g-fees across product types, loan purposes, loan-to-value ratios, credit scores, and lender sizes.

The average g-fee across all loans was 61 basis points in 2022 – up 4 basis points from 2021. Average g-fees increases were consistent across lenders of varying sizes. For mortgage-backed security swaps, average g-fees were 62 basis points for large lenders, 61bps for medium lenders, and 51 basis points for small lenders. With respect to the cash window, average g-fees were 56 basis points for large lenders and 60 basis points for medium lenders and 58 basis points for small lenders.

FHFA stated that these increases were driven by a higher percentage of home purchase loans and a “modest increase in the aggregate risk profile” due to higher loan-to-value ratios and a higher rate environment compared to 2021.

Why it matters: The annual report on g-fees is required by law and is a key component of long-running efforts championed by MBA to promote greater transparency in GSE pricing. Throughout its GSE reform advocacy campaign, MBA has pursued the elimination of “volume discounts” or other g-fee adjustments based on a lender’s size, business model, or charter type.

What’s next: MBA will continue to engage with FHFA and the GSEs on issues related to pricing and will work to ensure g-fee parity across lender groups.

For more information, please contact Sasha Hewlett at (202) 557-2805.

FHFA, FDIC, and OCC Issue Proposal on Incentive-Based Compensation

The Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and FHFA adopted a Notice of Proposed Rulemaking (NPR) to address incentive-based compensation arrangements, as required under section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (section 956).

The National Credit Union Administration (NCUA) is expected to take action on the NPR in the near future and the U.S. Securities and Exchange Commission (SEC) has included a rulemaking to implement section 956 in its rulemaking agenda. This NPR is intended to advance stakeholder engagement needed to develop a final incentive-based compensation rule.

Why it matters: Section 956 requires the appropriate Federal regulators to jointly prescribe regulations or guidelines pertaining to incentive-based compensation practices at certain financial institutions that have $1 billion or more in assets.

What’s next: FHFA along with the other agencies acting on the NPR will make it available on their respective website and will accept comments. Once the NPR is adopted by all six agencies, it will be published in the Federal Register with a comment period of 60 days following publication. MBA will review and further analyze the proposal in the coming weeks.

For more information, please contact Sasha Hewlett at (202) 557-2805.

Connecticut and Colorado AI Updates

There were several important developments last week in state debates regarding legislation to protect consumers against unintended bias from artificial intelligence (AI) tools.

With both Connecticut (CT) and Colorado (CO) poised to pass legislation, FHFA Counsel wrote to the governors and legislative leaders to express its regulatory authority over Fannie Mae and Freddie Mac and explained the GSEs’ underwriting tools used by mortgage lenders.

FHFA also suggested alternative legislative language to avoid conflicts that could result in significantly reducing affordable mortgage credit options for consumers in those states. Under threat of a veto by CT Governor Ned Lamont, SB-2 did not pass both chambers before the Legislature adjourned for the year on Wednesday.

Go deeper: However, SB-205 in CO was approved on Wednesday.

MBA provided reviews of the respective bills through memos and worked closely with both the Connecticut Mortgage Bankers Association and the Colorado Mortgage Lenders Association to try and amend the language to address the specific needs of the real estate finance industry.

The resulting language added in the final days before passage in CO does provide a broad safe harbor for federally-related loans, but may need further refinements in the future.

Why it matters: Colorado’s legislation reflects a first in the nation statute, which could be emulated by other states.

What’s next: While many states have adjourned for the remainder of 2024, some states like California and New York are still in session. MBA will continue to work with its state partners to engage on AI bills to address industry needs.

For more information, please contact William Kooper (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:

Using Data and Technology to Connect with Today’s Buyers to Increase Homeownership – May 14

Rethink Everything: You “Know” To Be a Next Gen Loan Officer – A Deeper Dive with the Writers & Experts Webinar Series: Show Up on Video – May 14

Fundamentals of Secondary Marketing: Broad Concepts Every Mortgage Professional Should Know – May 15

Introduction to Commercial Mortgage-Backed Securities – May 23

Culturally Competent Marketing and Messaging for Hispanic Homebuyers and Homeowners – May 30

Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – June 11

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.