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  • July 12, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    This week, the House of Representatives passed MBA-supported legislation clarifying seasoning requirements for refinanced mortgage loans to veterans. The House Committee on Financial Services began its planned two-day markup of roughly 20 proposals pertaining to residential appraisals, credit reporting, and corporate board diversity disclosures. And Federal Reserve Chairman Jerome Powell hinted in congressional testimony that an interest rate cut may come later this month.

     

    Industry Update

     

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    House Passes VA ‘Orphan’ Loan Bill
    This past Tuesday, the House of Representatives passed both H.R. 1988 and S. 1749, identical legislation entitled the Protecting Affordable Mortgages for Veterans Act of 2019. As a reminder, this is the MBA-supported legislation designed to repair a drafting error that caused certain VA-guaranteed refinances to be ineligible for pooling into Ginnie Mae securities. As a result of this error, thousands of valid VA-guaranteed loans became “orphaned” and remained stranded on lender balance sheets. MBA sent aletter of support ahead of the final floor vote.


    This legislation, originally introduced by Representatives David Scott (D-GA), Lee Zeldin (R-NY), Mike Levin (D-CA), and Andy Barr (R-KY), and Senators Kyrsten Sinema (D-AZ) and Thom Tillis (R-NC), removes the duplicative requirements that created the 2018 Ginnie Mae pooling glitch. Importantly, it does not weaken any of the consumer protections that are necessary for refinances to obtain a VA guaranty. Further, it provides go-forward relief by restoring the calculation of the 210-day seasoning period to its original form – that is, the seasoning period will begin on the first payment due date of the prior loan, rather than the date that the borrower made the first payment.

    The passage of this legislation is the result of over a year of MBA advocacy, and as an identical bill (S. 1749) was passed by the full Senate via voice vote last month, it is expected to go to the president’s desk for his signature in the coming days.

    For more information, please contact Ernie Jolly at (202) 557-2741 or Dan Grattan at (202) 557-2712.

    House Committee on Financial Services Begins Markup of Appraisal, Credit Reporting, and Corporate Governance Proposals
    On Thursday, the House Committee on Financial Services began its markup of roughly 20 proposals pertaining to residential appraisals, credit reporting, and corporate board diversity disclosures.


    In a letter to members of the Committee, MBA urged support for the Homebuyer Assistance Act of 2019, H.R. 2852, introduced by Representatives Brad Sherman (D-CA) and Sean Duffy (R-WI). The legislation would allow licensed appraisers to become eligible to conduct real estate evaluations on properties subject to mortgages insured by the Federal Housing Administration (FHA). The bill passed unanimously out of committee.

    MBA also expressed concerns with two credit-reporting-related bills that would negatively impact the real estate finance industry. The Clarity in Credit Score Formation Act of 2019, introduced by Rep. Stephen Lynch (D-MA), for example, would authorize the Consumer Financial Protection Bureau (CFPB) to conduct biennial reviews of “credit scoring models” (undefined) and allow the Bureau to prohibit the use or alter the weighting of any model inputs that the Bureau deems “inappropriate.” The measure would give the CFPB extraordinary authority over all manner of credit scoring and underwriting models used in consumer financial services.

    Additionally, the Improving Credit Reporting for All Consumers Act, introduced by Rep. Alma Adams (D-NC), includes a provision that has the potential to increase uncertainty for lenders and consumers alike by providing injunctive relief under the Fair Credit Reporting Act. This bill passed on party lines.

    MBA will continue to engage members of Congress on these proposals as they potentially proceed through the House.

    For more information, please contact Ernie Jolly at (202) 557-2741 or Dan Grattan at (202) 557-2712.

    Federal Reserve Chairman Signals Possible Interest Rate Cut
    Federal Reserve Chairman Jerome Powell appeared before the House Financial Services Committee on Wednesday, July 10, and the Senate Banking Committee on Thursday, July 11, to deliver his Semiannual Monetary Policy (“Humphrey-Hawkins”) Report to Congress. Powell started each hearing by reading the same prepared remarks outlining a variety of concerns about the global economy that weigh on the U.S. outlook. He reiterated the Fed’s intention to “act as appropriate to sustain the expansion.” Observers interpreted that line, which first appeared in the Fed’s June 19 policy statement, to mean the central bank’s rate-setting Federal Open Market Committee (FSOC) is likely to lower its benchmark interest rate at its next policy meeting July 30-31. Powell would not answer with specificity any questions about what might sway Fed officials to considering a half-percentage-point rate cut instead of a quarter-point cut.


    House Financial Services questions covered numerous topics on the country’s economic outlook but also focused on politically charged items, including Powell’s job security and the feasibility of increasing the minimum wage. During Chairman Powell’s appearance before the Senate Banking Committee, Chairman Mike Crapo (R-ID) touched on GSEs briefly in his opening statement. He mentioned that Powell has already called Fannie Mae and Freddie Mac “systemically important,” and Crapo wanted Powell’s view of a proposal for FSOC to designate the entities as systemically important financial institutions (SIFIs), which would bring them under Fed supervision. However, Crapo did not pursue this line of questioning during the Q&A portion and instead focused solely on cryptocurrency.

    For more information, please contact Tallman Johnson at (202) 557-2866 or Erin Barryat (202) 557-2913.

