MBA State Relations Committee Update Federal Highlights

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

MBA and Members Meet with BCFP to Discuss Reexamination of HMDA
Last week, MBA joined representatives of several member companies to meet with Bureau of Consumer Financial Protection (BCFP) leadership to discuss the Home Mortgage Disclosure Act (HMDA). The meeting focused on three key issues. First, MBA urged the Bureau to proceed with its plan to reexamine certain HMDA reporting requirements, namely those that exceed Dodd-Frank's statutory amendments. Second, MBA reiterated its position that business-to-business loans secured by multifamily properties should be exempted from HMDA reporting. Finally, MBA urged the Bureau to delay publication of data collected in 2018 until it conclusively addresses its intended publication policy. The Bureau was receptive to our concerns. MBA was pleased with the outcome of the meeting.

Treasury Secretary Mnuchin Testifies before House Financial Services Committee
Yesterday, Treasury Secretary Steven Mnuchin gave his annual testimony before the full House Financial Services Committee on the State of the International Financial System. Important to MBA, Rep. Dennis Ross (R-FL) noted that with Congress slow to enact GSE Reform, the Treasury must get involved as an active participant. Specifically, he emphasized that taxpayers have spent more than $1 billion on the Common Securitization Platform and asked for a commitment to its implementation. Secretary Mnuchin noted that Treasury is working on the effort and is committed to its implementation. Additionally, Mnuchin said, "we need GSE reform. In the next Congress, this should be a major focus. We can't leave ‘these things' sitting where they currently are." Also, Rep. French Hill (R-AR) later pressed Mnuchin on the continued expansion of the GSEs business lines as they pertain to their charter. Mnuchin responded by that he is aware of the list of pilot programs and activities.

MBA Disputes HUD Interpretation on Orphaned VA Refinances
In comments submitted to HUD on Thursday, MBA provided its views regarding HUD's interpretive rule implementing the anti-churning provisions of the recent financial regulatory relief legislation. The interpretive rule clarifies that the guaranty on existing Ginnie Mae MBS is unaffected by the legislation, but also confirms HUD's determination that valid VA-guaranteed refinances that were in process or closed prior to the enactment of the legislation, but which do not meet the new seasoning requirements, are not eligible for Ginnie Mae pooling. In its response, MBA supported HUD's assessment of the unaltered guaranty on existing Ginnie Mae MBS, but strongly disagreed with the HUD interpretation regarding the orphaned VA loans. MBA noted that: "This determination is not supported by congressional intent, practical application in the mortgage market, or the considerations that led to HUD's determination regarding Multiclass Securities." In particular, MBA emphasized the need for consistent and prospective application of the law. For companies planning to submit their own responses, comments are due to HUD by August 2. Separately, MBA is continuing to pursue a legislative fix to the problem, as well as further aiding in the development of a more robust secondary market for the affected loans.

Fannie Mae Introduces Enterprise-Paid Mortgage Insurance
Fannie Mae released details of its Enterprise-Paid Mortgage Insurance (EPMI) pilot. The pilot is being marketed as an alternative to traditional borrower-paid and lender-paid mortgage insurance and is in many ways akin to the IMAGIN pilot developed by Freddie Mac earlier this year. Under the EPMI structure, Fannie Mae is the entity responsible for purchasing the mortgage insurance on high-LTV loans. To do so, Fannie Mae secures a forward insurance arrangement from a qualified insurer, which in turn transfers the risk to a panel of approved reinsurers. Fannie Mae pays the mortgage insurance premiums, while the lender is responsible for paying an additional loan-level price adjustment. Following engagement with MBA prior to the introduction of the pilot, Fannie Mae implemented a number of MBA recommendations, such as including a diverse cross-section of lenders in the pilot and adhering to an overall volume cap. MBA will work with Fannie Mae and FHFA to evaluate the pilot and help determine the path forward that best enables a robust market for borrowers and lenders.

