Advocacy Update: CFPB Latest – APOR Published; Jonathan McKernan Emerges as New Nominated Director of CFPB
CFPB Latest – APOR Published; Jonathan McKernan Emerges as New Nominated Director of CFPB
On Tuesday evening, Jonathan McKernan was nominated to serve as the permanent Director of the Consumer Financial Protection Bureau (CFPB). McKernan was most recently a member of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC). He also has deep housing finance experience from his past work at the Federal Housing Finance Agency (FHFA) and Treasury Department – and during his work in the Senate.
• Until McKernan is confirmed by the full Senate, the agency will continue to be led by Acting Director Russell Vought, who was appointed to the role last weekend and also serves as the now fully confirmed Director of the Office of Management and Budget.
What they’re saying: In a press statement on McKernan’s nomination, MBA’s Broeksmit said, “MBA looks forward to working with him and his staff to ensure that the agency operates within its statute to protect consumers in a manner that is transparent, fair, and supports competitive markets for financial products, including mortgages.”
Go deeper: This week, Acting Director Vought issued an even more expansive and prescriptive memorandum than the one Treasury Secretary Scott Bessent sent a week earlier to CFPB staff. The memorandum explicitly halts all ongoing, pending or planned rulemaking, guidance and bulletins, research reports, enforcement actions, examinations, and litigation. Stakeholder outreach and communications are also suspended.
In addition, although the CFPB website landing page returned a 404 error as of Friday, all other materials on the website remain available for now.
MBA at work for you: On Tuesday, MBA and industry stakeholders voiced members’ immediate concerns to the CFPB regarding this Thursday’s publication of the Average Prime Offer Rate (APOR), highlighting the numerous compliance obligations that rely on APOR as an input. The CFPB clarified its intent to continue to publish APOR data and did so Thursday.
Why it matters: Rules or guidance issued under previous Director Chopra’s regime could be modified or rolled back and enforcement actions dropped. Changes to rules will still require the regulatory process with proposed rulemakings, but guidance and advisory opinions can be removed or altered quickly.
While significant changes at CFPB are needed, MBA has urged the Administration to ensure that process carefully evaluates the impact on the mortgage and housing ecosystem to ensure:
• No disruptions to market utilities like APOR and Home Mortgage Disclosure Act (HMDA) submissions; and
• Problematic rules like Loan Officer Compensation are reformed to lower compliance costs, promote competition, and pass savings along to prospective homeowners.
What’s next: MBA is monitoring the ongoing developments at the CFPB and is engaging with the Trump administration to better understand the review of the agency’s activities and future priorities and the impact on housing finance and regulatory enforcement actions.
For more information, please contact Justin Wiseman (202) 557-2854.
Fed Chair Powell Provides Semi-Annual Report to Congress
On Tuesday and Wednesday, the Senate Banking Committee and House Financial Services Committee, respectively, held their semi-annual hearings with Federal Reserve Chair Jerome Powell. The hearings covered a wide range of topics including monetary policy, digital assets, financial crime, Basel III Endgame, consumer protection, supply chains, and the future of the housing GSEs.
At the Banking Committee hearing, Senator Mike Rounds (R-SD) asked about the status of the Basel III Endgame, to which Powell responded that the Federal Reserve remains committed to completing Basel III and is currently awaiting new leadership getting underway at the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. He also responded to Senator Rounds’ question about the Endgame remaining capital neutral, adding that “it’ll shake out somewhere in that area.”
• Senator Jack Reed (D-RI) asked if the federal guarantee of the GSEs makes housing more attainable and more accessible. Powell responded that he does believe this helps hold down mortgage rates. Additionally, Powell said that over the longer run, privatizing the GSEs “has some appeal,” but he indicated that it is a decision for lawmakers.
• Senator Jim Banks (R-IN) discussed the rising cost of homeownership. Powell noted that while the Federal Reserve affects housing prices through interest rates, many cost inputs occur at a state and local level through regulations, as well as inflation. Powell also agreed with Senator Catherine Cortez Masto (D-NV) that a significant supervisory gap exists for so long as work is halted at the CFPB.
At the House hearing, Committee Chairman French Hill (R-AR) voiced substantial apprehension that the Basel III proposal could undermine the competitiveness of American banks. Powell committed to revisiting the rule, with a focus on ensuring capital neutrality in any revised version.
• Representative Brad Sherman (D-CA) asked whether higher mortgage rates would result from a lack of an explicit or implicit guarantee for the GSEs.
• Powell said, “Since you’d no longer be borrowing on the credit of the United States . . . it could lead to that.” Powell added that privatizing Fannie and Freddie “might have other virtues too.”
Summaries of both hearings may be found here and here.
Why it matters: The Federal Reserve is a key player in the federal regulations and guidance impacting the housing finance industry, as well as setting interest rates. President Trump has indicated he may seek to replace Chair Powell at some point, but at the hearing, Powell reiterated his belief that the President is unable to remove the Chair of the Federal Reserve.
