MBA Advocacy Update

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

May 28, 2019

Last week, House appropriators passed a subcommittee spending bill allocating $50.1 billion for HUD in fiscal year 2020, including a specified $20 million for FHA's single-family information technology infrastructure.  

Also, the Senate passed a two-week, stand-alone flood insurance program extension amid uncertainty about whether a disaster aid bill containing a longer renewal would be enacted before the program lapses. And Sens. Kyrsten Sinema, D-Ariz., and Thom Tillis, R-N.C., began the process to request unanimous consent to pass a Senate companion proposal to House legislation that would make certain VA-guaranteed "orphaned loans" eligible for pooling as Ginnie Mae securities.  

Congress is out this week in observation of the Memorial Day recess.  

Appropriations Subcommittee Passes Spending Bill for Federal Housing Programs
On Thursday, the House Appropriations Subcommittee on Transportation, Housing and Urban Development and Related Agencies marked up a spending bill that would provide HUD $50.1 billion for fiscal year 2020. Among other provisions, the bill provides $300 million for HUD's Cybersecurity and Information Technology Fund, and importantly, also includes an MBA-requested $20 million for FHA's single family IT infrastructure.  

Prior to the markup, MBA sent a letter to congressional offices outlining the industry's priorities. This T-HUD subcommittee bill was passed unanimously, and will be now considered by the full House Appropriations Committee in June.  

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

Senate Begins Move on VA Orphaned Loan Pooling Legislation
Last week, Sens. Kyrsten Sinema, D-Ariz., and Thom Tillis, R-N.C., began the process to request unanimous consent to pass a Senate companion measure to the Protect Affordable Mortgages for Veterans Act of 2019 (H.R. 1988). The bipartisan bill would correct a legislative drafting error that prevented VA-guaranteed "orphaned loans" from being eligible for Ginnie Mae pooling. The legislation would also provide a go-forward fix by changing the start date of the 210-day seasoning period from the date on which the first payment was made to the date on which the first payment was due, which would provide greater clarity for lenders.  

Earlier this month, the House Financial Services Committee and the House Veterans Affairs Committee both passed H.R. 1988 by voice votes. Floor consideration by the full House is expected to follow shortly after the Senate's action to clear the Sinema/Tillis bill. Here is the full text of MBA's letter to the committees: https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Ae01cac91-f6e0-4d2c-9a5b-758b69c36671.  

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

Senate Passes Disaster Supplemental That Includes NFIP Extension
On Wednesday, the Senate passed a $19.1 billion disaster aid package after deal-makers jettisoned border wall/immigration funding that was a political obstacle to the bill's passage. Included in the bill is a clean extension of the National Flood Insurance Program until September 30. The bill now heads to the House for consideration.  

The Senate's disaster relief bill provides aid for states affected by disasters in 2018 and 2019, as well as ongoing relief for disasters that occurred in 2017, including: agriculture disaster relief for farmers; development grants for small, rural communities; assistance for veterans' health facilities and military construction projects; emergency funds for timber, watershed and wastewater infrastructure needs; and resources to restore highways, aviation facilities and other transit projects. The measure also includes $600 million in nutrition assistance and $304 million in Community Development Block Grant funding for Puerto Rico. The legislation further includes billions of dollars in additional funding for states in the Midwest and the South that have experienced catastrophic flooding and tornadoes in 2019. A full text of the bill can be found at https://www.appropriations.senate.gov/imo/media/doc/RO0509_23.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.  

Republican Banking Senators Introduce CECL Delay and Study Legislation
On Wednesday, Sen. Thom Tillis, R-N.C., introduced S. 1564, the Continued Encouragement for Consumer Lending Act, along with fellow Banking Committee Sens. Jerry Moran, R-Kan., Kevin Cramer, R-N.D., Tom Cotton, R-Ark., David Perdue, R-Ga., and Mike Rounds, R-S.D. (https://www.congress.gov/bill/116th-congress/senate-bill/1564).  

S. 1564 would require the Financial Accounting Standards Board to halt implementation of its current expected credit loss standard and work with the Securities and Exchange Commission and financial regulators to review CECL's effect and report the findings to Congress. Financial institutions would not be required to comply with the standard until one year after the report is submitted to Congress. Tillis' legislation comes on the heels of 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 (https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Ae70e771b-5ea0-4463-b11e-6a17e86ebfe2).  

