MBA Advocacy Update: Bob Broeksmit TV Appearance; Fed Vice Chair Barr Recommends MBA-Supported Basel III Changes; More
WATCH: President and CEO Bob Broeksmit, CMB, joined Yahoo Finance on Wednesday for a live interview on our Weekly Applications Survey, outlook for the housing market, and our recent advocacy win that resulted in meaningful improvements and enhancements to FHA’s 203(k) program! Tune in from 2:17:20 to 2:22:56
Basel III Re-proposal Appears to Include MBA-Supported Changes
On Tuesday at a speech delivered to the Brookings Institution, Federal Reserve Vice Chair Michael Barr confirmed his intent to recommend to the Board sweeping changes to the Basel III Endgame (B3E) proposal issued by the federal regulators in July 2023.
According to Barr, this recommendation would include a re-proposal, which the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) would also have to agree to.
Barr outlined some of the high-level highlights of the recommended changes to the proposal, including revisions that appear to address several of MBA’s top concerns regarding the mortgage market impact of the rule.
Why it matters: MBA has consistently called for changes to the proposal, including in testimony before Congress, speeches, comment letters, and ongoing conversations with federal regulators. MBA’s comments highlighted several concerns with the B3E proposal that would hurt the entire mortgage market, not just large banks.
Go deeper: Barr’s outline of the re-proposal appears to include MBA’s recommendation that the regulators eliminate the “gold plating” (higher) of single-family mortgage risk weightings, and instead, use the Basel Accord’s recommendations, which would result lower capital charges than current rules for single-family loans held in portfolio.
In addition, Barr indicated that most of the new Basel rule would not be applied to banks with $100-$250 billion in assets.
This will provide relief to many regional banks from the mortgage servicing rights (MSRs) and warehouse lending provisions of the B3E proposal that MBA argued would hurt the entire mortgage market. MBA believes similar relief from excessive capital charges on MSRs and warehouse lending should be extended to banks with assets above $250 billion.
What they’re saying: MBA’s President and CEO, Bob Broeksmit, CMB, issued a press statement agreeing with Barr’s support for a re-proposal, stating: “We support Vice Chair Barr’s recommendations to recalibrate some provisions that would have had negative impacts on single-family housing and commercial real estate finance markets. This includes removing the 20-percentage point risk-weighting add-on for single-family mortgages, which would have further diminished banks’ participation in mortgage lending while reducing credit availability for low- and moderate-income homebuyers.”
Broeksmit added, “We look forward to reviewing and commenting on the re-proposal, we will continue to advocate for a bank capital framework – including reduced risk-weighting for mortgage servicing rights and warehouse lines – that ensures safety and soundness without reducing mortgage market participation and thus limiting choice and increasing costs for consumers.”
What’s next: While Vice Chair Barr stated that a B3E re-proposal, along with the release of results from the Fed’s Quantitative Impact Study, is imminent, MBA continues to urge the regulators to ensure that the re-proposal and any final rule be the result of a rigorous impact analysis that is also subject to stakeholder comment.
A re-proposal, followed by a new comment period, potentially pushes the implementation of a final rule beyond 2025. MBA will continue to discuss this issue with federal regulators as we await the release of the re-proposed rule.
For more information, please contact Fran Mordi at (202) 557-2860.
House Financial Services Subcommittee Takes on Basel III, International Governing Guidelines
On the heels of Fed Vice Chair Barr’s remarks on B3E, the House Financial Services, Subcommittee on Financial Institutions and Monetary Policy held a hearing Wednesday on “Transparency in Global Governance.”
During the hearing, lawmakers took anticipated party-line positions on the value of U.S. participation in international standards-setting bodies, as well as on more granular proposals such as B3E and the Securities and Exchange Commission’s (SEC) Climate Risk Disclosure Rule. Find the full hearing here and a summary here.
Why it matters: Republicans on the panel sharply critiqued U.S. participation in multilateral financial institutions, criticizing them as avenues for foreign influence over the U.S. financial sector and raising particular concern with climate-related regulations and the impact they may have on small and community banks. They relayed a desire for greater transparency in the interactions between U.S. regulators and these institutions, noting their concern with a lack of congressional oversight.
