MBA Advocacy Update

Steve O'Connor soconnor@mba.org; Bill Killmer bkillmer@mba.org  

February 04, 2019

In an attempt to keep the government open, a group of 17 lawmakers met on Wednesday to hash out a legislative solution on issues relating to homeland security. This bipartisan conference committee has until February 15 to find such a proposal that could clear both chambers of Congress and get President Trump's signature.  

Also last week: the White House released a statement that the Administration intends to work with Congress in the months ahead to address housing finance reform; and Senate Banking Committee Chairman Mike Crapo, R-Idaho, on Friday announced an updated framework for his preferred legislative approach to GSE reform. And current Comptroller of the Currency and acting director of the Federal Housing Finance Agency Joseph Otting wrote a letter to Democratic lawmakers stating he welcomes their input on how to overhaul the housing finance system.  

Senate Banking Committee Chairman Crapo Releases GSE Reform Framework
On Friday, Senate Banking Committee Chairman Mike Crapo, R-Idaho, announced an updated framework for his preferred legislative approach to GSE reform (http://mba-pc.informz.net/mba-pc/data/images/Crapo%20Housing%20Finance%20Plan.pdf).   The framework, which includes a great deal of alignment with the MBA GSE reform proposal (https://www.mba.org/issues/gse-reform), features a system in which well-capitalized, private guarantors issue and provide credit enhancement on securities that receive a full-faith-and-credit federal government guarantee through Ginnie Mae.  

Importantly, the framework also prohibits guarantors from offering volume-based pricing, places strict limits on the size of the guarantors' mortgage portfolios, and grants the Federal Housing Finance Agency the ability to charter new guarantors to promote competition in the secondary market. The affordable housing funds specified in the framework would collectively receive annual assessments equal to 10 basis points of the total guarantor volumes.  

In response to the release of the framework, MBA President and CEO Robert D. Broeksmit, CMB, released a statement praising the proposal (https://www.mba.org/2019-press-releases/february/mbas-broeksmit-statement-on-us-senate-banking-committee-chairman-crapos-housing-finance-reform-principles).  

For more information, please contact Erin Barry at (202) 557-2913 ebarry@mba.org; or Dan Fichtler at (202) 557-2780 dfichtler@mba.org.  

White House GSE Reform Plan
In one of his first meetings with Federal Housing Finance Agency staff, Joseph Otting, current Comptroller of the Currency and acting FHFA director, told employees the Administration would end government control of Fannie Mae and Freddie Mac and that the White House would announce a plan by February.  

In response to these comments, House Financial Services Committee Chairwoman Maxine Waters, D-Calif., and Senate Banking Committee Ranking Member Sherrod Brown, D-Ohio, requested an explanation from Otting in a Jan. 25 letter. The White House then issued a statement that the Administration would work with Congress on a solution. It specifically said: "The White House expects to announce a framework for the development of a policy for comprehensive housing finance reform shortly. At this time, no decisions have been made on any reform plan."  

For more information, please contact Erin Barry at (202) 557-2913 ebarry@mba.org; or Dan Fichtler at (202) 557-2780 dfichtler@mba.org.  

Agencies' Final Rule Expands Lender Acceptance of Private Flood Insurance
Last month, five oversight agencies (Federal Deposit Insurance Corp.; Office of the Comptroller of the Currency; Federal Reserve; National Credit Union Administration; and Farm Credit Administration) issued a final rule outlining provisions for acceptance of "private flood insurance," in accordance with a number of broad reforms to the National Flood Insurance Program called for in the 2012 Biggert-Waters Act.  

The rule defines "private flood insurance" in accordance with the Biggert-Waters Act and includes a compliance aid to help lenders evaluate policies. Lenders can declare that a policy meets the definition of "private flood insurance" without full review of the policy if there is a statement or endorsement affirming "this policy meets the definition contained in 42 U.S.C. 4012a(b)(7) and the corresponding regulation." Additionally, lenders can conditionally accept certain flood insurance policies that do not meet the definition, as long as the policy provides sufficient protection for the loan, documented in writing.    

