Advocacy Update: FHFA and FHA Announcements; MBA RESBOG Priorities; State AI Updates
FHFA Announces Updates on Loan Repurchases, Appraisals, and Pricing at MBA Annual Convention
Last week at MBA’s Annual Convention and Expo (#MBAAnnual24), the Federal Housing Finance Agency (FHFA) announced several updates on key issues that have been part of MBA’s ongoing advocacy.
FHFA noted that these policy updates are a result of engagement with industry stakeholders and are intended to enhance efficiencies for Fannie Mae and Freddie Mac (the GSEs) and promote cost savings in the single-family mortgage market.
Loan Repurchases – Freddie Mac’s current targeted pilot that offers a fee-based alternative to repurchases for performing loans with defects will expand to all approved lenders. Under this expansion, lenders will be able to opt in to the fee-based repurchase alternative annually. Lenders with nonacceptable quality (NAQ) rates below 2% will pay no fee at all. Additionally, lenders that do not participate in the pilot will be offered a “Fee Only” option, for which the fee is charged on the defective loan only, instead of a repurchase. This will better align the repurchase alternative offerings across the GSEs.
Appraisals – In support of FHFA’s ongoing appraisal modernization efforts, the GSEs will expand eligibility for appraisal waivers and inspection-based appraisal waivers. The maximum loan-to-value (LTV) ratio for purchase loans eligible for appraisal waivers will increase from 80 percent to 90 percent, and the maximum LTV ratio for purchase loans eligible for inspection-based appraisal waivers will increase from 80 percent to 97 percent, consistent with standard Guide eligibility requirements. FHFA will also significantly expand the Uniform Appraisal Dataset to include appraisal data from applications for FHA loans.
GSE Pricing – The GSEs will provide a 60-day advance notice of increases to their base guarantee fees greater than 1 basis point for loans delivered through the mortgage-backed security (MBS) swap channel. This will ensure greater pipeline protection for lenders while still allowing the GSEs to have flexibility to appropriately manage their business operations.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, thanked FHFA for addressing our members on these important issues. MBA has been a leading industry voice in seeking effective alternatives to loan repurchase requests and appreciates the ongoing, constructive engagement with FHFA, Fannie Mae, and Freddie Mac over the past few years.
Go deeper: Expanding Freddie Mac’s pilot program is another important step toward encouraging high-quality underwriting and eliminating performing loan repurchases. MBA also support the expansion of appraisal waivers, which will lower costs for moderate-income first-time buyers. A 60-day advance notice for some guarantee-fee increases is a response to our concerns and is a welcome development that will allow lenders to better manage their pricing strategies and loan pipelines.
What’s next: MBA will continue to work with FHFA and the GSEs on these important policy issues and looks forward to learning of any new developments on property insurance costs and availability, which was also addressed at FHFA’s session.
For more information, please contact Sasha Hewlett at (202) 557-2805.
FHA Announces ‘Show Me’ Solution
The Federal Housing Administration (FHA) recently proposed a long-awaited Mortgagee Letter (ML) to the Single-Family Drafting Table for public comment (Nonjudicial Foreclosure Process for Mortgagees with Secretary-held Liens) in response to the 8th Circuit’s 2023 opinion in Show Me State Premium Homes v McDonnell.
The Show Me State decision held that a subordinate lien, such as an FHA partial claim, held by the United States must be extinguished by a judicial foreclosure sale.
Why it matters: FHA’s proposed ML allows servicers to resume the nonjudicial foreclosure process. FHA’s proposed ML follows their interim guidance recently published in ML 2024-17, which allowed servicers to request that the Department of Housing and Urban Development (HUD) release the Secretary-held lien in the event the non-judicial foreclosure sale resulted in no surplus funds.
This announcement follow’s MBA’s advocacy requesting that FHA address Show Me shortly after the 8th Circuit’s July 2023 decision, given the high volume of partial claims servicers and borrowers completed during the COVID-19 pandemic.
