Advocacy Update: VA Responds to MBA’s Advocacy; Will Address Buyer Commission Prohibition by June 12

VA Responds to MBA’s Advocacy; Will Address Buyer Commission Prohibition by June 12

Last Tuesday during a government lending session at #MBASecondary24, U.S. Department of Veterans Affairs Deputy Director for Policy Michelle C. Corridon announced that the VA will release a circular by June 12 to address the buyer commission prohibition. The circular will be in place while a formal rulemaking process occurs.

Why it matters: MBA has long advocated for such a move, 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,” the letter said.

Go deeper: For months, MBA has been engaged with the VA, Fannie Mae and Freddie Mac (the GSEs), the Federal Housing Finance Agency (FHFA), and the Federal Housing Administration (FHA) to identify possible guideline clarifications or changes that may be needed because of new real estate agent compensation arrangements that might arise from the National Association of Realtors®(NAR) commissions litigation. 

Previously, FHA and the GSEs provided confirmation to MBA and NAR that seller payments directly to buyer agents would not count toward caps on interested party contributions.

What’s next: MBA will continue its advocacy on this issue and is assessing market developments for other changes that may be needed in agency guides and Consumer Financial Protection Bureau (CFPB) rules to ensure any new agent compensation arrangements do not limit access or raise the cost of mortgages.

For more information, please contact Pete Mills at (202) 557-2878 or Justin Wiseman at (202)557-2854.

MBA Pushes for Additional Details Regarding Freddie Mac’s Closed-End Second Mortgage Proposal

Last week, MBA sent its letter to FHFA in response to a new product proposal from Freddie Mac that would allow them to purchase certain closed-end second mortgages.

• The letter highlights the possible benefits for both borrowers and lenders as well as concerns regarding potential harm to the existing market.
Most importantly, the letter stresses the need for additional information in the proposal such as pricing details, information on expected volume or volume caps, and UMBS implications necessary to effectively evaluate the impact of introducing the new product. MBA urges the FHFA to request additional information and further evaluate the issues raised in our comments prior to considering approval.

Why it matters: MBA was pleased to see that this proposal will be following the process established in FHFA’s New Products and Activities Final Rule. While the proposal outlines the basic parameters of Freddie Mac’s proposed new product, there are several critical details that remain unknown making it difficult to fully assess its potential impacts and benefits.

What’s next: The proposal will continue to be subject to criticism, particularly from congressional Republicans (e.g., see recent GOP letter here). MBA plans to request the opportunity to meet with FHFA to discuss the questions raised in the letter. 

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

Ginnie Mae Announces E-Note Flexibility, Recovery Planning Requirements at #MBASecondary24

Last week at #MBASecondary24, Ginnie Mae announced that it will now allow both digital and paper collateral to be commingled in pools starting with June 1, 2024, issuances. 

• The introduction of commingling is intended to promote liquidity and further increase participation in the Digital Collateral Program. This change also supports HUD’s Strategic Plan with respect to the modernization and digitalization of the Ginnie Mae Mortgage-Backed Securities (MBS) program.

Ginnie Mae also announced mandatory recovery planning requirements for non-depository issuers with Ginnie Mae servicing portfolios of $50 billion or greater at the end of the calendar year.

• The plans must include information related to an issuers organizational structures and technology systems to provide and are intended to help Ginnie Mae uphold its explicit government-backed guaranty should an issuer fail to meet their obligations. Issuers will be required, every two years, to update and resubmit their recovery plans or attest that the most recently approved recovery plan remains current.
• The initial recovery plans for the calendar year 2024 are due no later than June 30th, 2025. Details can be found in APM 24-08.

Go deeper: Additional details on commingling can be found in APM 24-07 and Ginnie Mae will publish an updated eGuide reflecting this change and providing further updates. Digital Collateral will continue to be eligible for the same pool types for which they are currently eligible, as published in Ginnie Mae’s Digital Collateral Guide.

Why it matters: Both initiatives reflect MBA’s ongoing work with Ginnie Mae to address program modernization, improve liquidity, and strengthen issuers without imposing undue burdens.   

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

Federal Reserve Vice Chair for Supervision Gives Speech on Bank Capital and Building a Resilient Regulatory Framework

Last Monday, Federal Reserve Vice Chair for Supervision Michael Barr gave a speech at the 28th Annual Financial Markets Conference on bank capital, liquidity and long-term debt rules.

• Of particular interest on Basel III Endgame proposal, Barr noted that regulators intend to make substantial changes; however, he did not give specifics as to when the rule will be finalized or if they will re-propose it. He also stated that regulators are focused on requiring big banks to maintain discount window capacity and that regulators are in the process of reviewing comments to the proposal on long-term debt rules.

Why it matters: MBA and its members have substantial concerns that, without significant changes, the proposal will undermine real estate finance market stability, further diminish housing affordability, and reduce the opportunities that consumers have to access mortgage credit – particularly among first-time homebuyers and in communities that are traditionally underserved.

Go deeper: Read MBA’s January 2024 comment letter here.

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 Fran Mordi at (202) 557-2860.