    MBA Submits Joint Comment with ABA on FHA Single-Family Loan Sales
    On July 5, MBA joined the American Bankers Association (ABA) in submitting comments to FHA on its Advance Notice of Proposed Rulemaking on the Single-Family Loan Sale Program (“SFLS” or “the Program”). MBA and ABA applauded FHA for its intention to transition the SFLS from a demonstration program to a permanent one, as the program has helped stabilize communities and provided tens of thousands of borrowers a second chance to save their homes, all while producing a better financial outcome for taxpayers. SFLS reduces losses to FHA’s Mutual Mortgage Insurance Fund, relieving FHA of the high costs of maintaining and marketing foreclosed properties. MBA and ABA’s suggestions for FHA to improve the SFLS Program include, but are not limited to, 1) establishing a regular schedule of loan sales, 2) maintaining consistent eligibility criteria across sales and lock-qualified loans as of a specific date, 3) expanding loan eligibility criteria, 4) revising reps and warrants, and 5) revising SFLS claims policies.


    Please click here to read MBA and ABA’s full comment.

    For more information, contact Sara Singhas at (202) 557-2826.


    FHA Publishes Updates to Single-Family Housing Policy Handbook
    On Wednesday, FHA published updates to its Single Family Housing Policy Handbook 4000.1. These updates include policy guidance and clarity on several topics such as Minimum Decision Credit Score Determination, Net Tangible Benefit, Streamline and Rate/Term Refinances, as well as guidance regarding the incident end date policy for inspections in Presidentially Declared Major Disaster Areas (PDMDAs).


    While this list is not comprehensive, it’s strongly recommended that MBA members carefully review the redlined version of the updated handbook to ensure compliance with FHA’s updated policies.

    For more information, please contact Julienne Joseph at 202-557-2782.

    New Report Details Product Design for SOFR-Indexed ARMs
    On Thursday, the Alternative Reference Rates Committee (ARRC) released a white paper illustrating the potential product design of a single-family, adjustable-rate mortgage (ARM) that is indexed to the Secured Overnight Financing Rate (SOFR). This white paper is a significant milestone in the broader push to move financial markets away from the use of LIBOR as the primary interest rate benchmark. Topics addressed in the white paper include index averaging, payment determination, adjustment periods, interest rate caps, and margins.


    MBA continues to be heavily involved in the work of the ARRC with respect to both single-family and commercial/multifamily mortgages. As a reminder, MBA recently published a consumer disclosure template for lenders seeking to provide borrowers with information on the LIBOR transition as they consider new single-family ARM products.

    For more information, or to join MBA’s working group on single-family LIBOR transition issues, please contact Dan Fichtler at (202) 557-2780. To join MBA’s working group on commercial/multifamily LIBOR transition issues, please contact Andrew Foster at (202) 557-2740.

    Financial Regulatory Agencies Adopt Final Rule to Exclude Community Banks from the Volcker Rule
    On July 9, the OCC, Federal Reserve, FDIC, SEC, and CFTC (the agencies) adoptedfinal rules to exclude community banks from the Volcker Rule, pursuant to statutory amendments made by certain sections of the Economic Growth, Regulatory Relief, and Consumer Protection Act. In general, the Volcker Rule imposes prohibitions and restrictions on banking entities relating to proprietary trading and owning, sponsoring, or having certain relationships with hedge funds or private equity funds. The final rules, which essentially adopt the proposal issued in May 2018, apply to community banks with $10 billion or less in total consolidated assets, and total trading assets and liabilities of 5 percent or less of total consolidated assets. The rules also, under certain circumstances, amend the restrictions that apply to a hedge fund or private equity fund sharing the same name or a variation of the same name with an investment adviser — as long as the adviser is not an insured depository institution, a company that controls an insured depository institution, or a bank holding company. The final rules are effective on the date of publication in the Federal Register.


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

    Washington, D.C., Passes Legislation to License and Regulate Appraisal Management Companies
    On Tuesday, the Council of the District of Columbia unanimously passed emergency legislation to establish required Dodd-Frank minimum standards for appraisal management companies (AMCs). Once signed by Mayor Muriel Bowser, the Department of Insurance, Securities and Banking (DISB) will be required to promulgate rules that govern the licensing of AMCs. The District has taken a major step toward meeting the Aug. 10 deadline that would have restricted the ability of lenders to use AMCs in the loan process if the jurisdiction had failed to comply with federal requirements. The passage of AMC legislation in Washington, D.C., which was the focus of a Mortgage Action Alliance Call to Action, leaves Massachusetts as the only state that has yet to adopt the required the Dodd-Frank rules. However, Massachusetts recently moved legislation (H.3904, formerly H.1114) through the House and had companion legislation (S.2288) pass in the Senate on Thursday to license AMCS. The bills must now be reconciled before final passage. MBA recently expressed support for H.3904, and the Massachusetts MBA encouraged its passage during the organization’s Beacon Hill Day advocacy agenda.


    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruittat (202) 557-2870.

    Mortgage Servicing and Subservicing Webinar Series
    Join MBA Education and industry experts on July 17 and 24 for a two-part series on mortgage servicing and subservicing. The completion of this series will provide you with the information necessary to understand servicing and its related components. Anyone who seeks to increase their knowledge of mortgage servicing will benefit from these conversations that will cover critical topics such as how to manage and pick a subservicer, which loans should be retained, why or why not to retain servicing in today’s market, and profitability trends for servicers. To register for part I, please clickhere. To register for part II, please click here. To receive a discount for registering for both, please email education@mba.org.


    For questions, please contact Allison Yaworske at (202) 557-2912.


  • July 03, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction 
    Due to the July 4th holiday and corresponding congressional recess, we will not have an extended Advocacy Update this week. However, there are a few items we wanted to share with you. We hope you have a wonderful Independence Day and look forward to resuming our regular protocol next week.




    Industry Update

     

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    MBA and Coalition Partners Urge Changes to FHA Loan-Level Certifications and Defect Taxonomy
    Late last week, a coalition featuring MBA, the Housing Policy Council, the American Bankers Association, and the Bank Policy Institute submitted detailed recommendations to FHA on its proposed revisions to the program’s loan-level certifications and Defect Taxonomy. These recommendations were developed to limit the overbroad use of the False Claims Act to penalize FHA lenders, often for minor loan defects.