What it says: Similar to interim guidance, the ML allows servicers to request that HUD release its secretary-held lien following a nonjudicial foreclosure sale. To do so, servicers must provide HUD notice of its intent to proceed with the nonjudicial foreclosure sale through EVARS (which includes a certification component) and collect surplus funds on HUD’s behalf where required.
Servicers have five business days to remit surplus funds to HUD after receiving the proceeds. Servicers must also submit an EVARS request to proceed through the judicial foreclosure process where the preferred method of foreclosure is the nonjudicial process. Documenting the EVARS request will allow servicers to exclude the additional time to complete the judicial process from the Reasonable Diligence Timeframe. Servicers are also permitted to request reimbursement for attorneys’ fees that exceed the maximum allowable fee provided a cost breakdown is submitted.
What’s next: Comments are due November 25, 2024. MBA will meet with members of the Loan Administration Committee to draft its response.
For more information, please contact Brendan Kelleher at (202) 557-2779.
FHA Proposal to Reduce DE Underwriter Requirements
The FHA released a draft Mortgagee Letter (ML) for public comment via the FHA Single-Family Drafting Table that would allow Direct Endorsement (DE) underwriters to work part-time for FHA-approved mortgagees. Although DE underwriters are still required to be employed by a single mortgagee and may not contract out underwriting functions, experience requirements have been adjusted to support part-time roles.
Go deeper: These changes apply to all FHA Title II forward and Home Equity Conversion Mortgage (HECM) programs and will be incorporated into an upcoming update of HUD Handbook 4000.1.
Why it matters: This update, aims to reduce barriers for smaller lending institutions and Community Development Financial Institutions (CDFIs) in a time where loan volume has decreased.
What’s next: MBA will gather feedback to respond to the draft ML through the Government Loan Production Subcommittee.
For more information, please contact Darnell Peterson at (202) 557-2922.
GSEs Announce Detailed Timeline for UAD 3.6 and URAR Implementation
Last Tuesday, Fannie Mae and Freddie Mac released a detailed timeline for implementing the Uniform Appraisal Dataset (UAD) 3.6 and the new Uniform Residential Appraisal Report (URAR), providing specific dates to help the industry prepare. Training for lenders and software providers begins on November 18, 2024, with continuing education for appraisers available in 2025.
Go deeper: Key dates include the July 28, 2025, mandate for Uniform Loan Delivery Dataset (ULDD) compliance, a limited “test and learn” phase from September 8, 2025, to January 25, 2026, and full production beginning January 26, 2026.
Why it matters: This preparation enables lenders to align their systems and workflows with the latest requirements, minimizing disruptions and maintaining compliance in the appraisal process.
What’s next: All lenders must adopt UAD 3.6 by November 2, 2026, with final UAD 2.6 revisions accepted until May 3, 2027.
For more information, please contact Darnell Peterson at (202) 557-2922.
MBA Residential Board of Governors Approves 2024-2025 Policy Priorities
On Tuesday at #MBAnnual24 in Denver, MBA’s Residential Board of Governors (“RESBOG”) voted unanimously to adopt its residential policy priorities for the new membership year.
The priorities cover three broad policy areas: 1) expansion of residential housing supply and affordability – a repeat priority from the prior year; 2) reduction of barriers to home refinancing, particularly for recent homebuyers; and 3) reforming credit underwriting guidelines to better reflect the next generation of first-time homebuyers. MBA’s RESBOG Chair for the 2024-2025 year is David Battany, Executive Vice President of Capital Markets at Guild Mortgage.
Why it matters: Each year, the RESBOG policy priorities establish areas of emphasis with specific objectives in addition to the ongoing efforts of MBA’s policy staff and Residential Policy committees.
What’s next: MBA’s policy staff and Residential Policy committees will establish workflows to tackle each priority issue and will provide regular progress updates to RESBOG throughout the year.
For more information, please contact Matt Jones at (202) 557-2933.
State Artificial Intelligence Policy Updates
On Monday, the Texas Mortgage Bankers Association received anticipated draft legislation on artificial intelligence regulation, Texas Responsible AI Governance Act (TRAIGA).