MBA Encourages Servicing Policy Collaboration

On Wednesday, MBA encouraged FHFA to provide greater transparency in the development of servicing policy by the GSEs, requesting that they create a process to evaluate written drafts of proposed guidance for instances where the GSEs seek to align their servicing guidance.

Why it matters: MBA’s request continues our longstanding advocacy to promote greater collaboration and transparency in the servicing policy development process. The opportunity to assess proposed guidance allows for stakeholders to provide insights into the practical application of proposed policy changes before new guidance becomes effective.

What’s next: MBA will communicate developments to the Loan Administration Committee.

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

FHA Implements Cybersecurity Incident Reporting Requirements

Last week, FHA announced that effective immediately, mortgagees are required to report significant cybersecurity incidents within 12 hours.

• Mortgagees must notify the FHA’s Resource Center via email, which must include the incident’s date and time, a summary of the incident, its impact on personally identifiable information, and a designated point of contact for the mortgagee.
• While cybersecurity incident reporting is required by many government entities and the GSEs, the FHA’s reporting timeframe is significantly shorter than those recently implemented by Ginnie Mae (48 hours).

Why this matters: In recent months, the mortgage industry has been the target of many attempted and successful cybersecurity incidents. MBA will continue to urge the federally-related housing and guarantor agencies to harmonize notice requirements.

What’s next: MBA will continue to engage and review policies implemented by the GSEs, FHA, VA, and RHS through the Residential Loan Production Committee and Government Loan Production Subcommittee.

For more information, please contact Darnell Peterson (202) 557- 2922.

FHA Increases Loan Assumption Fee Cap

FHA announced last week at #MBASecondary24 that it would increase the allowable fee mortgagees can charge to process and underwrite FHA assumptions. On Thursday, FHA released its latest update to its Single-Family Housing Policy Handbook (Handbook).

• The updated Handbook includes a number of recommendations proposed by MBA, including an increase to the assumption processing fee from $900 to $1,800.

Go deeper: MBA has advocated for both FHA and VA to increase the allowable fee for the assumption of VA and FHA-backed mortgages. FHA’s update follows the VA’s February Circular implementing an Assumption Locality Variance to increase its fee. MBA has urged VA to go beyond the locality variance and raise the base processing fee.

Why it matters: While rates remain at recent highs, assumptions have become more popular and it is important that the allowable fee reflects the actual cost of originating an assumable mortgage.

What’s next: MBA will continue to engage with HUD, VA, and USDA on behalf of members and gain feedback on loan production issues through the Residential Loan Production Committee and Government Loan Production Subcommittee.

For more information, please contact Darnell Peterson (202) 557- 2922.

House Energy & Commerce Subcommittee Advances Wide Ranging Federal Data Privacy Bill

Last week, the House Energy and Commerce Committee’s Subcommittee on Innovation, Data, and Commerce approved sweeping data privacy legislation by voice vote (without amendments).

• The American Privacy Rights Act of 2024 (APRA) is championed by full Energy & Commerce Chair Cathy McMorris-Rodgers (R-WA) and the panel’s Ranking Member Frank Pallone (D-NJ). MBA joined a financial services trade association coalition letter criticizing the proposals’ failure to adequately recognize the strong privacy and data security standards already in place for the financial sector under the Gramm-Leach Bliley Act (GLBA).

Why it matters: MBA has additional concerns with APRA, as drafted, regarding the bill’s private right of action provision, its insufficient pre-emption of state laws, and its consumer “opt-out” of an evaluation by algorithm for “consequential decisions,” such as housing and credit opportunities. See MBA’s letter to subcommittee members here.

What’s next: MBA will continue to work with our coalition partners to advocate for changes to the APRA text before its mark-up by the full Energy and Commerce Committee – and possible House floor consideration.

For more information, please contact Rachel Kelley at (202) 557 2816, or Madisyn Rhone at (202) 557-2741.

House Subcommittee Holds Hearing on Energy Codes, Green Building Policies

On Wednesday, the House Energy and Commerce Committee’s Energy, Climate, and Grid Security Subcommittee held a hearing titled, “Green Building Policies: Jeopardizing the American Dream of Homeownership.”  

• The hearing examined the impact of green building policies on housing affordability, including discussions regarding building energy codes, performance standards, and fossil fuel-use restrictions. Witnesses included executives from home building, building products, and energy firms, as well as a building science expert. A full summary of the hearing can be found here

Go Deeper: Republicans specifically criticized the recently finalized standards for HUD- and USDA-financed housing, in addition to plans to ban fossil fuels in federal buildings by 2030. Democrats generally supported the administration’s efforts and emphasized the need to balance affordability and energy efficiency concerns.

Why it matters: Last month, HUD published its final rule on energy-efficiency building standards to require any new construction with FHA-insured and USDA-guaranteed financing to use significantly newer building codes that most states have yet to adopt.  The rule is effective for building permit applications starting in December 2025. 

What’s next: MBA will continue to highlight our concerns with policies that impact housing costs in ongoing conversations with lawmakers and regulators alike.

