MBA Advocacy Update

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

June 17, 2019

Ginnie Mae released its "Ginnie Mae 2020" progress report and held a two-day summit with issuers, investors and other stakeholders.  

The Federal Housing Finance Agency published its annual report to legislators, noting there is an urgent need for Congress to act on housing finance reform. The House Financial Services Committee passed bills that would reauthorize the National Flood Insurance Program for five years and modify FHA policy with respect to DACA recipients, housing counseling, and "life-of-loan" premiums. And the full Senate passed companion IRS modernization and VA health care/Home Loan program-related bills, thereby ensuring enactment of those measures via President Donald Trump's signature.  

Ginnie Mae Releases Progress Update on Modernization Efforts

Last week, Ginnie Mae published a report (https://ginniemae.gov/newsroom/publications/Documents/ginniemae_2020_progress_update.pdf) detailing its progress on the objectives laid out last year in its Ginnie Mae 2020 white paper. These objectives include technological improvements to the program, innovation to further the loan-level capabilities of the program and enhanced counterparty risk management policies.  

The update provides greater clarity on Ginnie Mae's actions across these areas. Concerning digital collateral, Ginnie Mae has begun developing policy guidance, securing an eVault vendor and launching a pilot program. Similarly, Ginnie Mae will be starting what could be a lengthy effort to transition the program to a system that enables loan-level functionality, including the ability of servicers to "split pools" and transfer servicing of individual loans rather than the entire pool. MBA has long advocated for the ability of issuers to split pools in order to help them better manage their MSR portfolios.  

The enhanced counterparty risk management policies at Ginnie Mae will focus on capital requirements, the ability of Issuers/servicers to withstand stress events and recovery and resolution planning. Ginnie Mae has recognized on many occasions the need to ensure transparency in any new standards, as well as the need to tailor standards to the size and complexity of particular institutions. All of these initiatives were discussed in depth at this week's Ginnie Mae Summit, and presentations from the summit are available at https://www.ginniemae.gov/summit/Pages/agenda.aspx.  

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

FHFA Issues Reform Recommendations to Congress

On Wednesday, the Federal Housing Finance Agency published its yearly Report to Congress, which provides details on the Agency's activities over the past year, including its actions as conservator of Fannie Mae and Freddie Mac (https://www.fhfa.gov/AboutUs/Reports/ReportDocuments/FHFA_2018_Report-to-Congress.pdf).  

While this report--the first issued under Director Mark Calabria--covers FHFA regulation and supervision only under the prior Agency leadership, it does include recommendations for reforms endorsed by the new leadership.  

Concerning the future of the GSEs, the report notes "there is an urgent need for Congress to act on housing finance reform." FHFA further commits that it "will set an ambitious agenda that ensures the mortgage market and FHFA's regulated entities do not return to pre-financial crisis business models." To that end, the report references existing reforms that must be preserved, including implementation of the Uniform Mortgage-Backed Security, continued use of credit risk transfers, and equal access for lenders of all sizes. These priorities mirror those that MBA has urged FHFA to "lock in" through administrative means.  

Notably, the report also echoes a long-standing MBA recommendation that FHFA be granted the authority to charter new entrants to promote competition in the secondary market. This competition should enhance market stability while also providing benefits for borrowers and lenders alike.  

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

House Financial Services Committee Advances Flood Insurance Reauthorization Bill

On Wednesday, the House Financial Services Committee passed the National Flood Insurance Program Reauthorization Act of 2019, H.R. 3167, as part of a markup that contained several housing-related bills. H.R. 3167 reauthorizes the National Flood Insurance Program and its flood mapping program for five years and makes reforms to various parts of the program. The bipartisan bill was tightly negotiated and passed unanimously out of the Committee.  

MBA sent a letter ahead of the markup (http://mba-pc.informz.net/mba-pc/data/images/MBA-06-11-2019-FSC-Markup-Letter%20final.pdf), in which it offered support for the overall legislation while expressing disappointment that a provision was not included that would eliminate the mandatory purchase requirements for all commercial properties, similar to what has been introduced in past proposals. This legislation now goes to the floor of the House for a vote, but faces an uncertain future in the Senate.   Also last week, President Trump signed a $19.1 billion disaster aid bill that included a four-month extension of the NFIP until September 30.  

