MBA State Relations Committee Update Federal Highlights
Advocacy News and Information from the Latest Issue of the MBA State Relations Committee Update
The the Federal Housing Administration (FHA) and Fannie Mae and Freddie Mac responded to MBA-raised concerns by announcing that they will delay the implementation date for their new Reconsideration of Value (ROV) policy. Originally scheduled for August 29 and September 2, respectively, the new implementation date is now October 31, 2024, providing lenders an additional 60 days. In July, MBA sent a letter to the Federal Housing Finance Agency (FHFA) and the Department of Housing and Urban Development (HUD) asking for a delay in implementing their expanded Reconsideration of Value (ROV) policies, which were each announced in May 2024. The new policies require lenders to establish an ROV process for borrowers to dispute appraisal valuations and provide them with a comprehensive disclosure outlining the ROV procedure at the loan application stage, among other changes. MBA recognizes the value of ROV policies as a helpful tool in ensuring fairness, transparency, and accuracy in property valuations. The extension will allow lenders and their vendors to ensure that all necessary measures are in place to comply with the new standards, enabling the industry to better support the objectives of HUD and FHFA.
Senator Peter Welch (D-VT) announced the introduction of S.4971, the Rural Homeownership Continuity Act of 2024. MBA supports the legislation, as it provides the opportunity to assume a home seller’s U.S. Department of Agriculture (USDA) Rural Housing Service (RHS) mortgage and aligns the program with other government-backed lending. The text of the legislation can be found here. MBA has testified previously before the Senate Banking Committee’s Housing, Transportation, and Community Development Subcommittee on the need to update USDA home loan products and improve the capacity of the RHS to work more effectively with participating lenders. If enacted, the Welch legislation would improve affordability, boost home buying and selling activity, and increase lending options – on a prospective basis – for rural communities. MBA will work with lawmakers to build bipartisan support for this legislation in the remaining months of the current congressional session.
The Federal Reserve held the federal funds rate at a target range of 5.25-5.50% on Wednesday, while indicating that recent signs of cooling inflation is paving the way for a rate cut as soon as September. Read more of Fratantoni's full commentary here.
MBA submitted its comment letter – and led efforts on a joint trades letter – in response to the Consumer Financial Protection Bureau’s Request for Information (RFI) “Regarding Fees Imposed in Residential Mortgage Transactions.” The RFI sought input from industry participants, consumers, and others on “the impact closing costs have on borrowers and the mortgage market,” citing, among other things, the rising costs for credit scores, credit reports, title insurance, and employment verification. MBA shares the CFPB’s goal of reducing costs and removing regulatory barriers to homeownership. However, MBA also offered recommendations on other rule reforms that would be more impactful in lower consumer costs and improving affordability, including loan officer compensation changes, TRID changes, and appraisal reforms. MBA for months has been vocal about the sharply rising costs of credit reports and other credit reporting products and is pleased that the RFI specifically provides an opportunity to share concerns about the factors driving these pricing changes amidst challenging market conditions for lenders of all sizes and business models. While the RFI contained no specific policy proposals, MBA in press statements (here and here) and speeches made by MBA President and CEO Bob Broeksmit, CMB, (including at the Exchequer Club and at #MBASecondary24) has been critical about the CFPB’s consistent, illogical use of the term ’junk fees’ as it pertains to mortgage closing costs. The RFI followed a March 2024 White House fact sheet and CFPB blog post on “lowering closing costs for home mortgages,” including the possibility of pursuing rulemaking and guidance to address purportedly “anticompetitive closing costs imposed by lenders on homebuyers and homeowners.” MBA welcomes the opportunity to respond to the CFPB’s RFI and will continue to work with them and the Biden administration on common sense initiatives to support affordable and sustainable homeownership.
MBA released an updated version of the Building Generational Wealth Through Homeownership and Affordable Housing Update white paper. The updated white paper highlights MBA’s efforts in advocating for legislation and regulatory actions that promote housing affordability and more options for both renters and homeowners as well as raising awareness and utilizing resources available to improve affordability and homeownership. Tamara King, MBA’s Vice President of Residential Policy and Strategic Industry Engagement, discussed the latest updates to the white paper and why the industry should get involved in advocacy efforts to close the racial homeownership gap. Watch the MBA Now video here. To learn more about the white paper and how to get involved, click here.
