MBA State Relations Committee Update Federal Highlights
Advocacy News and Information from the Latest Issue of the MBA State Relations Committee Update
On February 15, Mark Jones, MBA’s 2024 Chairman and President, Union Home Mortgage, testified before the House Committee on Veterans’ Affairs Economic Opportunity Subcommittee. The hearing, “Sink or Swim? A Deep Dive into the Current State of VA’s Home Loan Program in a Competitive Market,” began with an initial panel featuring John Bell, Executive Director, Loan Guaranty Service, U.S. Department of Veterans Affairs. A second hearing panel included Jones, along with Ed DeMarco, President, Housing Policy Council, and Steve Sharpe, Staff Attorney, National Consumer Law Center. Reactions from key subcommittee members focused primarily on Bell’s testimony – and his responses to questions – regarding VA’s proposed Veterans’ Assistance Servicing Purchase (“VASP”) program. A video recording of the hearing can be found here. Click here for MBA’s written testimony and here for Jones’ oral statement. Jones's testimony centered on the following MBA recommendations the VA should consider, including 1) implementing a permanent partial claim option; 2) tying the level of the VA Home Loan funding fee to the actual credit risk within the program, which would lower costs to Veterans by removing recent fee increases imposed to pay for unrelated benefits; and 3) delegating management of VA appraiser panels to lenders – the same way that the process works with every other government mortgage loan program. Jones also highlighted the need for more details from the agency regarding VASP, and effectively responded to a number of questions related to the current state of VA Home Loan program operations. MBA supports Senate legislation (S. 3728) that directly authorizes permanent partial claim authority for the VA. MBA staff will continue to work with key members of both the House and Senate Veterans’ Affairs authorizing committees – and the agency itself – to push for the recommendations Jones emphasized within his testimony.
The full U.S. House considered a procedural motion to move to debate on H.R. 7160, a bill offered by New York Republicans that would double the maximum amount of the deduction for state and local taxes (“SALT”) for married couples against their Adjusted Gross Income – thus eliminating the tax effect known as the SALT “marriage penalty.” The vote on the underlying House rule (H.Res. 994) to advance to a full House floor debate on H.R. 7160 failed by a margin of 195-225. State and local income taxes – including property taxes – generally place a greater burden on homebuyers in high-tax burden states. Some real estate groups (and many “blue state” lawmakers) believe the $10,000 SALT deduction cap against federal income (imposed in 2017) dampens the demand for homes and real estate in their states – particularly in high-cost regions and coastal areas. This failed procedural vote likely kills any momentum to advance SALT-related changes in either the House or Senate this year. MBA will continue to closely monitor any legislative movement on all housing and real estate-related tax provisions – such as the favorable Low Income Housing Tax Credit (LIHTC) enhancements within the recent House-passed, bipartisan tax package (H.R. 7024) – for the duration of the 118th Congress.
Reps. John Rose (R-TN) and Rep. Ritchie Torres (D-NY) introduced H.R. 7297, the Homebuyer Privacy Protection Act of 2024. This revised House bill is identical to companion Senate legislation, S. 3502, introduced late last year by Senators Jack Reed (D-RI) and Bill Hagerty (R-TN). The bill would allow for prescreen reports (trigger leads) to be permissible under the Fair Credit Reporting Act (FCRA) only in limited circumstances during a real estate transaction. A consumer reporting agency (CRA) would not be able to furnish a trigger lead to a third party unless: (1) the third party certifies to the CRA that the consumer has authorized the solicitations; OR (2) the third party certifies it has originated the consumer's current residential mortgage loan, is the servicer of the consumer's current residential mortgage loan, or is an insured depository institution or insured credit union and holds a deposit account for the consumer to whom the consumer report relates. Eliminating trigger lead abuses while preserving their use in appropriately narrow circumstances remains an MBA priority. The introduction of this revamped House bill furthers the momentum for legislative action on this issue. In a press statement, MBA’s Broeksmit said, “We commend Reps. John Rose (R-TN) and Ritchie Torres (D-NY) and Senators Jack Reed (D-RI) and Bill Hagerty (R-TN) for introducing these bills and continue to call on House and Senate leaders to pass them into law as soon as possible.” Your advocacy matters! Participate in MBA’s Mortgage Action Alliance (MAA) Call to Action TODAY and urge your U.S. Representative and U.S. Senators to co-sponsor H.R. 7297 and/or S. 3502, the bipartisan, bicameral MBA-supported “trigger leads” bills.
