MBA Advocacy Update
FHFA, Treasury Announce Amendments to the PSPAs
The Federal Housing Finance Agency (FHFA) and the U.S. Department of the Treasury (Treasury) announced amendments to the Preferred Stock Purchase Agreements (PSPAs) governing the conservatorships of Fannie Mae and Freddie Mac (the GSEs).
Why it matters: The amendments make various modifications, including deleting previously portions of the PSPAs that were suspended through the September 14, 2021, Letter Agreements, clarifying that the GSEs must meet the capital requirements established by FHFA as those rules are modified over time, and technical changes or clarifications applicable to the GSEs’ financial reporting. Notably, the amendments also reinstate the requirement for Treasury’s consent prior to terminating the conservatorships and incorporate a side agreement between Treasury and FHFA to establish a process for eventual public input on termination options and potential impacts.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “MBA believes strongly that any efforts to remove Fannie Mae and Freddie Mac from their federal government conservatorships must fully consider the impact on single-family and multifamily housing markets and overall financial stability. This includes the critical move that Congress establishes an explicit federal backstop for mortgage-backed securities.”
• He added, “Conservatorship was never intended to be perpetual, and we support efforts toward the GSEs’ release. We appreciate the rationale behind today’s changes to the PSPAs, which are designed to foster transparency across government agencies, share market impact analysis, and give appropriate time for market participants to provide feedback on proposed reforms.”
Go deeper: The suspended portions of the PSPAs that were deleted through this amendment were the artificial limits on GSE acquisitions of loans secured by second homes and investment properties, loans with multiple risk factors, lenders’ use of the cash windows, and multifamily lending volumes caps. These disruptive and unworkable backward-looking limits were initially suspended in response to intense MBA advocacy, and we welcome their removal from the PSPAs.
What’s next: MBA will review the amendments to the PSPAs in the coming days and will participate fully in the newly established process for public input regarding ending the conservatorships. MBA strongly believes conservatorship was never intended to be permanent and supports efforts toward a careful and deliberate release of the GSEs’ with appropriate reforms. MBA stands ready to work with the incoming Trump administration at the White House, Treasury Department, and FHFA — and also with the Congress — to ensure that happens.
For more information, please contact Sasha Hewlett at (202) 557-2805 or Megan Booth (202) 557-2740.
President Carter Observance on January 9 Not a Holiday under Reg Z; May Impact Some Operations
Following the passing of former President Jimmy Carter, President Joe Biden declared January 9 a federal holiday for the state funeral. The federal government will be closed that day, and some functions that rely on government responses may be delayed. However, it is not a holiday as defined in statute, which is the requirement for it to not count with respect to certain Regulation Z requirements such as the time for recission or the receipt by the borrower of the Loan Estimate and Closing Disclosure.
Why it matters: The general business day requirement, which governs when the Loan Estimate must be provided, will be determined based on whether the lender’s offices are open to the public “for carrying out substantially all of its business functions.” Note that activities that indicate a creditor is open for the general business day requirement include “the availability of personnel to make loan disbursements, to open new accounts, and to handle credit transaction inquiries.”
For more information, read this blog post from Alston & Bird here.
FHFA Releases Annual Scorecard for Fannie Mae and Freddie Mac
On December 20th, FHFA released its 2025 Scorecard for Fannie Mae and Freddie Mac and Common Securitization Solutions. The 2025 Scorecard builds on progress made last year and focuses on two equally weighted areas: promoting equitable access to affordable and sustainable housing, and operating in a safe and sound manner.
Go deeper: The 2025 Scorecard highlights specific objectives that address housing affordability, housing supply and the resiliency of the nation’s housing stock, efficiency in the mortgage process, and sustainability in housing outcomes.
• Objectives include exploring opportunities to support first-time homebuyers and homebuyers limited by wealth and income, a continued focus on multifamily workforce housing, leveraging data, technology, and other innovations to promote efficiency and cost savings in housing finance, identifying opportunities to mitigate risk in the evolving property insurance market, continuing to monitor natural disaster/climate-related market developments and risks, and exploring the benefits and risks of increased use of artificial intelligence (AI) and machine learning in the mortgage industry.
• Notably, the Scorecard again includes an objective that the GSEs will work with industry stakeholders to improve loan quality and continue to harmonize processes and remedies that support the Single-Family Representations and Warranties Framework. This reflects a key advocacy issue MBA has pursued over the last year.
• It also includes a reference to continuing the tenant protections that were initiated by the GSEs last year.
Why it matters: The Scorecard outlines FHFA’s expectations for the GSEs’ priorities in the coming year. These priorities, in turn, influence the GSEs’ operations across a wide range of policy areas and business activities.
What’s next: MBA will continue to work with the GSEs as they implement the Scorecard initiatives and, over the long term, continue to pursue the necessary conditions to exit conservatorship.
For more information, please contact Sasha Hewlett at (202) 557-2805 or Megan Booth (202) 557-2740.