MBA and National Reverse Mortgage Lenders Association (NRMLA) submitted a joint comment letter to Ginnie Mae on the proposed Home Equity Conversion Mortgage (HECM) Mortgage-Backed Securities (HMBS) 2.0 program term sheet. The letter commends Ginnie Mae’s efforts to boost liquidity for HECM issuers and emphasizes key recommendations to streamline processes, reduce costs, and ensure operation efficiency. The recommendations specifically include:
- Implementing a 100% pooling maximum participation rate with a 5% risk retention requirement, aligning with the existing HMBS 1.0 program.
- Clarifying "Loan Advances" definitions for transparency.
- Adjusting certification requirements to address legal and operational considerations.
- Revising the Adjusted Property Value Ratio calculation to facilitate the pooling of seasoned HECM loans.
If implemented, the proposed program could alleviate liquidity constraints for HMBS issuers by facilitating the re-pooling of active and non-active buyouts into new custom, single-issuer pools. HMBS 2.0 will permit the pooling of HECMs with an outstanding unpaid principal balance (UPB) of no less than 98 percent and no greater than 148 percent of the Maximum Claim Amount (MCA). HMBS 2.0 will also provide issuers with an incremental source of servicing income to ensure that customer service operations can sustainably meet the needs of borrowers requiring assistance. This process, in turn, would help improve investor confidence in the HMBS market and support HECM MSR values. MBA encourages HMBS Issuers to continue sharing their feedback on the structure of the HMBS 2.0 program as Ginnie Mae decides the next steps. This collaborative effort is essential in crafting a program that bolsters issuer liquidity while protecting taxpayers' interests.
The Senate held a procedural vote on H.R. 7024, the “Tax Relief for American Families and Workers Act of 2024” – the bipartisan, House-passed tax package that includes much-needed Low-Income Housing Tax Credit (LIHTC) program improvements and enhancements. Unfortunately, the “cloture” motion to proceed to the bill failed – as expected – by a tally of 48-44 (60 votes needed, 8 Senators not voting) due to differences over non-housing-related policy matters (such as the size and scope of the federal Child Tax Credit). During floor debate, Senate Majority Leader Chuck Schumer (D-NY) supported the bill’s LIHTC provisions, saying, “[T]he housing crisis in America would ease, one of our biggest crises – housing costs, [would ease] by expanding the Low-Income Housing Tax Credit, something I deeply cared about and urged to be put in the bill. I’m glad it’s there.” In a press statement supporting the bipartisan House passage of H.R. 7024, MBA President and CEO Bob Broeksmit, CMB, previously said, “MBA and its members have long called for enacting tax provisions that address our nation’s housing affordability crisis and the acute shortage of homes for owning and renting. We support this bill, particularly for its meaningful enhancements to the Low-Income Housing Tax Credit (LIHTC) that will produce an estimated 200,000 additional rental units over the next two years.” MBA also joined a previous broad coalition letter in support of the bill’s LIHTC provisions here. A large bipartisan group of Senators has expressed strong support for the LIHTC provisions embedded in H.R. 7024’s affordable housing title. The bill would restore a LIHTC program ceiling increase from 9 percent to 12.5 percent for calendar years 2023 through 2025, which would allow states to allocate more credits for affordable housing projects. It would also temporarily lower the Private Activity Bond (PAB) threshold test from 50 percent to 30 percent for 4 percent LIHTC property projects with an issue date before 2026. Since February, MBA’s Mortgage Action Alliance (MAA) members have sent almost 3,000 messages urging the Senate to take a vote on H.R. 7024. A similar procedural vote could come up again later this year, but it is more likely that programmatic LIHTC changes will be folded in as part of a more comprehensive tax policy debate in 2025. MBA’s ongoing support for affordable housing programs like the LIHTC will be critical to help maintain momentum for the consideration of a mix of housing supply-related credits – and other key industry priorities – as part of the tax debate next Congress. Along with our coalition partners, MBA will continue to advocate strongly for the enactment of housing affordability solutions.