MBA Releases Commercial/Multifamily Finance Policy Priorities

MBA NewsLink Staff

April 22, 2016


WASHINGTON--More than 500 real estate finance professionals visited Washington, D.C. last week to present MBA's priorities to policymakers during MBA's National Advocacy Conference.

The conference included a special set of meetings focused on commercial and multifamily policy issues. A summary of MBA's commercial and multifamily priorities is below; click here for more information about each issue. 

Support a Public Policy Environment That Strengthens Capital Formation in Commercial/Multifamily Real Estate

MBA supports efforts to provide enhanced and efficient capital availability to the commercial/multifamily real estate market. Fundamental to this effort is the support of policies that enhance capital availability for all commercial/multifamily financing sources.

In addition, MBA supports stable, consistent and predictable tax policies that promote long-term economic growth, which is the foundation of strong real estate markets. We express strong concerns over proposals that would discourage prudent investment in real estate. The Like-Kind Exchange rules, the Low-Income Housing Tax Credit and other tax policies that support real estate markets and economic expansion should be preserved and strengthened.

Support the Role of Mortgage Bankers for Delivering Commercial/Multifamily Real Estate Financing
Mortgage bankers, who work with a range of capital sources to facilitate the loan execution that best meets the needs of their clients, enable the efficient delivery of financing to the real estate market and to a variety of property types. Mortgage bankers perform this vital role throughout the economic cycle and for borrowers in virtually all locations and market sizes. MBA supports legislative and regulatory initiatives that encourage and facilitate this vital intermediary role.

Strengthen the Future of the Multifamily Housing Finance Market
MBA underscores the importance of the multifamily rental market as a critical source of housing while recognizing the unique attributes of multifamily housing finance and the need for liquidity in all market cycles.

In the context of multifamily housing finance and GSE reform, MBA will continue to advocate for legislative reform that is consistent with these principles, as well as the important role of private capital in financing multifamily housing. Given the strong diversification of capital sources in multifamily finance at this time, MBA will encourage policymakers to continue to support multifamily activities that strengthen liquidity and stability, monitor ongoing market dynamics and support a regulatory framework that supports a competitive landscape.

MBA will engage with policymakers to develop policies that impact the GSEs and their lender partners intended to support workforce rental housing and affordable housing, while underscoring that multifamily housing, by its nature, tends to be affordable, and support of the broad multifamily housing market is essential to families of modest incomes.

Policymakers should also exercise stewardship of taxpayer resources and consider forward-looking steps to build an even stronger foundation for a stable, competitive and resilient multifamily finance system. FHA multifamily and healthcare programs have performed well, and MBA supports policies that ensure that FHA remains a stable and consistent source of liquidity during all economic cycles. MBA will continue to educate policymakers on the strengths of FHA multifamily and healthcare programs, including the partnership with private sector lenders. MBA will advocate for (1) stable and sufficient resources at FHA to support workforce housing, affordable rental housing and residential healthcare properties, (2) review of FHA policies and procedures to reflect the multifamily competitive landscape and economic trends, (3) reduced regulatory barriers that inhibit FHA-insured financing and (4) strategic and clearly communicated organizational transformation of HUD operations, including asset management functions, with opportunity for ongoing MBA input.  

Enhance Policies that Promote Portfolio Lending on Commercial Real Estate

MBA supports a regulatory framework for banks and life insurance companies that attracts capital to the real estate markets, promotes the efficient allocation of capital within institutions and strengthens sound risk management practices that do not unnecessarily stifle real estate lending.

With regard to banks, MBA supports policies that enhance their ability to lend in local communities and promote balanced regulatory and examination regimes. MBA will continue to work closely with regulatory agencies to seek clarification and modification to the Basel III high volatility commercial real estate exposure capital regime for construction lending. Among other things, this effort includes the removal of cash flow restrictions for the borrower and allowing the inclusion of appreciated land value in the equity component of the HVCRE rule.

In addition, MBA strongly opposes the adoption by U.S. regulators of proposed Basel Committee capital rules that would create unwarranted and burdensome capital requirements for banks. These include a capital charge for bank exposure to counterparty risk (Step-in Risk), and supplemental capital charges for bank commercial mortgage-backed securities trading book activity (the Fundament Review of the Trading Book). Life insurance companies are a steadfast source of capital for commercial real estate. As the National Association of Insurance Commissioners reviews the more current risk-based capital regime governing commercial real estate mortgages, MBA will strongly support this existing capital framework. In concert with this effort, MBA is also working with the NAIC on developing appropriate risk-based capital rules for equity holdings as well as other regulatory proposals that would influence life company investment in commercial real estate. Overall, MBA supports a regulatory capital regime for commercial real estate mortgages that helps diversify and strengthen life companies' investment portfolios

Sustain a Strong Commercial Mortgage-Backed Securities Market

MBA supports the continued growth of the CMBS market as a source of private capital. Critical to the future of the CMBS market is the appropriate regulation of the securitization markets including the risk retention regulatory framework under the Dodd-Frank Act.  

With the implementation of CMBS risk retention slated for December 2016, MBA is working with members and regulators to address implementation concerns. This includes clarifications on the obligations of the second purchasers of a risk retention interest and for CMBS with multiple sponsors the obligations of the initial CMBS sponsor once the sponsor for risk retention purposes has been assigned.

In addition, MBA supports H.R. 4620, which addresses areas of the risk retention final rule that should be modified in order to align the risk retention final rule with customary and prudent CMBS market practices.

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