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

House Passes Bill Making CFPB Administrative and Policy Changes
On Wednesday, the House passed on party lines the Consumers First Act (H.R. 1500), introduced by House Financial Services Committee Chair Maxine Waters, D-Calif. The bill reverses certain administrative changes made under the tenure of Acting Director of the Consumer Financial Protection Bureau Mick Mulvaney.  

For example, the bill restores supervisory and enforcement powers of the fair lending office and limits the number of CFPB political appointees. The bill passed by a 231-191 vote with adoption of 14 amendments, including one from Rep. Nydia Velazquez, D-N.Y., that reverses legislative changes made to home mortgage disclosure requirements enacted last Congress.  

The bill is likely to die in the Senate and has largely been considered as a Democratic messaging bill.  

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

HUD Secretary Carson Testifies Before House Financial Services Committee
HUD Secretary Ben Carson appeared before the House Financial Services Committee this past Tuesday in what proved to be a spirited hearing.   Committee Chair Maxine Waters, D-Calif., opened the hearing by saying Carson's leadership of HUD causes her great concern, and noted her belief that the Trump Administration is actively causing harm and striving to make housing "less affordable and less fair."  

During the Q&A, Rep. Blaine Luetkemeyer, R-Mo., said regulatory burdens were a major reason for the lack of affordable housing. He asked Carson about the impact of the impending FASB rule on Current Expected Credit Loss on the cost of housing affordability. Carson stated HUD is studying CECL carefully, noting, "We don't want to make a mistake on that."  

Rep. Denver Riggleman, R-Va., addressed the need for HUD to modernize its "archaic" IT systems and asked about the status of the update. Carson stated that while their platforms are still 40 years old, HUD has created a dashboard that provides real-time information about their individual capacities. Carson also stated that FHA is in the process of updating its platforms as well, though it will take some time.  

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

Treasury Secretary Mnuchin Returns to House Financial Services Committee
Following a contentious hearing last month, Treasury Secretary Steven Mnuchin returned to the House Financial Services Committee early Wednesday morning for Part II of The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System. Headlines from the hearing were focused on Treasury's refusal to release President Trump's tax returns to Congress, domestic effects of tariffs on Chinese products and the potential for changes to the $20 bill, among other items.  

Of particular interest to MBA, Rep. Barry Loudermilk, R-Ga., asked Mnuchin about the nature and coordination of reforms to Fannie Mae and Freddie Mac between the legislative and executive branches. Mnuchin once again encouraged Congress to act in a bipartisan manner, and agreed that the administration will need to work with Congress on the most significant parts of GSE reform.  

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

Senate Passes TRACED Act
On Thursday, the Senate passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act (S. 151) by a 97-1 vote. The bill (https://www.congress.gov/bill/116th-congress/senate-bill/151/text), sponsored by Sens. John Thune, R-S.D., and Ed Markey, D-Mass., must now be considered by the House. If enacted, the bill would amend the Telephone Consumer Protection Act by requiring voice service providers to establish a call-authentication network to combat spoofing.  

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

FHA Issues Technical Correction in FHA-HAMP Eligibility Section of Handbook Update
Last Friday, FHA issued a technical correction for an error identified by MBA and its members in the Single Family Housing Policy Handbook 4000.1 update.  

MBA sent a letter to FHA outlining an error in the FHA-HAMP borrower qualification section. The section stated that an FHA-HAMP modification and the resulting monthly mortgage payment of less than 40 percent of the borrower's gross monthly income was only available to borrowers whose existing front end ratio is less than 31 percent. FHA released a technical correction affirming that the section should read "greater than," and servicers should continue using the previous FHA-HAMP evaluation criteria as outlined before the handbook update (https://www.hud.gov/sites/dfiles/SFH/documents/SFH_FHA_INFO_19-22.pdf).   MBA will continue advocating against publishing handbook updates "effective immediately." According to FHA representatives, another handbook update is planned for September.  

For more information, contact Hanna Pitz at (202) 557-2796 hpitz@mba.org.  

CFPB Releases Spring 2019 Rulemaking Agenda
On Wednesday, the Consumer Financial Protection Bureau released its Spring 2019 Rulemaking Agenda (https://www.consumerfinance.gov/policy-compliance/rulemaking/regulatory-agenda/) outlining the "regulatory matters that the Bureau reasonably anticipates having under consideration during the period from May 1, 2019, to April 30, 2020."  

