MBA State Relations Committee Update Federal Highlights
Advocacy News and Information from the Latest Issue of the MBA State Relations Committee Update
MBA issued a Mortgage Action Alliance (MAA) Call to Action that urges members to contact their U.S. Representative and ask him/her to urge congressional leaders to bring H.R. 3507, the bipartisan Yes in My Backyard Act (YIMBY) legislation introduced by Congressmen Mike Flood (R-NE) and Derek Kilmer (D-WA), to the House floor for a vote in September. The YIMBY Act would provide transparency on local efforts to eliminate ill-conceived land use policies and remove barriers that depress production of housing in the United States. The bill requires Community Development Block Grant (CDBG) recipients to report periodically on the extent to which they are removing land use policies that impede housing supply and raise affordability barriers. The bill does not mandate the implementation of any specific practices, thereby preserving local land use control, increasing transparency and encouraging a more thoughtful and complete discussion of development practices in local communities throughout the country. Your help is needed to bring H.R. 3507 before the full House Floor in September. Take action today.
MBA provided comments to the Federal Housing Administration’s (FHA) proposed Servicing Defect Taxonomy. MBA stressed the need for FHA to implement an objective Materiality standard to classify servicing defects. Last month, FHA re-proposed Appendix 8.0 FHA Defect Taxonomy for Servicing Loan Reviews, which FHA previously proposed in 2021. The Defect Taxonomy addresses loan-level defects or noncompliance with FHA’s Single-Family Housing policies by consistently classifying defects and applying the appropriate remedies. FHA’s latest proposal addresses earlier MBA comments by providing greater specificity regarding defect severity tiers and remedies -- a necessary step to enhance the predictability and certainty of the framework’s application. To ensure FHA’s Homeownership Centers consistently apply FHA’s complex mortgage servicing policy, MBA urged FHA to remove subjectivity out of FHA’s definition of a Material Finding, the cornerstone of FHA’s analysis. MBA also recommended that FHA instead align the definition of a Material Finding with its existing definition in the Department of Housing and Urban Development’s (HUD) Single-Family Housing Policy Handbook. That definition focuses on harm to the FHA (the Insurance Fund) and the property (the mortgage collateral) through an objective, de minimis standard. Creating standardization will allow FHA to implement a Taxonomy that servicers can rely on.
MBA and the Housing Policy Council (HPC) asked the Department of Veterans Affairs (VA) to extend the mandatory compliance deadline for the Veterans Affairs Servicing Purchase (VASP) program to December 31, 2024. Given the complexity of the program and the ongoing policy changes and clarifications published recently, MBA and HPC believe additional time is necessary for mortgage servicers to successfully update their processes to implement VASP. MBA and HPC have been consistently engaged on VASP, which is a complex loss mitigation and servicing transfer program that requires servicers to execute a 2.5% interest-rate modification before transferring the loan to the VA’s contractors. Originally announced in April, the VASP requires servicers to implement changes to VA’s loss mitigation structure and the new VASP program simultaneously. Servicers continue to work diligently to adjust their systems, processes, and borrower communications ahead of the October 1 deadline. The trades continue to engage with the VA in weekly calls to discuss ongoing challenges to ensure servicers have the necessary clarity to adjust their operations and communicate with Veterans. MBA will continue to communicate any developments with members.