For more information, please contact Dan Grattan at (202) 557-2712 dgrattan@mba.org; or Ernie Jolly at (202) 557-2736 ejolly@mba.org.  

House Financial Services Committee Passes Life-of-Loan Legislation

On June 13, the House Financial Services Committee passed the FHA Loan Affordability Act, H.R. 3141, which would repeal the requirement that Federal Housing Administration borrowers pay mortgage insurance premiums for the life of the loan. The bill reinstates the FHA's previous policy of requiring borrowers to pay premiums until the outstanding principal balance reaches 78 percent of the original home value. The bill passed with a largely party-line vote of 34-25.  

MBA's letter (http://mba-pc.informz.net/mba-pc/data/images/MBA-06-11-2019-FSC-Markup-Letter%20final.pdf) acknowledged the intent to restore the sunset of the monthly FHA premium, but urged a more thorough assessment of the impact of the change on the Mutual Mortgage Insurance Fund, and on overall structure of the premium between upfront and monthly premiums.  

For more information, please contact Dan Grattan at (202) 557-2712 dgrattan@mba.org; or Ernie Jolly at (202) 557-2736 ejolly@mba.org.  

House Financial Services Committee Passes Bill to Encourage Housing Counseling

Also, as part of its June 13 markup, the House Financial Services Committee passed the Housing Financial Literacy Act of 2019, H.R. 2162, which would require HUD to provide a 25-basis-point discount in upfront FHA single-family mortgage insurance premiums for first-time homebuyers who complete a housing counseling program. The bill passed with a 53-6 bipartisan vote.  

Committee Republicans noted that to maintain the bill's bipartisan support, the bill would have to be analyzed by the Congressional Budget Office. A CBO report will likely assess the impact such a legislative change would have on the health of the Mutual Mortgage Insurance Fund. MBA's letter (http://mba-pc.informz.net/mba-pc/data/images/MBA-06-11-2019-FSC-Markup-Letter%20final.pdf) raised the concern that the bill (as drafted) would challenge the HUD Secretary's discretion to set premiums at rates that are consistent with actuarial evidence accepted by the agency.  

For more information, please contact Dan Grattan at (202) 557-2712 dgrattan@mba.org; or Ernie Jolly at (202) 557-2736 ejolly@mba.org.  

House Financial Services Committee Passes Bill to Provide Certainty to Lenders Serving DACA Recipients

Finally, during its June 13 markup, the House Financial Services Committee passed the Homeownership for Dreamers Act, H.R. 3154, which seeks to clarify that recipients of Deferred Action for Childhood Arrivals cannot be deemed ineligible for mortgage loans backed by FHA, Fannie Mae, Freddie Mac or the USDA solely on the basis of their status as DACA recipients. The bill passed with a largely party-line vote of 33-25 with one Republican, Rep. Anthony Gonzalez of Ohio, voting in favor.   MBA's letter (http://mba-pc.informz.net/mba-pc/data/images/MBA-06-11-2019-FSC-Markup-Letter%20final.pdf) encourages Congress to provide its members more certainty on whether they could lend to DACA recipients through the federal housing programs, but stopped short of supporting the measure outright. Though this bill is likely to come to the House floor, it will probably languish in the Senate, unless a larger immigration package is negotiated and it is included therein.  

For more information, please contact Dan Grattan at (202) 557-2712 dgrattan@mba.org; or Ernie Jolly at (202) 557-2736 ejolly@mba.org.  

HUD Confirms DACA Recipients are Ineligible for FHA Mortgages

In a letter sent to Rep. Pete Aguilar, D-Calif., on June 11 (https://www.housingwire.com/ext/resources/files/Editorial/Documents/Aguilar-DACA-FHA-Final-Response-Letter-2.pdf), a HUD official confirmed that DACA recipients are not eligible for FHA loans. In the letter HUD underscores that in 2015, former Secretary of Homeland Security, Janet Napolitano described DACA as an exercise of "prosecutorial discretion and confers no substantive right, immigration status or pathway to citizenship and that only Congress, acting through its legislative authority, can confer these rights." 