Go deeper: Chair Powell also discussed several other matters of interest during the two hearings, including that he believes in pursuing regulatory tailoring based on bank size and that he is extremely concerned with the trend of insurance providers and banks pulling out of areas at-risk for natural catastrophes.
What’s next: MBA will continue to actively engage with the Federal Reserve, the Senate Banking Committee, and the House Financial Services Committee on matters important to the housing finance industry.
For more information, please contact George Rogers at (202) 557-2797 or Ethan Saxon at (202) 557-2913.
MBA-Supported Maryland Legislation Drafted to Address the Licensing of Mortgage Trusts
On Friday, a draft became available of the emergency legislation to be introduced by Maryland Senate Finance Committee Chair Pamela Beidle to address the Maryland Office of Financial Regulation (OFR) guidance and emergency regulations to facilitate compliance with the state Appellate Court’s April 2024 ruling in the case of the Estate of Brown v. Ward. The guidance and regulations have raised urgent issues for entities involved in the secondary mortgage market because OFR’s interpretation significantly (and unnecessarily) expanded on the Court’s opinion.
• The bill would create the necessary exemptions for trusts to the Installment Loan Licensing Law and Mortgage Lender Law, and would create a one-year study commission to review the issue and make recommendations to the Legislature.
• MBA led the drafting of the bill with a broad industry coalition, and last week submitted a comment letter to OFR that strongly encouraged it to rescind its guidance and regulations.
Go deeper: The Brown v. Ward case was limited to an assignee of a home equity line of credit and whether the assignee needed a license to have the legal authority to bring a foreclosure action. The Court agreed that a license was required, but the OFR unnecessarily expanded the regulation to cover purchasers/assignees of closed-end credit such as passive trusts of residential mortgages loans, which under the order would also need to be licensed. The requirement was effective Jan. 10, but OFR has delayed enforcement until April 10.
Why it matters: MBA and MMBA last fall strongly urged the OFR not to expand its rules beyond the court’s decision and warned of the harmful and immediate consequences to the Maryland mortgage market and consumers. In recent weeks, the industry’s predictions of detrimental impact to Maryland have proven prescient, as several purchasers of Maryland loans have announced that they will either raise costs for them or cease their purchases.
What’s next: MBA and MMBBA will continue to work with its coalition partners in supporting the legislation’s speedy passage and enactment as well as encouraging OFR to rescind its guidance and regulation.
For more information, please contact William Kooper at (202) 557-2737 and Justin Wiseman (202) 557-2854.
IMB CRA Bills Introduced in Two States: One Already Withdrawn
Legislation to apply Community Reinvestment Act (CRA) mandates on independent mortgage banks (IMBs) was introduced recently in Pennsylvania (SB-119) and Maryland (HB-1040). Both bills have been proposed in previous legislative sessions, but were not approved by their committees of introduction. In fact, the Maryland bill has already been withdrawn by its sponsor, who has now introduced and withdrawn the bill in each of the last three years.
Why it matters: CRA for IMBs represents a solution in search of a problem and does not recognize the incompatibility of the CRA with the business models of IMBs and their historical lending activities. IMBs do not have deposits to reinvest; do not have access to direct government support; already engage in sustainable lending in low- to moderate-income (LMI) communities; and are subject to robust oversight and supervision in every state they operate as well as from federal regulators.
What’s next: MBA will continue to work with its state partner associations to oppose these bills wherever they are introduced.
For more information, please visit MBA’s State CRA resource center or contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870.
MBA Engages on NMLS Issues During Annual State Regulator Conference; Comment Period for MCR Changes Extended to March 6
At the annual Nationwide Multistate Licensing System (NMLS) conference in Atlanta, MBA representatives delivered remarks during the NMLS Ombudsman meeting regarding the proposed changes to the Mortgage Call Report Form Version 7 (MCRV7), NMLS modernization and individual state regulator requirements, and a proposal to improve the timing of regulator announcements related to NMLS system changes or progress reports.
Importantly, during the conference, regulators announced an extension until March 6, 2025, for comments on the proposed MCRV7 changes.
Why it matters: With representation from nearly 60 different state mortgage regulatory agencies, the NMLS conference in February and American Association of Residential Mortgage Regulators conference in August represent excellent opportunities for member companies and MBA to discuss state policy challenges and help drive continuity of requirements among states.
What’s next: MBA will follow up with regulators and Conference of State Bank Supervisors (CSBS) and will submit its comments on the MCRV7 proposal.
For more information, please contact William Kooper at (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 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:
• The Power of Your Handshake: Turning First Impressions into Content for Social – Feb. 25
• Mastering Compliance and Efficiency with Digital Reverifications – March 4
• AI Voice Agents and Use Cases for Mortgage Lending – April 10
• Tech Trends Shaping the Future of Mortgage Lending – May 13
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 at (202) 557-2931.
