MBA Advocacy Update: Republicans Win White House, Senate Majority; Ginnie Mae Guidance on RBC Relief; Fed Cuts Rates
Republicans Win White House, Senate Majority; House Still to Be Determined
Following Tuesday’s decisive election results, Donald Trump will return to the White House as the 47th President of the United States after exceeding his 2020 popular vote and Electoral College tallies in battleground states across the country.
Republicans are set to control the Senate with a likely 53-seat majority, pending all finalized results.
The tally of final majority control of the House of Representatives is still up in the air following both Democratic and Republican seat “flips” in various individual districts – with some final outcomes likely not completely known for several days.
Why it matters: A Trump administration and Republican control of at least one chamber of Congress – with the potential for continued GOP control of the House quite likely – could lead to sweeping attempts at changes to regulatory and legislative policy in 2025 and beyond, from tax reform, increased interest in GSE reform, and new leadership at the Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), Treasury, and the Department of Housing and Urban Development (HUD), among other key considerations.
What’s next: MBA will provide a deeper analysis in the near future on the full outcome of the national election – and what it means for real estate finance.
In the meantime, register for the next Mortgage Action Alliance (MAA) Quarterly Webinar: Post-Election Briefing on Wednesday, December 4, from 3:00pm – 4:00pm ET. You’ll hear from a panel of experts as they reflect on the outcome of the election and how to prepare for what’s ahead next year for our industry on the policy front.
For more information, please contact Bill Killmer at (202) 557-2736 and Pete Mills at (202) 557-2878.
Ginnie Mae Issues Guidance on Risk-Based Capital Relief for Effective MSR Hedging
On Tuesday, Ginnie Mae released an All Participants Memo (APM) finalizing risk-based capital relief for issuers based on their hedging activities.
The guidance addresses some of MBA’s concerns with the upcoming implementation of Ginnie Mae’s risk-based capital ratio (RBCR) requirement.
In 2022, Ginnie Mae issued an APM announcing the implementation of a new RBCR standard for certain issuers and applicants beginning on December 31, 2024. MBA’s initial feedback noted that the requirement, as implemented, was excessive and would have a significant, negative impact on issuers and the broader MSR market.
Why it matters: The relief provided in the APM allows an Issuer to essentially reduce the risk-weighted value of its mortgage servicing rights (MSR) based on the efficacy of its MSR hedging activities, which would then result in lower “excess MSRs” (as defined by Ginnie Mae). This, in turn, would boost the Issuer’s RBCR.
Go deeper: Ginnie Mae convened several stakeholder meetings with MBA members during the development of the APM, which allowed issuers to provide direct feedback at various stages of the process.
MBA’s goal was to ensure that this new RBCR requirement provided capital relief for effective risk reduction activities by issuers, while protecting Ginnie Mae’s interests and mitigating unintended negative consequences for the MSR market and the cost of credit for borrowers.
The APM is effective immediately for Issuers that have any history of hedging prior to its release. Issuers that have not historically hedged their MSRs should discuss the APM with their Account Executive.
For more information, please contact Fran Mordi at (202) 557-2860 or Pete Mills at (202) 557-2878.
Federal Reserve Cuts Rates by 25 Basis Points; Second Rate Cut of 2024
Softer inflation data and higher unemployment gave the Federal Reserve enough evidence to cut short-term rates by another 25 basis points on Thursday to a target range of 4.50% to 4.75%. The move comes after a 50-basis-point cut in September.
The FOMC stated that it “will continue to monitor the implications of incoming information for the economic outlook” and “would be prepared to adjust the stance of monetary policy as appropriate.”
Read MBA SVP and Chief Economist Mike Fratantoni’s full commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
MBA-Opposed Rent Control Initiative Defeated in California
With more than 61 percent of the vote, Californians voted against the approval of Proposition 33 (Prop 33), a statewide ballot proposition designed to enact rent control.
MBA and the California MBA deployed the Mortgage Action Alliance (MAA) to encourage industry members in the state members to vote “No for Me on Prop 33.” These efforts included an educational webinar that featured a joint presentation including the leadership of the California Apartment Association.
This is the third time that California voters have rejected rent control.
Why it matters: Prop 33 would have repealed the state’s Costa-Hawkins Rental Housing Act in order to allow local governments to set residential rental rates when a unit became vacant – actions which would have harmed the multifamily real estate market and housing affordability. Repealing Costa-Hawkins would have created a patchwork of state and local price control laws that would have undermined the supply of new housing and make multifamily lending more costly.
What’s next: MBA will continue to work with its state and local association/coalition partners to oppose any continued attempts at rent control throughout the country – while simultaneously promoting workable solutions to the challenge of affordable housing and the need to increase housing supply.
For more information, please review this issue brief and contact William Kooper (202) 557-2737 or Jamey Lynch (202) 557-2818.
MBA Calls for Regulation X Servicing Reform Prioritization
Earlier this week in a guest column in MBA NewsLink, MBA’s Director of Loan Administration Brendan Kelleher called for the CFPB to prioritize Regulation X Servicing reform for next year.
The column calls on the CFPB to finalize its proposed amendments to the mortgage servicing rules, but with improvements to encourage homeowner engagement.
Why it matters: Earlier this summer, the CFPB proposed amendments to the servicing rules under Regulation X that significantly alter the loss mitigation framework that governs the compliance procedures servicers must follow to provide borrowers with foreclosure protections during the loss mitigation process.
Go deeper: The Bureau also proposes to prohibit servicers from recovering servicing fees and third-party costs, as well as a ban on advancing the foreclosure process in order to incentivize servicers to engage borrowers during their delinquency. While modernizing Regulation X has been a top priority for the mortgage servicing industry with the increased use of streamlined loss mitigation solutions in investor waterfalls, this incorrect framing would result in unfortunate and unhelpful outcomes.
What they’re saying: MBA encourages the Bureau to finalize its proposal with improvements to motivate homeowners to contact their servicers and pursue loss mitigation assistance early in the default process. Echoing the sentiment of MBA’s original comments, MBA believes the CFPB must:
Provide clear and reasonable parameters for servicers to determine when dual tracking protections begin and end under the new “loss mitigation review cycle”;
Reinstate Regulation X’s existing “one review per delinquency” standard; and
Eliminate the prohibition on fees.
What’s next: MBA will continue to monitor and communicate any new developments on this issue.
For more information, please contact Brendan Kelleher at (202) 557-2779.
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
Powering CRE Lending & Asset Management with GenAI: Practical Applications – November 21
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.