Further, HUD confirmed that it is not responsible for determining citizenship or immigration status.  The letter concludes that DACA doesn't confer lawful status, therefore, recipients are ineligible to receive FHA financing.  

For more information, please contact Julienne Joseph at (202) 557-2782 jjoseph@mba.org.  

House Introduces CECL Delay and Study Measure

Last week, a bipartisan coalition of representatives led by Vicente Gonzalez, D-Texas, and Ted Budd, R-N.C., introduced a measure that would study the impact and delay implementation of the Financial Accounting Standards Board's new Current Expected Credit Loss standards. The "Consumer Impact and Study Bill of 2019" calls for prudential regulators to work with FASB to delay implementation of the CECL standards to review their anticipated effect and report the findings to Congress. Financial institutions would not be required to comply with the standards until one year after the report is submitted to Congress.  

This measure follows closely recently introduced legislation from a group of Republican senators, as well as recommendations made by MBA in its May 21 letter to Congress calling for a quantitative study on the overall impact of CECL implementation and a delay in enactment pending a completion of that study.  

For more information, please contact Ernie Jolly at (202) 557-2741 ejolly@mba.org; or Dan Grattan at (202) 557-2712 dgrattan@mba.org.  

House Passes IRS Modernization Bill

Last week, Congress passed the Taxpayer First Act, the first major legislative reform of the Internal Revenue Service in nearly two decades. The bill includes provisions that restructure the IRS, improve customer service and increase vital taxpayer protections. The bill passed unanimously in both chambers and is expected to be signed by the President. 

MBA sent a letter to Congress (http://mba-pc.informz.net/mba-pc/data/images/2019-06-10%20MBA%20Letter%20Taxpayer%20First%20Act%202019%20(002).pdf) encouraging the bill's passage, highlighting language to automate the third-party income verification process which has been a major priority for MBA members.  

For more information, please contact Ernie Jolly at (202) 557-2741 ejolly@mba.org; or Dan Grattan at (202) 557-2712 dgrattan@mba.org.  

Senate Passes Blue Water Navy Bill

On June 13, the Senate passed the Blue Water Navy Vietnam Veterans Act of 2019, H.R. 299, by unanimous consent. The bill now heads to the President to be signed into law. This follows the unanimous vote of 410-0 by the full House on May 14. The bill, introduced by House Veterans Affairs Committee Ranking Member Phil Roe, R-Tenn., would extend certain health benefits to veterans who served in Southeast Asia and Korea and were affected by diseases associated with Agent Orange.  

While applauding the underlying purpose of the bill, MBA raised concerns (https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3A8322af41-a3e2-408e-a2e4-e5d35de06a74) about a provision that would increase fees charged to veterans in connection with the Department of Veterans Affairs Home Loans program. MBA's longstanding policy opposes increases in loan guarantee or insurance premiums to pay for unrelated spending or government benefits. House leaders had encouraged the full Senate to pass the measure before Memorial Day.  

For more information, please contact Tallman Johnson at (202) 557-2866 tjohnson@mba.org; or Ernie Jolly at (202) 557-2741 ejolly@mba.org.  

Senate Banking Committee Discusses Data Brokers in Latest Data Privacy Hearing

On June 12, the Senate Banking Committee conducted a hearing, "Data Brokers and the Impact on Financial Data Privacy, Credit, Insurance, Employment and Housing." Witnesses were Alicia P. Cackley with the Government Accountability Office; and Pam Dixon of the World Privacy Forum. The hearing examined the structure and practices of the data broker industry and technology companies, such as large social media platforms; how the data broker industry has evolved with the development of new technologies; what gaps exist in federal privacy law; and what changes to federal law, including the Fair Credit Reporting Act, should be considered to give individuals real control over their data.  

