MBA State Relations Committee Update State Highlights

Advocacy News and Information From the Latest Issue of the MBA State Relations Committee Update  

North Carolina Governor Signs H228 Related to Threshold Calculation Index

North Carolina Governor Roy Cooper signed H228, which amends the state’s “threshold” calculation to rely on the Average Prime Offer Rate (APOR). This legislation updates the state calculation, which previously relied on the greater of Fannie Mae’s or Freddie Mac’s Required Net Yield Index. Freddie Mac retired its index years ago while Fannie Mae retired its on June 3, 2024, which necessitated the need for the legislation. North Carolina joins Georgia this year in updating state law to rely on APOR, thus providing alignment with Federal definitions and allowing lenders to apply federal compliance standards to the state requirements. Without addressing this pending conflict in statute, lenders would not be able to remove discount points from the high-cost calculation tests and potentially not provide the loan terms consumers need. Arkansas, Minnesota, and South Carolina also relied on the Fannie or Freddie index by statute. MBA’s state partners are working with the regulators or attorneys general in their respective states to find opportunities to resolve this issue. Considering the gap in Fannie’s retirement and a statute change, the South Carolina Department of Consumer Affairs issued Administrative Opinion No. 23.20-2401 near the end of May, effectively changing its index reliance to APOR. MBA and its state partners will support all three states as they pursue legislation in 2025.

MBA-Opposed Residential PACE Bill Signed by Governor DeSantis

Florida Governor Ron DeSantis signed harmful legislation to expand projects eligible for residential Property Assessed Clean Energy (PACE) financing (SB-770). The now-enacted law will significantly expand the number and types of projects eligible for financing by Florida’s PACE loan program without first subordinating residential PACE liens to existing mortgages or providing substantive consumer protections. MBA has long opposed residential PACE programs because they create risk to lenders and consumers due to the priority status the PACE lien is granted ahead of previously recorded first-mortgages. They also expose consumers to further risk because they are not yet covered by MBA-supported federal consumer protection regulations currently being written by the Consumer Financial Protection Bureau (CFPB). After the bill was sent to Governor DeSantis for consideration, the MBA sent a Mortgage Action Alliance (MAA) Call-to-Action to members in Florida and coordinated with the MBA of Florida to provide a second wave of industry opposition and concern. Expanding the PACE program will preclude borrowers from future refinancing of their first mortgages with a loan insured by the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA), or with a loan sold to Fannie Mae or Freddie Mac (GSEs). Similarly, buyers of homes with PACE liens cannot obtain federally backed financing unless the PACE lien is first paid off in its entirety. MBA will continue to support the MBAF in its efforts to resolve PACE lien priority issues to protect consumers and sustain financing options within Florida.