As expected, much of the Bureau's rulemaking activity will focus on implementing statutory directives of the Economic Growth, Regulatory Relief and Consumer Protection Act of 2018. This includes creating ability-to-repay requirements for PACE financing, HMDA reporting exemptions for certain small lenders, as well as various guidance documents to support EGRRCPA implementation.  

In addition, the agenda confirms the Bureau's plans to continue several previously announced discretionary rulemakings involving HMDA and the Fair Debt Collection Practices Act. With respect to the FDCPA, which was the subject of a Notice of Proposed Rulemaking issued earlier this month, the Bureau intends to address concerns with certain communication practices and consumer disclosures in the debt collection market. Regarding HMDA, the Bureau will consider responses to its May 2019 Advance Notice of Proposed Rulemaking to determine the extent of any changes to the data points added or revised by the 2015 HMDA Rule. In addition, the Bureau expects "to issue a Notice of Proposed Rulemaking concerning the public disclosure of HMDA data in light of consumer privacy interests."  

The Bureau also announced several new projects and regulatory plans. In a development long urged by MBA, the Bureau stated its intent to focus on the expiring GSE qualified mortgage (i.e. the patch) and "determine whether rulemaking or follow up activity is appropriate concerning the patch or other aspects of the ATR/QM rules." In addition, the Bureau will conduct a section 1022(d) assessment of the TILA-RESPA Integrated Disclosure Rule. The release concludes by explaining that "Bureau leadership is considering further prioritization and planning of the Bureau's rulemaking activities," and "expects by no later than the Fall 2019 Agenda to issue a more comprehensive statement of priorities[.]"  

For more information, please contact Justin Wiseman at (202) 557-2854 jwiseman@mba.org; or Blake Chavis at (202) 557-2930 bchavis@mba.org.  

Mortgage Closings in Baltimore Resume after Ransomware Attack
On Friday, May 17, the City of Baltimore released guidance on a manual "work-around" to allow real estate transactions to proceed, starting Monday, May 20, after a recent ransomware attack resulted in disabling of the municipality's computer infrastructure (https://content.govdelivery.com/accounts/MDBALT/bulletins/2458b25).  

The attack on Baltimore's IT system led to near complete halting of all real estate finance transactions for properties located in the city, because there was no available method to issue accurate lien certificates. After several days of industry engagement (including MBA's outreach to state regulators, the GSEs and our industry sister trades), the City released its "work-around" to resume lending.  

The situation remains unresolved and is subject to an ongoing FBI investigation, but the announced process, while far from ideal, is allowing transactions to proceed, albeit more slowly. MBA members closing loans in Baltimore should plan on those transactions taking longer than normal. MBA will provide any updates as the issue develops.  

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 to Hold Webinar on MLO Temporary Authority; Conference of State Bank Supervisors to Participate
MBA Education announced it will hold a live Compliance Essentials webinar at 2:00 p.m. ET on July 11 to discuss implementation of the federal new Mortgage Loan Originator Temporary Authority law and what companies need to know to take advantage of this business opportunity.  

MBA Senior Vice President of Residential Policy and Member Engagement Pete Mills will lead a discussion that will include Bill Young, Vice President of NMLS Business Services at the Conference of State Bank Supervisors. Young's team at CSBS is in the process of redesigning the MLO licensing components of the NMLS to prepare for Temporary Authority's November 24 implementation, and this is a chance to hear directly from, and ask questions of, CSBS on the status of that effort. Also participating is Haydn Richards, Partner with Bradley, to walk through many new operational challenges and legal compliance requirements that member companies should be considering ahead of implementation.  

To register for the webinar, click https://store.mba.org/ProductDetail.aspx?product_code=E2191718AC%2fREGIS.  

For more information, please contact William Kooper at (202) 557-2737 wkooper@mba.org; or Lisa Volb at (202) 557-2919 lvolb@mba.org.  

MBA Education Webinar May 29 on Recent Activity with Consumer Complaints
Join MBA Education on May 29 for a look at recent activity and best practices with managing consumer complaints.  

Handling consumer complaints has become one of the most important functions a financial services company must do to avoid extreme reputational harm, increased regulatory direction and severe monetary penalty. In this webinar, legal and compliance experts will guide you through the background and regulatory requirements, fundamentals, and practices to assist your company in reducing the inherent risks of complaints going unresolved.  

To register for this webinar, click https://www.mba.org/store/events/webinar/ce-update-on-recent-activity-and-managing-consumer-complaints.  

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

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