MBA State Relations Committee Update Federal Highlights

Advocacy news and information from the latest issue of the MBA State Relations Committee Update

Mortgage Bankers Post Open Letter to Congress on GSE Reform: On Tuesday, more than 130 mortgage banking leaders from 40 states, including current and former MBA officers, sent an open letter to Congress emphasizing the need for comprehensive secondary mortgage market reform. The letter outlines common core principles, similar to those advocated by MBA in its white paper, GSE Reform: Creating a Sustainable, More Vibrant Secondary Mortgage Market.  The GSE reform debate is at a critical juncture, with parallel proposals being drafted for possible introduction and consideration by leaders in both the House and Senate. 

Mortgage Bankers Post Open Letter to Congress on GSE Reform: On Tuesday, more than 130 mortgage banking leaders from 40 states, including current and former MBA officers, sent an open letter to Congress emphasizing the need for comprehensive secondary mortgage market reform. The letter outlines common core principles, similar to those advocated by MBA in its white paper, GSE Reform: Creating a Sustainable, More Vibrant Secondary Mortgage Market.  The GSE reform debate is at a critical juncture, with parallel proposals being drafted for possible introduction and consideration by leaders in both the House and Senate. 

House Again Passes Key SAFE Act Amendments (H.R. 3978): On Wednesday, the House passed H.R. 3978, the TRID Improvement Act, as amended, by a vote of 271-145. The bill packaged together a series of individual financial services bills - including the previously free-standing H.R. 2948, the SAFE Transitional Licensing Act. Just prior to the floor debate, MBA sent a letter of support highlighting the two mortgage-related sections of the bill, its Title I and Title V.

  • Title I, Section 101 (the language of the former free-standing H.R. 3978), entitled "TRID Improvement," allows title insurance companies to disclose available discounts and accurate title insurance premium costs to consumers.
  • Title V, Section 501 (the language of H.R. 2948), entitled "Eliminating barriers to jobs for loan originators," amends the S.A.F.E. Mortgage Licensing Act of 2008 to provide 120 days of temporary origination authority to mortgage loan officers transitioning from federally-insured depositories to non-depositories, as well as across state lines.

MBA commended the House for passage of the bill, particularly the SAFE Act which have been a major MBA priority. Focus now turns to the Senate, where similar transitional origination authority language is contained within Section 106 of S. 2155, a broad bipartisan regulatory relief package introduced by Senate Banking Committee Chairman Mike Crapo (R-ID). The Mortgage Action Alliance (MAA) recently issued a call of action supporting swift consideration and passage of the Crapo bill.  

Mortgage Choice Act (H.R. 1153) Passes House: The House of Representatives passed HR 1153, the Mortgage Choice Act by a vote of 280-131. This is the "points and fees" legislation from Rep. Bill Huizenga (R-MI) that has passed out of the House a few times but never materialized in the Senate. MBA signed a coalition letter with ten other groups in support of the bill which was circulated before it came up for a floor vote.   

Trump Administration Releases Budget Proposal: On Monday, the Trump Administration released its budget proposal for fiscal year 2019. MBA has done an analysis of the budget, which you can find here. It's important to remember that this is just a framework, does not have the force of law, and represents the first step in the much lengthier federal budget/appropriations process. Throughout the budget process, MBA will work to ensure the government continues to support vibrant real estate markets that grow and strengthen America's communities.

CFPB Publishes Five-Year Strategic Plan: On Monday, the Consumer Financial Protection Bureau (CFPB) published a five-year Strategic Plan covering FY 2018 - 2022. The plan differs significantly from the draft Strategic Plan released October 2017 and commented on by MBA, and reflects a number of the principles articulated in MBA's CFPB 2.0 White Paper. Consistent with other recent statements by Acting Director Mulvaney, the accompanying press release states that "the Bureau will now focus on equally protecting the legal rights of all, including those regulated by the Bureau, and will engage in rulemaking where appropriate to address unwarranted regulatory burdens and to implement federal consumer financial law."  Importantly, the strategic plan also reflected other MBA priorities including:

  • Promoting fair competition by enforcing laws consistently regardless of the regulated entity's business model or status as a depository institution.
  • Focusing supervision and enforcement efforts on businesses and products that "pose the greatest risk to consumers based on the nature of the product, field and market intelligence, and the size of the institution and product line.

CFPB Publishes RFI on Bureau's Supervision Program: On Wednesday, the CFPB published a Request for Information (RFI) on the Bureau's supervision program. This is the fourth in a series of RFIs issued as part of Acting Director Mick Mulvaney's ongoing assessment of Bureau operations and practices. The RFI seeks comments on "how best to achieve meaningful burden reduction or other improvement" to the Bureau's supervision program "while continuing to meet the Bureau's statutory objectives and ensuring a fair and transparent process for parties subject to enforcement authority." As with the preceding RFIs, the scope of this RFI is broad, covering all aspects of the Bureau's enforcement processes. All interested members of the public are encouraged to submit comments. The Bureau anticipates issuing RFIs on the several topics noted in its press release 

Congress Extends Mortgage Insurance Deductibility for another Year: Last Friday, H.R. 1892, the "Bipartisan Budget Act of 2018", was signed into law by President Trump. The bill includes two pertinent provisions for the mortgage industry. One extends the deductibility of mortgage insurance premiums (MIP) through the end of the most recent tax year, and the other extends protections for individuals to avoid tax liability on "phantom" income via the forgiveness of prior mortgage debt. These two provisions (amongst a host of others) expired at the end of 2016, and this legislation extended (or reinstated) them through December 2017.   The legislation, which made the MIP provision effective retroactively to January 1, 2017 creates significant burdens for mortgage servicers who have to mail IRS Form 1098 to borrowers. The instructions for Form 1098 for 2017 state that MIP should only be reported in Box 5 if section 163(h)(3)(E) applies for the applicable tax year (i.e., if such MIP is deductible for the year). Servicers are required to file the form with the IRS and mail copies to borrowers no later than January 31st each year. Since the MIP deductibility provision was not in effect by the time Servicers were required to file and mail the Form 1098 to borrowers, Servicers who complied with the timely filing requirement sent out these forms to borrowers without completing box 5. The result essentially would be that borrowers who filed their tax returns early (at least before February 9) would not have taken the deduction for MIP paid. For Servicers/Issuers who file and mail millions of Forms 1098, the reprinting and postage costs that will be incurred as a result of this retroactive application of the law will be significant. MBA expects that the IRS will be issuing the necessary guidance as quickly as possible that will address next steps for borrowers (i.e., Form 1098 recipients), as well as Servicers/Issuers who mailed out the Forms before February 9, inadvertently completing box 5 or without completing box 5.

FHFA Finalizes 2018-2020 GSE Housing Goals: FHFA finalized a rule to establish new affordable housing goals for Fannie Mae and Freddie Mac covering the period from 2018 through 2020. The goals, required by law, specify both the single-family and multifamily mortgage purchase benchmarks that the GSEs must meet each year. The new proposal leaves six of the seven benchmarks unchanged, while slightly increasing the benchmark for multifamily low-income purchases.