    The coalition’s recommendations focused on three areas:

    • Recognition that the underwriting process entails judgment and discretion on the part of the underwriter;
    • Exclusion of certifications related to minor defects that would not impact the eligibility of the loan for FHA insurance; and
    • Formal incorporation of the Defect Taxonomy to provide greater certainty regarding the remedies for various types of loan defects.

    FHA is expected to consider the public input it has received to date via its “drafting table” approach before publishing a revised version of the loan-level certifications in theFederal Register for an additional round of comments.

    For more information, please contact Justin Wiseman at (202) 557-2854, Fran Mordi at (202) 557-2860, or Dan Fichtler at (202) 557-2780.

    House Financial Services Committee Expected to Consider Numerous Bills 
    MBA anticipates the House Financial Services Committee will hold a significant mark-up – with as many as 20 bills on the docket – beginning on Thursday, July 11, and stretching until Tuesday, July 16. The focus of the proposals will be grouped into four major policy areas: Consumer Protection, Diversity and Inclusion, Housing, and Investor Protection. As is our customary practice, MBA will offer its policy feedback on the bills pertinent to real estate finance in a letter to the committee when the mark-up agenda is formally announced.

    For more information, please contact Dan Grattan at (202) 557-2712 or Ernie Jolly at (202) 557-2736.

    Mortgage Servicing and Subservicing Webinar Series

    Join MBA Education and industry experts on July 17 and 24 for a two-part series on mortgage servicing and subservicing. The completion of this series will provide you with the information necessary to understand servicing and its related components. Anyone who seeks to increase their knowledge of mortgage servicing will benefit from these conversations that will cover critical topics such as how to manage and pick a subservicer, which loans should be retained, why or why not to retain servicing in today’s market, and profitability trends for servicers. To register for part I, please clickhere. To register for part II, please click here. To receive a discount for registering for both, please email education@mba.org.

    For questions, please contact Danielle Jackson at 202-557-2873.


  • May 31, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    Congress was out this week in observance of the Memorial Day recess and will return to Washington next week. On Thursday, Congress passed an extension of the National Flood Insurance Program (NFIP) for two weeks. Also, FHA extended the comment period for public input regarding loan-level certifications.


    Industry Update

     

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    NFIP Reauthorized for Two Weeks; Program Lapse Avoided
    The National Flood Insurance Program (NFIP) was set to expire on May 31, 2019. Reauthorization appeared to be a done deal when it was included in a disaster relief package passed by the Senate last week in an 85-8 vote.That package would have extended the program’s authorization through September 30, 2019.The House was then expected to pass the package by unanimous consent, as most House members had already left town for the holiday weekend. Unfortunately, unanimous consent failed last week and again this past Tuesday when one member objected. After experiencing procedural hurdles, the House eventually passed a different Senate bill that would extend the NFIP for two weeks, buying legislators time to negotiate a longer-term extension. Considering a threat of an NFIP lapse, MBA sent a joint coalition letter to Congress urging congressional leaders to immediately extend the NFIP.

    For more information, please contact Ernie Jolly at (202) 557-2741 or Dan Grattan at
    (202) 557-2712. 

    FHA Grants Extension for Comments Regarding Loan-Level Certifications  

    On Thursday, the Federal Housing Administration (FHA) announced that it will extend the public feedback period on its proposed revisions to the Addendum to Uniform Residential Loan Application posted on the Single Family Housing Drafting Table (Drafting Table) on hud.gov until 11:59 PM (Eastern) on June 30, 2019. The original feedback end date was June 8, 2019. The proposed revisions to the Addendum to Uniform Residential Loan Application were previously announced in FHA INFO 19-18 on May 9, 2019. FHA is extending the feedback period to give interested parties additional time to review and submit feedback on the proposed changes.


    Please note that while the extension is granted for comments on
    the Loan-Level Certifications only, the feedback deadlines for the Annual Lender Certifications and the Defect Taxonomy — also posted on the Drafting Table — remain the same, and end on June 8, 2019.

    For more information, please contact Dan Fichtlerat (202) 557-2780 or Fran Mordi at (202) 557-2860.


    MBA Provides Comments to Ginnie Mae on VA Cash-Out Refinances

    Earlier today, MBA submitted comments to a Ginnie Mae Request for Input on Pooling Eligibility Changes for VA cash-out refinances with higher loan-to-value ratios.


    In its comments, MBA reiterated its long-running emphasis on the need to protect borrowers, lenders, and investors from the serial refinancing—or “churning” —of VA loans. MBA also provided specific feedback on three pooling restrictions considered by the RFI: creating single-Issuer custom pools for high-LTV VA cash-out refinances, creating a new category of multi-Issuer pools that include only these loans, or imposing a de minimis standard to limit the concentration of these loans in any given pool. Further, MBA provided mechanisms for Ginnie Mae to better narrow the scope of loans affected by any policy changes, both by Issuer and by loan type.


    As a reminder, MBA recently submitted comments to VA detailing a series of recommendations on the parameters of cash-out refinances to deter loan churning, slow Ginnie Mae prepayment speeds, and protect consumers. MBA drew upon this work in developing its response to the Ginnie Mae RFI.