MBA Urges Congress to Reauthorize Flood Insurance Program
MBA joined 21 other stakeholders in a letter urging Congress to reauthorize the National Flood Insurance Program (NFIP) ahead of the July 31, 2018 deadline. Congress has yet to pass a long-term reauthorization of the program which has already resulted in a series of six stop-gap extensions and two brief lapses in 2017 and 2018. While the House passed a series of bills to extend and reform the NFIP, the Senate has yet to coalesce around an agreement. However, just this week the Senate passed a motion (95 -4) to include an extension of the NFIP in an appropriations package. The motion calls for the program to run through January 31, 2019 but it's unlikely it will pass ahead of the looming deadline.

MBA Suggests BCFP to Broaden Education Offerings, Urges Elimination of Rate-Checker Tool
Earlier this week, MBA submitted comments on the Bureau of Consumer Financial Protection's (BCFP) Request for Information (RFI) on Bureau financial education programs. MBA continues to support the Bureau's efforts to ensure consumers have the information they need to make informed financial decisions. This RFI presents an opportunity for the Bureau to assess the effectiveness of its current financial education offerings. In its comments, MBA suggests the Bureau broaden the delivery channels for its education programs to reflect today's consumer. MBA also urged the Bureau to eliminate its Explore Interest Rates Tool (rate-checker). Despite recent improvements, many flaws remain with the BCFP rate-checker. MBA believes the Bureau should focus its overall message to consumers on the importance of shopping, and provide concrete guidance on how to shop effectively. In addition, the letter reiterated MBA's support for a broad reexamination of Bureau practices as detailed in CFPB 2.0: Advancing Consumer Protection.

MBA Urges BCFP to Revise LO Comp Rule to Better Serve Consumers, Lenders
Recently, MBA responded 
to the Bureau of Consumer Financial Protection's (BCFP) Request for Information on its adopted regulations and new rulemaking authorities, submitting a detailed comment letter applauding Acting Director Mulvaney's efforts to end the Bureau's past practice of "regulation by enforcement" while urging the BCFP to re-examine its regulations and issue new interpretations that establish clear standards for complying with consumer protection laws. The MBA letter makes it clear that the most pressing rule needing attention to address both consumer and industry harm is the LO Comp Rule, which broadly prohibits compensation based on loans terms or proxies for terms while providing a short list of expressly permissible compensation factors. MBA urged the Bureau to provide the industry with common-sense exemptions and clearer guidance so that lenders can compete based on their ability to provide consumers with the best rates and customers service, rather than differing interpretations of an overly complex rule. The letter also provides several specific recommendations regarding potential modifications to the Bureau's adopted regulations, prioritizing revisions and clarifications to the Ability-to-Repay/Qualified Mortgage Rule's Appendix Q and the expansion of the ability to cure minor errors under the TILA-RESPA Integrated Disclosure Rule. Additionally, the letter comments on UDAAPs, mortgage servicing rules, and standards related to limited English proficiency consumers. The letter is part of the series of MBA responses to more than a dozen BCFP Requests for Information.

MBA Calls for Clearer BCFP Guidance Procedures, End to Regulation by Enforcement
Earlier this week, MBA submitted comments on the Bureau of Consumer Financial Protection's (BCFP) Request for Information (RFI) on Bureau Guidance and Implementation Support. Changing the Bureau's approach to guidance is a key part of ending "regulation by enforcement." This practice of regulation by enforcement was both unfair and an ineffective means of communicating the Bureau's interpretations of the laws and regulations it enforces. MBA appreciates the Bureau's plan to abandon this approach and urges the Bureau to employ guidance to articulate paths to compliance. The letter offers fundamental guidance principles as well as several other suggestions to assist the Bureau in fulfilling its mandate by providing regulated entities with certainty as to their legal and regulatory requirements. In addition, the letter reiterated MBA's support for a broad reexamination of Bureau practices as detailed in CFPB 2.0: Advancing Consumer Protection.