Chairman Mike Crapo, R-Idaho, remains concerned about data collection by both government agencies and private companies, saying, "I have been troubled by government agencies and private companies' collection of personally identifiable information for a long time.... Even more troubling is that the vast majority of Americans do not even know what data is being collected." During his opening remarks, Ranking Member Sherrod Brown, D-Ohio, described this issue as "bipartisan" and said the Senate needed to further address the "shadow industry" of data brokers to ensure consumer data privacy is protected.  

This was the Senate Banking Committee's second hearing on this topic in the 116th Congress and further committee hearings are expected. On February 13, in a rare bipartisan request, Crapo and Brown invited feedback from the public on collection, use and protection of sensitive information by financial regulators and private companies. MBA submitted its feedback and supports efforts to ensure that no consumer is unwittingly exposed to harm by unintentionally providing his or her personal data to unscrupulous actors. However, MBA suggested not preventing the careful use of data to improve the efficiency of mortgage origination. The full text of MBA's letter to the Banking Committee can be found at http://mba-pc.informz.net/mba-pc/data/images/SBC%20Privacy%20Questions%2003152019%20(002).pdf.  

For more information, please contact Tallman Johnson at (202) 557-2866 tjohnson@mba.org; or Erin Barry at (202) 557-2913 ebarry@mba.org.   

IRS Modernization Bill Passes Senate, Goes To President Trump for Signature

On June 15, the Senate unanimously passed a bipartisan bill to make improvements to the Internal Revenue Service after the House passed the measure earlier in the week. The bill represents the first legislative reform to the IRS in nearly two decades and represents the culmination of several years of work in both chambers. Known as the Taxpayer First Act (H.R. 3151), the bill contains a host of provisions designed to modernize the IRS, in areas such as customer service, taxpayer rights during the enforcement process, information technology, identity theft protection, and electronic systems. Among these provisions, the bill includes language to automate the 4506T tax transcript process.

MBA submitted a letter (http://mba-pc.informz.net/mba-pc/data/images/2019-06-10%20MBA%20Letter%20Taxpayer%20First%20Act%202019%20(002).pdf) supporting the validation of income as an important component of sound residential mortgage lending. MBA emphasized that automation will greatly enhance the customer experience by reducing the time needed for a lender to determine how to most suitably serve their clients.  

The House passed versions of the bill on multiple occasions last year, and it also approved a version of the measure in April. However, concerns about the Free File language pushed House lawmakers to reintroduce the bill last week without the controversial provision. The reintroduced bill is what the House and Senate passed this week and it now heads to the President's desk for signature.  

For more information, please contact Tallman Johnson at (202) 557-2866 tjohnson@mba.org; or Erin Barry at (202) 557-2913 ebarry@mba.org.  

FHFA Postpones Optional Use Period for the Redesigned Uniform Residential Loan Application

On June 12, The Federal Housing Finance Agency released an announcement (https://www.fanniemae.com/content/news/urla-announcement-june-2019.pdf) postponing the optional use period for the redesigned Uniform Residential Loan Application form and corresponding datasets. Before the postponement, the optional use period was slated to begin on July 1. FHFA has stated that it will provide additional information regarding the new effective date and an updated version of the form at a later date.  

FHFA will continue to engage with industry stakeholders to finalize issuance of an updated URLA form, corresponding datasets, and a new implementation timeline. Please note that no change has been made to the mandatory use date of February 1, 2020.   MBA remains in constant communication with the leadership at FHFA and will provide updates as they become available.  

For more information, please contact Rick Hill at (202) 557-2718 rhill@mba.org.  

MBA Urges Changes to FHA's Proposed Revisions to the Annual Lender Certification

On June 7, MBA, together with other key trade associations, submitted comments on FHA's proposed revision to the annual certification required of FHA-approved lenders (http://mba-pc.informz.net/mba-pc/data/images/FHA_Annual%20Certification%20Proposed%20Changes_Joint%20Trades%20Comment%20Letter.docx%20(002).pdf). The current annual certification has contributed to the unfair use of the False Claims Act by HUD and the Department of Justice in recent years, causing many lenders to scale back or exit FHA lending. While MBA appreciates the proposed changes simplifying the certification, the letter noted that the proposed revision falls short of the goal of reducing excessive FCA risk and providing lenders the certainty needed to return to the program.  