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

    MBA Asks FHFA to Delay GSE Early Implementation of the Uniform Residential Loan Application (URLA)

    On Wednesday, MBA sent a letter to FHFA Director Mark Calabria requesting a delay to the July 1, 2019, optional adoption date for the Uniform Residential Loan Application (URLA). This request follows similar conversations that MBA President and CEO Bob Broeksmit had with Director Calabria and the GSEs during MBA’s 2019 Secondary Conference last week. MBA made this request due to concerns that the optional adoption period would create severe logistical challenges for the industry, requiring each lender to coordinate with every one of its business partners to develop a separate implementation plan. MBA also expressed concerns that some of the government housing agencies (FHA, VA, USDA) might not be ready to fully support the new URLA by the July 1 date. MBA requested that the February deadline for mandatory adoption also be reassessed should any the agencies be deemed unlikely to meet that date. MBA will continue to communicate with FHFA and the GSEs to address these concerns.

    For more information, please contact Rick Hill at (202) 557-2718 or Dan Fichtler at (202) 557-2780. 

    Agencies Publish Long-Awaited Final Rules on Mortgage Servicing Assets (MSAs) For Non-Advanced Approaches Banks
    On May 28, the OCC, FDIC, and Federal Reserve Board (the agencies) released final rules on their September 2017 proposal to simplify certain aspects of the Basel III capital rules for non-advanced approach banking organizations. The original proposal increased the amount of MSAs that a bank can include in Tier 1 capital from 10% to 25%, and retained the risk weighting for MSAs not deducted from Tier 1 capital at 250%. The final rule made no substantive changes to the proposal. MBA has been advocating for years for an increase in the Tier 1 cap (above even the proposed 25%) and a reduction in the risk weighting. This action represents a partial win on the cap, but MBA is disappointed that the cap was not increased further and that the excessive risk weighting was left unchanged. We are still reviewing the entire document and will follow up with any other pertinent details in the final rules.   

    The rules are effective April 1, 2020, but a banking organization is allowed to early adopt. As expected, these final rules supersede and, in effect, eliminate the 2017 transition rules.

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

    Senate Banking Committee to Hold Hearing on Nominations
    On Wednesday, June 5, the Senate Committee on Banking, Housing, and Urban Affairs will hold a hearing on the following Executive Branch nominations: Thomas Peter Feddo, of Virginia, to be an Assistant Secretary of the Treasury for Investment Security; Nazak Nikakhtar, of Maryland, to be Under Secretary of Commerce for Industry and Security; Ian Paul Steff, of Indiana, to be Assistant Secretary of Commerce and Director General of the United States and Foreign Commercial Service; Michelle Bowman, of Kansas, to be a Member of the Board of Governors of the Federal Reserve System; Paul Shmotolokha, of Washington, to be First Vice President of the Export-Import Bank of the United States; and Allison Herren Lee, of Colorado, to be a Member of the Securities and Exchange Commission.

    For more information, please contact Tallman Johnson at (202) 557-2866 or Erin Barry at (202) 557-2913.

    New York Senate and Assembly Banking Committee Chairs Introduce Companion Bills to Clarify State’s 2018 AMC Minimum Standards Law 
    This week, the Chairs of the New York State Senate and Assembly Committees on Banks introduced companion legislation (SB-6249 and AB-8024, respectively) to amend law enacted last year that established Dodd-Frank-required minimum standards for appraisal management companies (AMCs). The new law went into effect on April 27 despite strongly expressed concerns from the industry about the NY Department of State’s extremely narrow legal interpretation of Section 160-jjjj(3) that runs counter to the legislative intent of the law. As a result, AMCs and lenders stopped using unlicensed individuals for non-appraiser services such as broker price opinions, property condition reports and more. The new bills would clarify that an AMC may hire or contract a person for property inspections or property evaluations if they are licensed as an appraiser, real estate broker, or home inspector, or a person for a broker price opinion if they are licensed as a real estate broker. The bills are the result of efforts by the NYMBA, Mortgage Action Alliance members, and industry volunteers and partners. Given the bills’ sponsorship, they are expected to move through their respective committees to a floor vote in the remaining days of the state’s legislative session.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

    MBA Reconvenes NMLS Working Group

    Recently, due to the numerous developments affecting state-licensed companies and the NMLS, MBA reconvened its NMLS Working Group to discuss, among other issues, the proposed NMLS 2.0 changes and the MLO licensing process.The group will meet quarterly and is open to employees of MBA regular member companies or select- or premier-level associatemember companies. During its inaugural meeting, the group asked MBA staff to organize emerging issues they are facing as they prepare to implement MLO Temporary Authority. The next meeting will be held the week of July 29.

    For more information or to participate, please contact Kobie Pruitt at (202) 557-2870.

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

    For more information, please contact William Kooper at (202) 557-2737 or Lisa Volb at (202) 557-2919.


    Compliance Essentials Webinar on Proposed Amendments to Reg F

    Join MBA Education on June 13 as subject matter experts examine the proposed amendments to Reg F and the impact on the Fair Debt Collection Practices Act. Speakers will address changes including who is covered under the proposed amendments, updated disclosure requirements, conduct and communication requirements, and a few issues not addressed in the Proposed Rule and potential interplay with state debt collection laws. To register for this webinar, please click here.

    For more information, please contact Lisa Volb at (202) 557-2919.


  • May 31, 2019 8:00 AM | Michelle Martin (Administrator)

           

       Issue 16                                                                                       May 31, 2019

    IT'S A WRAP (almost)!! Texas Legislature Adjourns

    The Texas House and Senate wrapped up their respective business for the 86th Legislative Session on Memorial Day and formally adjourned well before the midnight deadline. Texas Mortgage Bankers Association was able to achieve all of its legislative goals, or so it looks as of the end of the Session. Two or our legislative measures, SB 2128 ("paper out" of electronic documents) and SB 2330 (temporary or transitional authority for loan originators) passed during the last days of the Session and await the Governor's signature before they become law. The Governor has until Sunday, June 16th to veto bills (Happy Father's Day!). While these two measures are still subject to potential veto, we believe that we would have heard from the Governor's office before now if there was an anticipated problem.