In contrast, Democrats defended U.S. participation in the organizations, arguing that they are partially responsible for the success of domestic capital markets. Subcommittee Democrats further argued for the importance of climate-related financial regulation, expressing concern at the potential for climate-induced economic malaise, and defending the SEC’s climate rule.
What’s next: MBA will continue to engage with lawmakers on both sides of the aisle on all government regulations pertaining to real estate finance.
For more information, please contact Rachel Kelley at (202) 557-2816 and Madisyn Rhone at (202) 557-2741.
Senate Banking Committee Ranking Member Tim Scott Introduces Broad Housing Bill
On Wednesday, Senator Tim Scott (R-SC), along with seven GOP Senate Banking Committee cosponsors, introduced the “Renewing Opportunity in the American Dream to Housing Act” (also referred to as the “ROAD to Housing Act”). The bill includes several titles designed to: Improve Financial Literacy, Increase Access to Housing, Serve the Most Vulnerable, Promote Opportunity, and affect Good Governance (mandatory Department of Housing and Urban Development (HUD) testimony, Federal Housing Administration (FHA) reporting requirements, etc.)
The bill text can be found here, the sponsor’s summary of the bill can be found here, and the press release (with quotes from the Senate sponsors) can be found here.
Why it matters: The bill, long in the works, is intended to be a marker for Senator Scott’s initial engagement on housing policy should Republicans win a Senate majority in November – and should he, as expected, become the Chair of the Senate Banking Committee. Given that the bill has been introduced with no Democratic co-sponsors, any legislation considered in the 119th Congress on housing policy would involve negotiations, changes, and additional policy provisions.
Go deeper: The bill’s provisions offer reforms to current housing counseling and financial literacy, rental housing assistance, manufactured housing, construction grants, and small dollar lending programs. The legislation would also require annual congressional testimony from the HUD secretary and increased congressional oversight of the Federal Housing Administration’s Mutual Mortgage Insurance Fund.
What’s next: MBA has been actively and regularly engaged with Senator Scott (and his fellow Banking Committee Republicans) on housing policy matters and will monitor developments closely on this bill (and others) this year and during the next Congress.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
Senate Finance Committee Holds Key Tax Policy Hearing
On Thursday, the Senate Finance Committee held a hearing titled “The 2025 Tax Policy Debate and Tax Avoidance Strategies.” A summary of the hearing can be found here.
Why it matters: The hearing kicked off a contentious debate on the upcoming yearend 2025 expiration of major provisions of the Tax Cuts and Jobs Act of 2017 and highlighted avoidance strategies utilized by certain taxpayers under the existing tax code.
Committee Chairman Ron Wyden (D-OR) and Ranking Member Mike Crapo (R-ID) presented contrasting views over the value of the tax code’s current Section 199A small business/”passthrough” provision (set to expire in 2025) which allows taxpayers who file as sole proprietorships, partnerships, and S corporations to deduct up to 20 percent of their Qualified Business Income (QBI) from federal income tax obligations. The senators also clashed on proposals that would change the “stepped-up basis” provision for individuals calculating capital gains taxes.
Go deeper: During the hearing, Senator Maggie Hassan (D-NH) also highlighted the economic impact of housing shortages in New Hampshire and asked the witnesses for proposals to use the tax code to enhance the supply of affordable housing.
What’s next: MBA will directly, and in coalition with other trade associations, continue to advocate for the extension, preservation, and/or improvement of provisions of the tax code that support real estate finance and the appetite for real estate investment.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
MBA, Joint Trades Responds to Mortgage Servicing Proposal
On Monday, MBA submitted both individual and joint trade comments to the Consumer Financial Protection Bureau’s (the Bureau) mortgage servicing proposal to amend Regulation X.
Why it matters: The Bureau’s proposal significantly changes the mortgage servicing provisions of Regulation X and discusses new possible obligations for servicing borrowers with limited English proficiency (LEP). Specifically, the Bureau proposed eliminating the procedural loss mitigation application framework to provide servicers with more flexibility to assist borrower in the loss mitigation evaluation process.