The final rule took into consideration arguments put forth by the MBA during the comment period. MBA advised against requiring both mortgagor and mortgagee be included as loss payees, as this would exclude condominium master policies that generally do not include a lender beneficiary. The final rule excludes that proposed provision. The rule will become effective July 1.  

For more information please contact Sara Singhas at (202) 557-2826 ssinghas@mba.org.  

MBA Offers Support for Revisions to FHLB Housing Goals
In comments submitted to the Federal Housing Finance Agency earlier last week, MBA voiced support for newly proposed amendments to the Federal Home Loan Bank housing goals. These goals require the FHLBs to meet certain affordability targets when purchasing loans through their Acquired Member Assets programs.  

FHFA's potential changes to the goals (https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Issues-Proposed-Rule-on-Federal-Home-Loan-Bank-Housing-Goals.aspx) would remove the annual volume threshold by which the goals are triggered; consolidate the four existing, retrospective goals into a single, prospective goal; and introduce a small member participation goal.  

MBA noted the potential for the revised goals to expand FHLB purchases of loans to lower-income households, while also providing greater compliance certainty and simplicity for the FHLBs.  

For more information, please contact Dan Fichtler at (202) 557-2780 dfichtler@mba.org.  

FASB Hosts Public Roundtable on CECL Model
On Jan. 28, the Financial Accounting Standards Board hosted a public roundtable discussing several issues relating to the new Current Expected Credit Loss accounting standard. CECL, which will change the way institutions account for loan and credit losses, will become effective for most institutions in 2020. MBA and other concerned trade associations and stakeholders have been advocating for a delay in implementation pending a necessary quantitative impact study on the effects or challenges of implementing CECL.  

The first part of the discussion revolved around an alternative proposal submitted by a group of banks that would allay some of the capital impact CECL presents. The second part focused on possible guidance addressing the reporting of gross write-offs and recoveries by origination year for financial assets. FASB is expected to reconvene by the end of the first quarter to make determinations on both issues.  

For more information, contact Fran Mordi at (202) 557-2860 fmordi@mba.org.  

MBA Convenes Stakeholder Meeting to Discuss Remote Online Notarization Campaign
On Jan. 31, MBA held a meeting with industry representatives to discuss the 2019 campaign to enact state laws that would allow notaries to use audio-visual communication technology to perform notarial acts.  

As of today, 20 bills pertaining to remote online notarization have been introduced in 14 states during the current legislative session. In some states, companion bills have been introduced in both the house and senate chambers, while others have introduced separate bills that address components of RON (i.e. credential analysis) in different ways.  

MBA will continue to collaborate with the American Land Title Association and our respective state association partners in pushing for the enactment of RON legislation that comports with the MBA-ALTA model (https://www.mba.org/audience/state-legislative-and-regulatory-resource-center/remote-online-notarization).  

For more information please contact William Kooper at (202) 557-2737 wkooper@mba.org; or Kobie Pruitt at (202) 557-2870 kpruitt@mba.org.  

MBA Education/MISMO eMortgage Servicing Webinar Feb. 13
Join MBA Education and MISMO on February 13 for a look at the next step in MBA's eMortgage Roadmap Series.  

An increasing number of lenders are offering the convenience and efficiency of a digital signing process known as eClosing. Preparing to service eMortgage loans has both technology requirements and operational impacts. This webinar will explore both as industry experts dive into topics such as tracking eMortgage loans; eVaults and the role of the MERS eRegistry in the servicing process. Presenters will also discuss operational considerations when servicing eMortgages covering topics such as custody; payoff processing; modifications; and transfers of servicing including discussions on potential challenges and how they can be overcome.  

To register for this webinar, click https://www.mba.org/store/events/webinar/roadmap-for-moving-from-paper-to-digital-servicing.  

For more information, please contact Allison Yaworske at (202) 557-2912 ayaworske@mba.org

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