    So here is a look at where we stand as we head into the Veto period:

    SB 614 (Nichols, Lambert). The highest priority for TMBA this Session was preserving the existence of the Department of Savings and Mortgage Lending as an independent agency within the Finance Commission to oversee the mortgage industry and state chartered thrifts. SB 614 did just that by extending the lives of Savings and Mortgage Lending, Department of Banking, and Finance Commission until September 1, 2031. The Office of Consumer Credit Commissioner was extended under a separate bill. The bill did include some minor changes to the licensing provisions of Chapter 157 by eliminating the "good moral character" requirement. Remember that under Texas occupational licensing standards the applicant for a license bears the burden of proof that he or she is qualified as contrasted with the licensing agency having the burden to show the applicant is not qualified. Because "good moral character" is such a subjective concept, the Sunset Commission for several years has recommended this term be eliminated from agency licensing statutes.   For mortgage loan originators the "character qualification" remains somewhat more objective: "demonstrates financial responsibility, character, and general fitness so as to command the confidence of the community and to warrant a determination that the individual will operate honestly, fairly, and efficiently as a residential mortgage loan originator within the purposes of this chapter and any other appropriate regulatory law of this state" Finance Code 180.055(a) (3) (3). Each of the agencies' individual statutes were updated to include "standard" language on alternative dispute resolution and directions to review and update consumer complaint procedures. SB 614 was signed by the Governor on May 7th.

    HB 1254 (Murphy/Hancock)Home equity lending on agricultural property can now become a reality. When the Constitutional amendments to 50(a) (6) were approved by voters in 2017, the prohibition on home equity loans for agricultural property was eliminated. However, the continued existence of Tax Code 23.42(a-1) has probably restrained extensive use of home equity loans. This provision prohibited an owner from claiming an agricultural use exemption for ad valorem taxes if the property was subject to a home equity loan. HB 1254 repealed this straggler provision.

    SB 2128 (Creighton/Parker) "paper out" of electronic documents. TMBA partnered with the Texas Land Title Association and national underwriters Stewart Title and First American Title and representatives of the Texas County Clerks on this bill. Currently only about 62 or so out of 254 Texas counties record electronically. The statutes provide no clear guidance on how to record an electronic document in those counties. SB 2128 cures this by enacting amendments to Chapter 12 of the Property Code to add a new 12.0011(b) (3) and new 12.0013 that permits recording of a paper print out of an electronic document in the real property records if the paper print out has been verified as a true and correct print out of the electronic document; and the electronic document contains an electronic signature and electronic notarial acknowledgement. New 12.0013 contains a Declaration of Authenticity that may be completed by a notary public (or other officer authorized to take acknowledgements or administer oaths). The Declaration is to be attached to the paper print out and recorded. A document recorded in accordance with these new provisions are entitled to the same recognition as a document bearing a wet ink signature and notary. This bill and SB 2330, discussed below, came close to becoming collateral damage in the closing days of the Session. Members of the House attempted to hold up these two bills until they could get assurances from the Senate author that he would accommodate the House on amendments to totally unrelated bills. We don't know what deal was worked out, but we do know that these two bills were passed on the very last train out of town-the very last House and Local Consent Calendar. These bills have been advanced to the Governor's desk.

    SB 2330 (Creighton/Parker) temporary authority to originate. In 2018, Congress amended the SAFE Act as part of S.2155, the financial regulatory reform bill that also amended Dodd-Frank. The SAFE amendments grant temporary authority to originate to a registered residential mortgage loan originator moving to a non-depository lender and to an out of state licensed residential mortgage loan originator for a 120 day period pending the granting of a license. SB 2330 conforms the Texas SAFE Act to mirror these changes to the federal act.

     

    SOONERS NOT WELCOMENo offense to my Okie friends (after all my mom was born in a dug out in Hackberry Creek, Oklahoma and raised in Vinson, Oklahoma, and my grandfather homesteaded in what is known as "No Man's Land", that part of the Oklahoma Panhandle that was neither Texas, Kansas or Indian Territory) but I can almost guarantee that sometime in the next 18 months, I am going to get a call from a mortgage banker or an originator who jumped the gun on temporary authority and started originating before they complied with the requirements to qualify for temporary authority. They will have wound up on SML's naughty list because they did not follow the rules. I call these Sooner violations, like the settlers who sneaked across the line before the official day opening Oklahoma to settlement. The 120 day period does not start until the originator has submitted an application for a license and uploaded his/her fingerprints for a criminal background check; submitted personal information as required by Finance Code 180.054. Any originator that starts early will be considered to have engaged in unlicensed activity and any employer will be considered to have aided and abetted unlicensed activity. We have seen this one before, when SML granted a transition period to originators who worked for mortgage bankers were first required to have a license in 2009. A significant number of those originators dillied and dallied and did not meet the timelines. Monetary penalties followed. Also be aware that if an originator did not meet the qualifications, and is denied, all of the origination activity may be considered unlicensed. Mortgage bankers will need to be sure that the originators they onboard under temporary authority do in fact qualify for a license. Proceed with caution. Make sure you know all the requirements. One final note on SB 2330: the effective date is delayed until November 24, 2019. That is the date Congress established for the effective date of the amendments to federal SAFE.