Despite the proposed changes, the annual certification would continue to require FHA-approved mortgagees to certify to strict compliance with all HUD regulations and requirements. This includes compliance with all servicing regulations, quality control requirements and the full range of ineligibility criteria--which continues to act as a deterrent for lender participation in the program. MBA strongly urged FHA to consider eliminating the annual certification requirement entirely. If the certification is not eliminated, MBA recommended that it be revised to only require the mortgagee to certify that it "maintains policies, procedures and internal controls that are reasonably designed to assure compliance in all material respects with FHA regulation, as part of an FHA compliance management system."  

MBA is currently working on comments on the proposed revisions to the loan-level certification and defect taxonomy, which is due to the Department on June 30.  

For more information, or to join MBA's comment working group, please contact Fran Mordi at (202) 557-2860 fmordi@mba.org; or Dan Fichtler at (202) 557-2780 dfichtler@mba.org.  

FASB to Discuss Possible Accounting Changes Due to LIBOR Transition

The Financial Accounting Standards Board has added to its June 19 Board meeting agenda a discussion on accounting changes that would need to be made in light of the upcoming demise of LIBOR, including guidance on adjusting hedging transactions and loan and lease modifications, and whether guidance needs to be updated on how to modify debt arrangements, as companies transition from LIBOR to a new index.  

FASB recognizes that as companies are working on finding and transitioning from LIBOR to a replacement index, it is important to start addressing the accounting issues that would need to be adjusted or updated to reflect the impact of the transition. According to the Board, the goal is to help facilitate the transition, rather than allowing accounting to become a barrier to the transition. Hence, the Board has noted that examining the ramifications of LIBOR's demise is currently one of the most important projects on its agenda, and it will focus on providing the necessary guidance to companies on this important topic.  

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

MBA Supports Legislation in Massachusetts to Enact AMC Minimum Standards

This week, in support of the Massachusetts Mortgage Bankers Association's Beacon Hill Advocacy Day on June 12, MBA wrote to the Chair and Vice Chair of the Massachusetts House Committee on Ways and Means regarding H.1114 to support the legislation and urge that it be approved expeditiously (https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3A36932e52-850a-4d0e-9648-a2a719f2ffbc).  

The bill (https://malegislature.gov/Bills/191/H1114) would establish a regulatory structure in the state for appraisal management companies consistent with Dodd-Frank requirements for states. Federal rules provided all states with three years to implement the law's minimum standards and an additional year, if necessary, to complete the undertaking. That timeline ends on August 10, and Massachusetts and the District of Columbia are the only jurisdictions that have not yet come into compliance. While the federal law is not a state mandate, if Massachusetts does not meet the deadline, lenders wishing to use AMCs will only be able to use federally regulated AMCs to process federally related transactions after August 10. H.1114 has strong bipartisan support and is a priority legislative issue for the Massachusetts MBA.  

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 Webinar June 26 on Trends in Servicing Regulations Join MBA Education and the Compliance Essentials program on June 26 to hear about the latest developments pertaining to the Consumer Financial Protection Bureau's Servicing Rules. This webinar will address the content of the 2016 Servicing Rules that are now in force, as well as other rules relating to mortgage loan servicing. The webinar will address topics including, but not limited to: Accelerated Loans, Successors in Interest, Bankruptcy, Loss Mitigation Requirements and Notice Timing Requirements, among others. Hear from leading legal experts as to why these rules continue to be a cause for concern for servicers and compliance professionals throughout the industry.  

To register for this webinar, click https://www.mba.org/store/events/webinar/ce-trends-in-cfpb-servicing-rules  

For more information, please contact Lisa Volb at lvolb@mba.org or 202/557-2919.

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