With many other states considering AI-related legislation, the Texas bill would further shape the emerging patchwork of state AI bills. The introduction came just one day after Jeffery Riester, Colorado Director of Legislative Affairs/Senior Assistant Attorney General from the Office of the Attorney General, attended the State Legislative & Regulatory Committee meeting at #MBAAnnual24. Colorado earlier this year was the first state to pass legislation that regulates AI at the state level.
The meeting included some pre-planned questions as well as open Q&A for members in the room to address concerns after the enactment of Colorado’s Consumer Protections for Artificial Intelligence (SB 24-205).
Go deeper: Mr. Riester expressed interest in member concerns that will help shape forthcoming regulations and guidance, and provided a positive outlook on how the Office of the Attorney General plans to implement this law.
Mr. Riester expressed interest in relying on current disclosures and risk management policies, in lieu of creating duplication or additional processes. He also talked about the need for clarity and the Attorney General’s desire to be a resource in helping businesses comply.
At the end of the meeting, Mr. Riester provided this resource the Attorney General has created for future developments on SB 24-205 as the regulatory process is expected to begin Summer 2025.
Why it matters: MBA continues to stay in the state AI conversations as more states consider this policy. Early and positive engagement seen in both Colorado and Texas provides our industry the chance to educate policymakers on the impact of these bills and the current use, regulation, and need for technology in our industry.
What’s next: MBA will continue to coordinate with state partners on AI policy, providing resources and feedback to ensure our industry is heard in the state capitols and can continue to advance and provide cost saving efficiencies to consumers while maintaining fair and safe lending practices.
For more information, please visit the MBA resource center mba.org/stateai or contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Advocacy Highlights at #MBAAnnual24
If you attended #MBAAnnual24 in Denver, we hope you found it impactful, especially as we near Election Day. Throughout the week, MBA’s Legislative and Political Affairs team held a series of fun and exciting events aimed at growing the industry’s grassroots network (Mortgage Action Alliance or “MAA”) and federal political action committee (MORPAC). Whether it was enjoying lunch with MBA’s lobbyists, participating in a round of “Election Jeopardy,” or stopping by for a sweet treat at the MBA booth, attendees were encouraged to vote and become even more active advocates for real estate finance.
The team hosted its annual MAA and MORPAC advocacy reception and exceeded its fundraising goal of $2 million for the 2024 election cycle.
MORPAC also hosted two invitation-only events, including a candidate fundraiser in support of House Financial Services Committee Member Congresswoman Brittany Pettersen (D-CO) and a meet-and-greet with former House Speaker John Boehner.
Newly appointed 2025 MBA Vice Chair and current MORPAC Chair Owen Lee also presented the annual Schumacher-Bolduc award to incoming 2025-2026 MORPAC Chair Nanci Weissgold, Partner at the law firm of Alston & Bird.
Why it matters: A growing MAA remains important to our efforts to help amplify MBA’s advocacy thrust on Capitol Hill, including enhancing MORPAC’s fundraising potential. Attendees at all of these events had the opportunity to discuss the latest in Washington, hear about potential results of various election outcomes, discuss legislative and regulatory issues, and network with other industry advocates.
What’s next: Tuesday, November 5, is Election Day! Don’t forget to register for the next MAA Quarterly Webinar: Post-Election Briefing on Wednesday, December 4, from 3:00pm- 4:00pm ET, and hear from a panel of experts as they reflect on the outcome of the elections and how to prepare for what’s ahead next year for our industry on the policy front.
Registration for MBA’s National Advocacy Conference (NAC), April 8-9, 2025, in Washington, D.C., is now open.
For more information, please contact Jamey Lynch, AMP at (202) 557-2818 or Erin Reilly at (202) 557-2751.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
Mastering MSR Valuations in a Shifting Marketplace – November 13
Manufactured Housing: An Emerging Multifamily Supply Solution – November 13
From Mortgage Eligibility to Affordability: Adapting Lending Strategies to Market Conditions – November 19
Transition Climate Risks: From Initial Assessment to Mitigation – November 20
Master the Art of Pricing and Rate Lock Strategies – December 10
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.