    Preserving lien priority; enforcing Deeds of Trust. Going into this legislative session we anticipated another fight to kill bills that threatened mortgage lien priority. Two bills drew our attention this session. HB 2024 (Romero) would have elevated a subcontractor's lien for retainage ahead of a mortgage lien. The bill received a hearing, and some empathy from members, but did not get voted out of House Business and Industry. The second bill HB 4295 (Johnson) did not alter lien priority, but it would have prohibited a lender from enforcing a deed of trust if the borrower had claimed an over 65 tax deferral or disable vet deferral for property taxes even though the mortgage requires taxes to be paid annually. This bill could have significantly restricted the availability of certain loan products particularly any loan insured by a federal agency. The bill received a hearing but died in House Ways and Means.  

    HB 4390 (Capriglione/Nelson). Data privacy. This bill started out as a comprehensive data privacy bill styled by its author as "California lite." The bill encountered severe resistance from many sectors of the business community. By the time it was scrubbed and passed by the Legislature, the bill had turned into a study bill establishing a working group to study data privacy issues. The bill does contain some extended consumer protections. It amends Business Code 521.053 to strengthen the notification requirements by businesses who have data breaches where a person's sensitive personal information that is stored by computer has been or may reasonably be expected to have been acquired by an unauthorized party. The notification must be made 'without unreasonable delay but in no event later than 60 days" after the breach. If the breach involves more than 250 individuals, the attorney general must be notified as well. The current statute language says the notice must be given "as quickly as possible." If signed by the Governor, the bill becomes effective January 1, 2020.

     In the 'what we missed' department:HB 3 and Escrow Accounts. During every Legislative Session, we have concerns that with 5,000 plus bills and resolutions floating around, something will get buried in a bill that impacts financial services and will get missed. In this case it is a Senate amendment that was made to HB 3. The bill caption reads "relating to school finance and public education." But as part of school finance reform, the bill also provides for provisions to reduce school property taxes. Between TMBA, TBA, IBAT, and the lobbyists for Chase, Wells, Quicken, City, and B of A, there are probably at least 10 sets of eyes on this stuff, but this one slipped by. In the Senate, the bill was amended to add the following language: "To the extent that H.B. 3, 86th Legislature, Regular Session, 2019, has the effect of reducing property taxes in this state, a lender, or home loan servicer of a home loan that maintain a property tax escrow account must take into account the effect of that legislation in establishing the borrower's annual property tax payments to be held in that account and immediately adjust the borrower's monthly payments accordingly". It is the "immediately" that has folks scratching their heads. At least one national servicer in conversations this week has commented that experience with other states would indicate there is no way to begin until tax bills are received and that there are questions as to whether RESPA provisions may preempt this. My initial reactions are: 1) We can't know the impact until final tax bills are delivered; 2) the impact may be small for this year and smaller or non- existent for future years; and 3) RESPA conflicts may exist; and 4) servicers will be required to make these adjustments anyway when they do their annual escrow analysis. Stay tuned.

    pdf version


  • May 24, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    This 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 (IT) infrastructure. Also, the Senate passed a two-week, standalone flood insurance program extension amid uncertainty about whether a disaster aid bill containing a longer renewal would be enacted before the program lapses. And Senators Kyrsten Sinema (D-AZ) and Thom Tillis (R-NC) 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 will be out next week in observation of the Memorial Day recess.

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    Appropriations Subcommittee Passes Spending Bill for Federal Housing Programs
    On Thursday, the House Appropriations Subcommittee on Transportation, and Housing and Urban Development, and Related Agencies (T-HUD) marked up a spending bill that would provide HUD $50.1 billion for fiscal year (FY) 2020. Among other items, 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 or Dan Grattan at
    (202) 557-2712.

    Senate Attempts to Move on VA Orphaned Loan Pooling Legislation
    This week, Senators Kyrsten Sinema (D-AZ) and Thom Tillis (R-NC) 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 (HFSC) and the House Veterans Affairs Committee (HVAC) both passed the H.R. 1988 by voice votes. Floor consideration by the full House of Representatives 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 HFSC and HVAC.

    For more information please contact Erin Barry at (202) 557-2913 or Tallman Johnson at (202) 557-2866.

    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 (NFIP) until September 30, 2019. 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 (CDBG) 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 here.

    For more information, please contact Tallman Johnson at (202) 557-2866 or Erin Barry at (202) 557-2913.


    Republican Banking Senators Introduce CECL Delay and Study Legislation
    On Wednesday, Senator Thom Tillis (R-NC) introduced S. 1564, the Continued Encouragement for Consumer Lending Act, along with fellow Banking Committee Senators Jerry Moran (R-KS), Kevin Cramer (R-ND), Tom Cotton (R-AR), David Perdue (R-GA), and Mike Rounds (R-SD). S. 1564 would require the Financial Accounting Standards Board (FASB) to halt implementation of its current expected credit loss (CECL) standard and work with the Securities and Exchange Commission (SEC) 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. Senator Tillis' legislation comes on the heels of recommendations made by MBA in its May 21st 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 Tallman Johnson at (202) 557-2866 or Erin Barry at (202) 557-2913.

    House Passes Bill Making Administrative and Policy Changes at the CFPB
    On Wednesday, the House of Representatives passed on party lines the Consumers First Act (H.R. 1500), legislation introduced by HFSC Chairwoman Maxine Waters (D-CA). The bill reverses certain administrative changes made under the tenure of Acting Director of the Consumer Financial Protection Bureau (CFPB) 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 vote of 231-191 with the adoption of 14 amendments, including one from Rep. Nydia Velazquez (D-NY) 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 or Dan Grattan at (202) 557-2712.

    HUD Secretary Carson Testifies In Front of House Financial Services Committee
    Secretary of Housing Ben Carson, Sr., M.D., appeared before the HFSC this past Tuesday in what proved to be a spirited hearing.

    Chairwoman Maxine Waters (D-CA) began the hearing by saying that Dr. 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 that 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 (CECL) 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 or Ernie Jolly at (202) 557-2741.


