After MBA Query, FINRA Amends Proposed Margining Requirement

Well, that didn’t take long.  

One day after the Mortgage Bankers Association expressed concerns over a proposed Financial Industry Regulatory Authority rule on margining requirements for multifamily agency finance, FINRA issued an amendment exempting multifamily from the rule. The victory was the result of a nearly two-year advocacy effort.  

The rule, had it been implemented as originally proposed, would have amended FINRA Rule 4210 to establish margin requirements in the single-family “to-be-announced” market, but the rule also scoped in the multifamily housing finance programs of Fannie Mae and FHA/Ginnie Mae.  

Under the amended proposal that FINRA filed with the Securities and Exchange Commission yesterday (, multifamily and project loan securities would be exempt from mandatory margin requirements and each broker-dealer would make its own risk limit determination.  

MBA President and CEO David Stevens, CMB, called the decision a “significant victory” for multifamily finance. “As originally proposed, the rule did not consider the distinct character of commercial/multifamily finance,” he said. “It would have been highly disruptive to the workforce and affordable rental housing market.”   

MBA had filed supplemental comments on Jan. 11 with the SEC ( Supplemental Letter on SEC FINRA Margin Proposal – Jan 11 2016.pdf), arguing that multifamily agency finance already includes strong safeguards, including Good Faith Deposits, stringent agency oversight and underwriting and business protocols that align the interests of the parties to the multifamily lending transaction, making the proposed margin requirements unnecessary.