For more information, please contact Rachel Kelley at (202) 557-2816, or Madisyn Rhone at (202) 557-2741.

Illinois Passes Study, Potentially Establishing New CRA Exam Standards

Last week, the Illinois Legislature passed SB 3235 despite swift industry opposition, including two MBA Mortgage Action Alliance (MAA) calls conveying members’ concerns to their Illinois representatives in Springfield. The bill mandates the Illinois Commission on Equity and Inclusion (Commission) to conduct a mortgage lending “Disparity Study.”

• The Study was originally included in the second notice of proposed regulations to implement the Illinois Community Reinvestment Act (ICRA) in late 2023 by the Department of Financial and Professional Regulation (DFPR).

Go deeper: MBA objected to the Study because DFPR did not offer it as part of a public comment process and because the regulatory proposal included no assurances the Study would be conducted independently. The Study was subsequently removed from the re-proposed ICRA regulations, but has now been passed in SB 3235 with the same problematic language and direction.

• The Commission has no known experience or expertise in financial services or real estate finance and it is inappropriate to task it with conducting a mortgage lending study. Further, the legislation fails to ensure the Study would be conducted by an organization without an advocacy mission and agenda.
• The bill offers no certain opportunity for industry feedback on the Study’s results nor does guarantee Commission will explain any potential causes or context for disparity or legally compliant ways to address them.

Why it matters: SB 3235 permits the Study’s findings to be implemented into ICRA examination criteria, which could change these exams from an LMI-based assessment to ones based on race.

• Additionally, because the Study will not clearly address causes of any disparity, DFPR may improperly incorporate its results into CRA exams. Rather than providing a means to improve CRA exam results of member companies, the Study supports a punitive enforcement-based approach towards supervision of licensees.

What’s next: MBA will continue to support efforts to expand access to credit while opposing efforts that add compliance costs without resolving any of the underlying barriers to credit.

For more information, please contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870. For more information about MAA, please contact Jamey Lynch (202) 557-2818.

Colorado First to Enact Artificial Intelligence Legislation

Recently, Colorado Governor Jared Polis signed first in the nation legislation to regulate artificial intelligence (AI). While MBA and the Colorado Mortgage Lenders (CMLA) achieved improvements from earlier versions of the bill, both organizations ultimately opposed it in a joint veto request to Governor Jared Polis submitted last week.

• The final law fails to consider the totality of the real estate finance system, and it will hold IMBs accountable for AI tools they do not own nor control but rely on to extend credit through the affordable housing programs of the federal government.

Go deeper: In a critical development, the Governor Polis issued a detailed signing statement expressing not only his reservations but also calling for the conversation on AI to continue and urging changes to the language before the February 1, 2026 effective date. The Governor also called for federal standards to help prevent a patchwork of divergent state approaches. An important amendment made to the bill in the final days was an exemption for FHFA, and by extension the GSEs. However, not all lending institutions received a similar safe harbor.

Why it matters: Colorado has now set a concerning precedent that could quickly spread to other states. For example, California is also considering an AI law and remains in legislation session until the end of August.

What’s next: MBA will continue to work with the CMLA to amend this law and with all state and industry partners to advocate for member company needs as this debate continues at the state and federal levels.

For more information, please contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.

Minnesota Legislature Passes Broad Data Privacy Bill in Omnibus Package

Last week, the Minnesota Legislature in the final hours of its 2024 session passed a large omnibus bill package, HF 4757, which included the Minnesota Consumer Data Privacy Act (MCDPA).

• The Minnesota Mortgage Association (MMA) and MBA worked to include MBA’s model amendment language to provide exemptions for federal Gramm-Leach-Bliley compliance. However, the House sponsor blocked IMBs from attaining a full entity exemption in line with depositories exemption in the language.
• Now both the Vermont Data Privacy Act (VDPA), passed earlier this month, and MCDPA await signature. If both bills are signed, 20 states will have enacted broad data privacy laws. The MCDPA effective date is July 31, 2025, and the VDPA will be implemented in stages beginning July 1, 2025 if approved.
Importantly, MCDPA only includes data exemptions for GLBA data, or data intermingled with GLBA, and additional narrow activities-based exemptions for IMBs while depositories are wholly exempt.

Why it matters: By failing to recognize the current standard of data protection provided under the federal GLBA for IMBs, the Minnesota billcreates an uneven playing field between depositories and non-depositories.

What’s next: Since 2018, broad data privacy legislation has been gaining traction across the states and this trend is gaining momentum. 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 the industry.

For more information, please visit our State Data Protection Issues resource page or contact William Kooper (202) 557-2727 or Liz Facemire (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:

Culturally Competent Marketing and Messaging for Hispanic Homebuyers and Homeowners – May 30
Automating Efficient and Empathetic Servicing Experiences for Your Borrower – June 4
Bank-Owned Mortgage Divisions: What Bankers Need to Know to Manage Mortgage Banking – June 11
Adding Reverse Mortgages to Your Business Line: The Value Proposition – June 20
Unpacking the Costs and Current State of Homeowners Insurance – June 20

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.