MBA State Relations Committee Update Federal Highlights

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



Partial Federal Government Shutdown Remains in Place
Despite continued negotiations, the partial federal government shutdown that began on December 22 remains ongoing. Because a portion of the various appropriations bills had already been approved by Congress, only certain agencies are currently impacted by the shutdown. Those remaining agencies include HUD (including FHA and Ginnie Mae), USDA (including RHS), and Treasury (including the IRS). Notably, as of January 7, and as a result of direct advocacy by MBA and coalition partners, the IRS reversed an earlier decision and began processing requests for tax transcript information made through the Income Verification Express Service (IVES). Last week, both President Trump and Democratic leaders in Congress appeared on national television to make their cases to the public, though meetings later in the week failed to produce an agreement or a meaningful path forward. For further details regarding how the shutdown impacts specific departments or agencies, please see the HUD Contingency PlanGinnie Mae FAQsRural Development Contingency PlanIRS Contingency PlanFannie Mae Lender Letter, and Freddie Mac Press Release.

House Passes Four Appropriations Bills Including Spending for T-HUD
The House passed four individual appropriations bills, including H.R. 267 which allocated spending for the departments of Transportation, and Housing and Urban Development (T-HUD). MBA sent a letter detailing our industry's priorities within H.R.267. Notably, this included the need for additional funding for the modernization of FHA's antiquated information technology infrastructure.  H.R. 267 passed the full House yesterday by a margin of 244-180; its prospects in the Senate are murky, at best.

Congressional Reauthorization of the NFIP Ensures Continued Policy Issuance and Renewal
Despite legislators reauthorizing the National Flood Insurance Program hours before the beginning of the partial federal government shutdown on Dec. 21, 2018, FEMA issued guidance on Dec. 26 discontinuing the issuance of new and renewed policies. FEMA rescinded the decision two days later in response to outcry from legislators and advocates such as MBA. MBA President and CEO Bob Broeksmit issued the following statement prior to FEMA's welcome policy reversal.

CFPB Issues Assessment on RESPA Servicing and Ability-to-Pay/QM Rules
The CFPB released reports detailing the findings from its first two 1022(d) assessments. Under section 1022(d) of the Dodd-Frank Act, the CFPB must conduct a formal assessment of each of its significant rules and publish a report of each assessment within five years of the rule's effective date. These assessments focused on the Bureau's 2013 Ability-to-Repay and Qualified Mortgage Rule and the 2013 RESPA Mortgage Servicing Rule. The Bureau used both its own research and external sources to evaluate the effectiveness of the rules in meeting (1), the purposes and objectives of the Bureau and (2), the specific goals of the rules as stated by the Bureau prior to their effective dates. MBA has begun the process of analyzing these lengthy reports. Summaries will be made available within the next few days. 

CFPB Releases Final Privacy Guidance on HMDA Data
The Consumer Financial Protection Bureau (CFPB) released its final privacy guidance governing how it will publicly disclose the 2018 HMDA data reported in early 2019. The guidance indicates which fields will not be published and those that will be modified in the public data disclosure. It does not modify any data reporting requirements or change any transaction reporting responsibilities. MBA and other trade associations have argued that the Dodd-Frank statute requires that this privacy policy be the product of a notice-and-comment rulemaking rather than guidance. Such a process would best ensure the robust consideration of multiple viewpoints around the serious consumer privacy issues raised by the disclosure of so much new information. While the Bureau has decided to publish the 2018 data under the finalized privacy guidance, it has indicated that it will do a notice-and-comment rulemaking in 2019 to consider the appropriate publication policy in future years. MBA has prepared a quick summary of the fields the Bureau will exclude or modify from public reporting, available here. You can find the Bureau's final privacy policy here. Its executive summary is available here.

HUD Announces Widespread Increases in FHA Loan Limits in 2019
FHA loan limits will rise in most areas of the country in 2019. The floor for FHA loan limits on one-unit properties will rise from $294,515 to $314,827. Meanwhile, the ceiling for one-unit properties will rise from $679,650 to $726,525 -equivalent to the GSE maximum conforming loan limit. The national loan limit for FHA-insured reverse mortgages, which does not vary geographically, will also rise from $679,650 to $726,525. FHA forward loan limits, including the floor and ceiling for these limits, are determined through formulas established by Congress and are not subject to the discretion of FHA or HUD. 

HUD Announces Widespread Increases in FHA Loan Limits in 2019
FHA loan limits will rise in most areas of the country in 2019. The floor for FHA loan limits on one-unit properties will rise from $294,515 to $314,827. Meanwhile, the ceiling for one-unit properties will rise from $679,650 to $726,525 -equivalent to the GSE maximum conforming loan limit. The national loan limit for FHA-insured reverse mortgages, which does not vary geographically, will also rise from $679,650 to $726,525. FHA forward loan limits, including the floor and ceiling for these limits, are determined through formulas established by Congress and are not subject to the discretion of FHA or HUD.

Trump Picks Otting for Acting FHFA Chief
President Trump announced plans to designate U.S. Comptroller of the Currency Joseph Otting as acting director of the Federal Housing Finance Agency. Current FHFA Director Melvin Watt, who has headed the housing agency since 2014, notified the administration that he will depart at the end of his term on January 6, 2019. Otting will serve as acting director upon Watt's departure until a permanent director is confirmed. Otting will simultaneously carry out his duties as head of bank regulator OCC.

Michael Bright Departs Ginnie Mae; Maren Kasper to Serve as Acting President
Ginnie Mae announced that Acting President Michael Bright will be stepping down from his role on Jan. 16. Bright will be replaced by Maren Kasper, who has served as an Executive Vice President at Ginnie Mae since mid-2017. MBA will be working closely with Kasper, as well as the rest of the Ginnie Mae senior leadership team, to continue important collaboration on issues such as counterparty risk management and abusive refinancing practices in the VA lending market.

VA Publishes Rule on Cash-Out Refinances
The Department of Veterans Affairs released an interim final rule to implement new protections against loan churning through cash-out refinances. This rule is required by law to ensure that cash-out refinances are "in the financial interest of the borrower," and it is meant to complement recent program changes governing streamlined refinances (IRRRLs). Specific provisions include 210-day/6-month loan seasoning, LTV ratios that cannot exceed 100 percent, and funding fees that can only be rolled into the loan up to an LTV ratio of 100 percent. Cash-out refinances must also meet a net tangible benefit test, which can be satisfied through a number of options, including a lower rate, a shorter term, elimination of mortgage insurance, or a switch from an adjustable to a fixed rate, among others. As a result of temporary authority granted to VA, this rule has been issued as an interim final rule, which means the provisions will take effect on February 15, 2019 without consideration of public comments. VA has stated, however, that it will still seek public comments, and will take such comments into account when determining whether to revise the rule after it goes into effect.