MBA, Joint Trades Respond to FHA’s Proposed Loss Mitigation Proposal
MBA, separately and together with a coalition of consumer and housing trade associations, recently submitted comments to the Federal Housing Administration’s long-anticipated proposal to update the Servicing Handbook. Joining MBA’s individual comments were the American Bankers Association and the National Mortgage Servicing Association.
Why it matters: A top servicing policy priority for MBA, FHA’s proposal establishes a permanent loss mitigation waterfall to succeed FHA’s COVID-19 Loss Mitigation Recovery Waterfall, which expires on April 30, 2025. To preserve the COVID-19 flexibilities available to borrowers and servicers, FHA’s proposal continues streamline loss mitigation reviews and the use of the Standalone Partial Claim.
• In addition, to address a growing risk of redefaults, FHA also proposed Trial Payment Plans for all workout options. Finally, FHA proposed the new Equity Saver Sale, a 120-day marketing period for borrowers with equity to sell their homes pre-foreclosure.
Go deeper: MBA’s message of support made four recommendations for FHA:
• Extend the COVID-19 Recovery Loss Mitigation Waterfall to February 1, 2026, to allow servicers to implement FHA’s updates;
• Eliminate unnecessary hardship documentation to be consistent with allowing borrowers to attest to a financial hardship;
• Eliminate the comparison between a Standalone Partial Claim and the Standalone 30-year modification to reduce complexity in evaluating borrowers; and
• Repropose the Equity Saver Sale to the Drafting Table as a separate Mortgagee Letter.
What’s next: FHA is expected to finalize its proposal ahead of April 2025. MBA will monitor and communicate any developments.
For more information, contact Brendan Kelleher at 202-557-2779.
MBA, Colorado Mortgage Lenders Association Submit Joint Response on Pre-Rulemaking Considerations on AI
MBA submitted joint comments with the Colorado Mortgage Lenders Association (CMLA) in response to a pre-rulemaking comment period from the Colorado Attorney General (CO AG) relating to the Colorado Anti-Discrimination in Artificial Intelligence (ADAI) law enacted in 2024 (SB 24-205). The CO AG offered a chance for industries to provide input on how its office can address issues within ADAI through rulemaking.
Go deeper: The joint MBA-CMLA comments included requests for the CO AG to: clarify reliance on existing anti-discrimination laws, rely on existing consumer notices where possible, recognize applicable and existing risk management frameworks, update reporting requirements so the CO AG establishes the need to report, and more.
• CMLA has also been coordinating feedback from MBA and its members through meetings at the state capitol and with the CO AG on certain amendments to clarify the statutory language.
Why it matters: Providing feedback to the CO AG in a pre-rulemaking process allows CMLA and MBA to help shape the direction of these regulations before an official comment period. The pre-rulemaking process demonstrates the CO AG’s commitment to work with stakeholders, which is an important step for any office in establishing a first-in-the-nation law like ADAI.
What’s next: MBA continues to support its state partners in their conversations on AI policy.
• MBA is also working with the California Mortgage Bankers Association as they prepare comments due on January 14, 2025, on the proposed regulations released by the California Consumer Privacy Protection Agency.
For more information, please visit the MBA resource center mba.org/stateai or contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870. Check here to see all comments submitted and to stay updated with the CO AG’s regulatory updates.
MBA Leads Industry Coalition in Response to NY Regulator’s Short CRA Comment Period
In a contemptuous move, the New York Department of Financial Services (DFS) issued a press release on December 17, 2024, announcing a mere 10-day comment period on draft rules to implement the state’s Community Reinvestment Act (CRA) for independent mortgage banks (IMBs). In response, MBA, the New York MBA and local associations in the state, and MBA members worked through the holidays to offer comments on the draft DFS rule.
Go deeper: Among other points, the letter implored DFS to not base the IMB regulations on existing CRA exams for depositories, and instead align as much as possible with the Massachusetts CRA framework (the only state with functioning CRA process for IMBs).
• On this point, the letter explained that IMBs have different business models, do not have deposits to “reinvest,” do not have access to direct government support, already lead the market in sustainable lending in low- to moderate-income (LMI) communities, and are subject to robust oversight and supervision in every state in which they operate, as well as from the federal regulators.
Why it matters: The law directing DFS to propose regulations was enacted more than three years before the December 17th press release announcing an inappropriately short comment period for such a consequential and new regulatory regime. The letter urged DFS to engage with stakeholders before proposing the regulation in the future with a minimum 90-day comment.
What’s next: MBA and its partners will seek a meeting with DFS to discuss these comments and DFS’ direction.
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.
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:
• New Entrants in the Mortgage Industry and Their Winning Strategies – Jan. 16
• Fundamentals of Commercial Insurance Issues and Problems – Jan. 28
• Turning Data into Action: Enhancing Recruiting and Solving Loan Officer Performance Challenges – Feb. 4
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.