Treasury Secretary Janet Yellen this week appeared before the House Financial Services and Senate Banking Committees to discuss the Financial Stability Oversight Council’s (FSOC) Annual Report to Congress. Secretary Yellen’s testimony and responses to questions centered on last year’s bank failures, the Basel III Endgame capital requirements proposal and other proposed banking regulations, commercial real estate risks, and FSOC’s nonbank systemically important financial institution (SIFI) designation guidance. Full summary of the hearings can be found here and here. In a press statement in response to commentary made on IMBs, MBA’s Broeksmit said, “If regulators are concerned about the market share and stability of IMBs, they ought to go back to the drawing board on the Basel III endgame proposal, which would drive banks even further out of the mortgage business and make it more difficult for them to serve consumers directly and provide the vital financing that sustains IMBs.” MBA does not believe IMBs – individually or as a sector – pose a systemic risk to the entire U.S. financial system and highlighted these concerns in a July 2023 comment letter. Republicans and Democrats also expressed concerns about the potential risks posed by artificial intelligence (AI) to financial stability and consumers. To a lesser extent, other issues discussed include payments, digital assets, cloud computing, cybersecurity, tax policy, the Securities and Exchange Commission’s (SEC) climate disclosures proposal, and the potential for the housing GSEs to exit from conservatorship. MBA will continue to monitor for any additional information that FSOC and the Treasury provide to the two committees in follow-up communications to lawmakers.
MBA and other trades sent a joint letter in response to a Federal Communications Commission (FCC) Draft Revocation Order proposal that clarifies how consumers may revoke consent to receive calls or texts under the Telephone Consumer Protect Act (TCPA). Specifically, the letter recommends that the FCC:
- Require that consumers that use a non-standard or non-conforming means of revocation to prove that the method used was reasonable in the event of a dispute;
- Provide that revocation will not be presumed to extend to specified informational messages such as fraud alerts, breach notifications, and multifactor authentications, absent a specific direction from the consumer;
- Replace the five-minute response rule for confirmation texts with a next business day requirement; and
- Remove the “soon as practicable” requirement for honoring revocations.
MBA members often provide important, sometimes critical, information to their customers through voice calls and text messages. These include suspicious activity alerts, notices of data breaches, past-due alerts, multifactor authentication texts and notices of payments due. MBA continues to engage to ensure reasonable rules on how customers may revoke consent to receive autodialed or prerecorded calls or text messages covered under the TCPA. Furthermore, given the potential monetary penalties for TCPA infractions, it is important for companies to continue to track the consent status of their customers and have procedures in place to process revocation. MBA will continue to monitor this rulemaking and provide any relevant updates.
MBA filed a comment letter on the Federal Trade Commission (FTC) Trade Rule on Unfair or Deceptive Fees. The letter responds to the FTC’s proposed rule requiring conspicuous pricing disclosures of total costs. MBA urged FTC to exempt mortgages from the rule because it is incompatible with the existing comprehensive mortgage disclosure regime. Because of an existing Federal regulatory regime specifically designed for mortgage transactions, MBA believes the application of the FTC’s rule on deceptive or unfair fees to mortgage lending is unnecessary and counterproductive, as it would present irreconcilable conflicts with the existing disclosure regime, undue compliance burdens on the industry, and consumer confusion. Accordingly, any FTC final rule should not apply to any mortgage transaction that is subject to regulation under the Truth in Lending Act. MBA members have invested significant resources to come into compliance with the comprehensive regulatory regime applicable to the disclosure of the cost of mortgage transactions for consumers. To avoid unnecessary conflict with this regime, excessive compliance burdens for lenders, and confusion for consumers, MBA urges the FTC to exclude mortgage transactions from the scope of any final Trade Regulation Rule on Unfair or Deceptive Fees. MBA will continue to monitor this rulemaking and provide any relevant updates.
The Federal Housing Administration (FHA) issued its final rule regarding lender branch office requirements. This final rule eliminates the current requirement for lenders to register the branch offices where they conduct FHA Title I or Title II loan originations, providing lenders with the option to register branch offices as they see fit. Of note, branches not registered with FHA will not be listed on the Department of Housing and Urban Development (HUD) Lender Search List. During the comment period, MBA submitted questions to HUD that included an inquiry about how HUD would continue to monitor lenders. HUD responded that it “will continue to maintain oversight and risk management of lenders and mortgagees that remain responsible to FHA for the actions of its branch offices and employees.” A more detailed announcement is expected to follow via Mortgagee Letter in the near future. The final rule becomes effective on March 4, 2024.
Senators Jon Tester (D-MT) and Sherrod Brown (D-OH), Chairmen of the Senate Veterans Affairs and Banking Committees (respectively), introduced S.3728, the Veterans Housing Stability Act of 2024, to authorize a permanent VA partial claim to help veterans who are seriously delinquent on their home loans. The text of the legislation can be found here. MBA has consistently called on Congress to authorize and fund a permanent partial claim program for the Department of Veterans Affairs (VA) Home Loan Program. The partial claim authority authorized by the new bill would complement other loss mitigation options still under consideration by VA Secretary Denis McDonough, such as a loan purchase program for delinquent loans. The House Veterans Affairs Committee has invited Mark Jones, 2024 MBA Chairman, to testify next week before its Economic Opportunity Subcommittee, along with the VA and other stakeholders, on the status of the VA Home Loan Program. MBA will provide more detailed commentary on S. 3728 and will share it with lawmakers in both the House and Senate in the coming weeks.