    Treasury Secretary 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 Secretary Mnuchin about the nature and coordination of reforms to Fannie Mae and Freddie Mac between the Legislative and Executive branches. Secretary 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 or Ernie Jolly at (202) 557-2741.

    Senate Passes TRACED Act
    On Thursday, the Senate passed the Telephone Robocall Abuse Criminal Enforcement and Deterrence (TRACED) Act (S. 151) by a vote of 97-1. The bill, sponsored by Senator John Thune (R-SD) and Ed Markey (D-MA), must now be considered by the House of Representatives. If enacted, the bill would amend the Telephone Consumer Protection Act (TCPA) 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 or Tallman Johnson at (202) 557-2866.

    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.

    MBA will continue advocating against publishing handbook updates "effective immediately." According to FHA representatives, another handbook update is planned for September 2019.

    For more information, contact Hanna Pitz at (202) 557-2796.

    CFPB Releases Spring 2019 Rulemaking Agenda
    On Wednesday, the CFPB released its Spring 2019 Rulemaking 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 the statutory directives of the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018 (EGRRCPA). This includes creating ability-to-repay (ATR) 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 (FDCPA). 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 or Blake Chavis at (202) 557-2930.

    Mortgage Closings in the City of Baltimore Resume after Ransomware Attack
    Late 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 the disabling of the municipality’s computer infrastructure. 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 or Kobie Pruitt at (202) 557-2870.

    MBA to Hold Webinar on MLO Temporary Authority; Conference of State Bank Supervisors to Participate
    This week, MBA Education announced that it will hold a live Compliance Essentials webinar at 2:00 p.m. ET on July 11 to discuss the implementation of the federal new Mortgage Loan Originator (MLO) 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 (CSBS). Bill’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 at 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 here. 

    For more information, please contact William Kooper at (202) 557-2737 or Lisa Volb at (202) 557-2919.

    MBA Education Webinar 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, please click here.

    For more information, please contact Lisa Volb at (202) 557-2919.


  • May 10, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    This week, FHA proposed new guidelines on Loan-Level and Annual Certifications, as well as a new Defect Taxonomy. The House Committees on Financial Services and Veterans’ Affairs both passed the Protect Affordable Mortgages for Veterans Act of 2019, a technical correction to allow a specific cohort of VA “orphan” loans to be pooled into Ginnie Mae securities. And Oklahoma Governor Kevin Stitt signed SB 915 into law, which will enable the use of remote online notarization (RON) in the state.


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    FHA Proposes New Lender Certification Requirements

    This week, FHA announced its long-awaited Proposed Revisions to the Certifications and Defect Taxonomy. These changes are the result of years of advocacy by MBA to reduce lender exposure to risk arising from overzealous use of the False Claims Act. They are being proposed in an effort to give additional clarity and to streamline FHA program requirements while continuing to fulfill FHA’s duty to protect the Mutual Mortgage Insurance Fund (MMIF). FHA is seeking public feedback on these proposed changes, specifically to its loan-level certifications, annual lender certifications, and the Defect Taxonomy. Key highlights from the announcement include: 

    • Loan-Level Certifications: FHA is completely revising the Addendum to Uniform Residential Loan Application;
    • Annual Lender Certifications: The proposal changes annual lender certifications to better align them with existing statute. Changes are intended to address industry concerns by streamlining the certification statements, while continuing to hold lenders accountable for compliance with all HUD eligibility and approval requirements; and
    • Defect Taxonomy: Updates will provide more clarity and transparency into FHA’s existing loan-level quality assurance processes.

    MBA released a statement of support and will continue to work with HUD as we have been in constant communication throughout this process. For a side-by-side comparison of existing language and the proposed changes, please click here.

    For more information, please contact Andrea Oh at (202) 557-2922 or Julienne Josephat (202) 557-2782.

    House Committees Pass Bill to Provide Certainty Regarding Mortgage Loans to Veterans On Wednesday, the House Committees on Financial Services and Veterans’ Affairs passed the Protect Affordable Mortgages for Veterans Act of 2019, H.R. 1988. The bipartisan bill, introduced by Reps. David Scott (D-GA) and Lee Zeldin (R-NY), 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. The legislative fix would promote liquidity and enable impacted VA lenders to provide more mortgage credit to veterans. The full text of MBA’s letter to the Financial Services and Veterans’ Affairs committees can be found here.

    For more information, please contact Dan Grattan at (202) 557-2712 or Ernie Jolly at (202) 557-2741.

    House Veterans Committee Advances Blue Water Navy Bill 
    On Wednesday, the House Veterans’ Affairs Committee passed the Blue Water Navy Vietnam Veterans Act of 2019, H.R. 299, which advanced by voice vote. The bill, introduced by Rep. David P. Roe (R-TN), would extend certain health benefits to veterans who served in Southeast Asia and Korea, and were affected by diseases associated with Agent Orange. While MBA applauded the Committee’s efforts to ensure adequate medical care for veterans who may have been exposed to dangerous chemicals in the course of their service, MBA raised concerns about a provision that would increase fees charged to veterans in connection with the Department of Veterans Affairs (VA) Home Loans program. MBA will continue to engage Congress and urge legislators to ensure that housing-related revenue is not used to pay for non-housing-related spending. The full text of the Veterans’ Affairs Committee can be found here.

    For more information, please contact Dan Grattan at (202) 557-2712 or Ernie Jolly at (202) 557-2741.

    House Passes Bill to Extend National Flood Insurance Program Through Fiscal Year 2019
    Today, the House of Representatives passed H.R. 2157, the Supplemental Appropriations Act, 2019, sponsored by Rep. Nita Lowey (D-NY), Chair of the Appropriations Committee.