In its place, the Bureau proposed a new “loss mitigation review cycle” concept, whereby borrowers can receive foreclosure protections upon a request for loss mitigation assistance. The proposal also included a new prohibition against servicers’ ability to recover certain servicing fees, along with a narrowly defined prohibition against advancing the foreclosure process.
What they’re saying: MBA has consistently advocated for the Bureau to pursue rulemaking to amend Regulation X. Unfortunately, key provisions of the Bureau’s proposed rule will undermine the incentives for borrowers to engage with their mortgage servicer for loss mitigation assistance as early in the delinquency as possible.
Additionally, while MBA supports the goal of providing borrowers with LEP tools, the current proposal is overbroad and vague without offering many benefits relative to the extraordinary cost of implementation. To that end, MBA was also joined by several other trades and consumer groups to push back on an open-ended “marketing” standard for triggering LEP requirements.
Going deeper: In sum, MBA specifically recommended the Bureau to:
Revise the rule to motivate borrower engagement in the loss mitigation process and provide clear and reasonable parameters for servicers to determine when dual tracking protections apply under the new “loss mitigation review cycle.”
Reinstate the “one review” framework by preserving Regulation X’s existing “duplicative requests” standard for each delinquency cycle.
Eliminate the foreclosure fee prohibition and recognize that certain costs can be passed to borrowers.
Provide appropriate lead time and exceptions to halting the foreclosure process.
Simplify all notice requirements and encourage borrowers to contact their servicers to discuss details about their loss mitigation review and available options.
Remove the LEP provisions and conduct a separate rulemaking with appropriate cost-benefit analysis.
What’s next: MBA will communicate developments to members as the Bureau decides to move forward with finalizing its proposal.
For more information, contact Justin Wiseman at (202) 557-2854, Brendan Kelleher at (202) 557-2779, Alisha Sears at (202) 557-2930, or Gabriel Acosta at (202) 557-2811.
FHA Releases Draft Partial Claim Mortgagee Letter for Comment
On Thursday, the FHA posted a draft ML to the Single-Family Housing Drafting Table for public comment, the Partial Claim Document Recording and Payoff Statements.
FHA proposes to:
Establish a new procedure requiring servicers to obtain partial claim payoff statements from HUD’s SMART Integrated Portal (SIP) and provide it when they receive a payoff request on an existing FHA-insured mortgage.
Extend the time allowed for mortgagees to record partial claim security instruments from 5 to 15 days.
Why it matters: According to its press release, HUD “is seeking to ensure that borrowers, closing agents, attorneys, and title agents are aware of the partial claim subordinate lien owed by ensuring the partial claim payoff is provided to the party requesting the payoff statement for the FHA-insured first mortgage.”
More than one million FHA borrowers have completed a partial claim in recent years. Through better tracking, HUD is seeking to prevent challenges to the subordinate lien ahead of a potential increase in refinances and home sales.
What’s next: MBA’s Loan Administration Committee will submit comments through FHA’s deadline, Thursday, October 10, 2024.
For more information, contact Brendan Kelleher at (202) 557-2779.
Register for MAA’s Next Quarterly Webinar on September 17
MBA’s Legislative and Political Affairs Group is inviting you to our upcoming Pre-Election Update on National Voter Registration Day, September 17, at 3:00 PM ET. Join us as we dive into the policy implications that could flow from the upcoming 2024 elections and will impact our industry.
Why it matters: This webinar will offer a comprehensive overview of the current legislative landscape and forecast potential political changes that could impact your business and the broader industry.
What’s next: Register with code MAA2024 to receive complimentary access to this webinar.
For more information, please contact Erin Reilly at (202) 557-2751 or Margie Ehrhardt at (202) 557-2708.
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 – which are complimentary to MBA members:
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 – which are complimentary to MBA members:
How AI Can Help Servicers Combat the High Cost of Borrower Communications – September 18
Loss Mitigation & Lessons Learned from Pandemic-Era Regulations – September 26
Navigating Multifamily Income and Expenses from Fundamentals to Performance Metrics – October 2
Regulation X Redefined: Analyzing the CFPB’s Proposed Loss Mitigation Framework and Language Access Requirements – October 3
Understanding the CFPB’s Non-Bank Registry – October 9
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.