    This supplemental appropriations bill includes a provision that would extend the National Flood Insurance Program, due to lapse at the end of May, through the end of this fiscal year on September 30, 2019. The bill, which passed by a 257-150 vote, also includes $17 billion in aid for certain disaster-stricken communities.

    In a joint coalition letter sent to Congress, MBA has advocated for an extension of the NFIP in the absence of consensus agreement among legislators to reform the program. The legislation now heads to the Senate for its consideration.

    For more information, please contact Dan Grattan at (202) 557-2712 or Ernie Jolly at (202) 557-2741.

    Senate Banking Committee Holds Hearing on Data Privacy
    On Wednesday, the Senate Banking Committee held a hearing entitled, Privacy Rights and Data Collection in a Digital Economy. Witnesses included Peter Chase, Senior Fellow, the German Marshall Fund of the United States; Jay Cline, Privacy and Consumer Protection Leader, Principal, PwC; and Maciej Ceglowski, Founder, Pinboard. Senate Banking Chairman Mike Crapo (R-ID), who is in the early stages of crafting a potential data privacy bill, used the hearing to examine the European Union’s General Data Protection Regulation and other approaches to data privacy, such as the effect on the financial services industry and how companies collect and use information in marketing and decision-making related to credit, insurance, or employment. Chairman Crapo and Ranking Member Senator Sherrod Brown (D-OH), indicated there was bipartisan support to address data privacy concerns. “There’s enough agreement here,” Brown said. “Unlike some issues that we’ve had greater differences on, this is something that we can really do.”

    On February 13, 2019, in a rare bipartisan request, Chairman Crapo and Ranking Member Brown invited feedback from the public on the collection, use, and protection on 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 to prevent 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 here.

    For more information, please contact Tallman Johnson at (202) 557-2866 or Erin Barryat (202) 557-2913.

    Ginnie Mae Extends Deadline for Comments on VA Cash-Out Refinances
    Earlier this week, Ginnie Mae extended the deadline for responses to its recently-issued Request for Input on Pooling Eligibility Changes from May 22 to May 31. As a reminder, this RFI addresses the prepayment behavior of VA-guaranteed cash-out refinances with higher loan-to-value ratios.

    More specifically, the RFI considers the potential for Ginnie Mae to place restrictions on the pooling of VA cash-out refinances with LTV ratios above 90 percent. Options explicitly noted in the RFI include creating single-issuer custom pools for these loans, creating a new category of multi-issuer pools that include only these loans, or imposing a de minimis standard to limit the concentration of these loans in any given pool. 

    In February, MBA submitted comments to VA detailing a series of recommendations on the parameters of cash-out refinances to deter loan churning, slow Ginnie Mae prepayment speeds, and protect consumers. MBA will draw upon this work in developing further recommendations in response to the Ginnie Mae RFI.

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

    MBA Submits Comments on CFPB PACE ANPR
    On Tuesday, MBA submitted comments on CFPB’s Advance Notice of Proposed Rulemaking (ANPR) on residential Property Assessed Clean Energy (PACE) financing. The ANPR follows from Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which directs the Bureau to create regulations applying TILA’s ability to repay requirements to PACE loans. The Bureau will use information gathered during the ANPR phase to inform later rule writing. MBA’s comments highlight several issues with PACE finance including the lack of consumer protections and the “super-lien” status afforded PACE loans. MBA urges the Bureau to treat PACE loans like mortgage loans, given that both forms of real estate finance pose similar risks for consumers. Specifically, PACE lenders should be subject to TILA’s ability to repay, disclosure, and licensing requirements. MBA also suggests offering Qualified Mortgage protections for subordinated PACE loans. 

    For more information about MBA’s comments or the Bureau’s PACE rule writing process, please contact William Kooper at (202) 557-2737 or Justin Wiseman at (202) 557-2854.

    CFPB Issues Proposed Rule on Fair Debt Collection Practices
    On Wednesday, the CFPB released a notice of proposed rulemaking on amendments to Regulation F, 12 CFR Part 1006, which implements the Fair Debt Collection Practices Act (FDCPA). This rule is the first major FDCPA rulemaking since the statute's passage in 1977. The announcement included two supporting documents: a Fast Facts sheet on the rule, and a flowchart outlining how to view electronic disclosures. The Bureau seeks comment on proposed revised definitions, communication restrictions and regulations, and required disclosures applicable to debt collectors as defined in the Act. Of particular note is that the rule’s definition of debt collector maintains the traditional understanding that those who collect on their own loans or acquire loans that are performing are not defined as debt collectors. MBA is currently reviewing the proposed rule and will provide a summary shortly.

    For more information, please contact Hanna Pitz at (202) 557-2796 or Sara Singhas at (202) 557-2826.

    FHFA Adds Two New Officials to its Leadership
    The Federal Housing Finance Agency (FHFA) added two new officials to its leadership ranks this week, Christopher Bosland and Meghan Patenaude. Bosland is slated to serve as a Senior Adviser for Regulatory Affairs and Patenaude joins as a Senior Policy Advisor.

    For more information, please contact Dan Fichtler at (202) 557-2780

    MBA’s Campaign for Consistent Remote Online Notarization Laws and Rules Continues to Gain Momentum: Oklahoma Enacts a New RON Statute and Tennessee Adopts Rules for RON Implementation
    On Thursday, Oklahoma Governor Kevin Stitt signed SB 915 into law, which will enable the use of remote online notarization (RON) in the state. The statutory language of SB 915 is consistent with the contours of the MBA-American Land Title Association (ALTA) model state RON bill. Oklahoma becomes the ninth state in 2019 to enact RON legislation and the 19th state to establish RON as a permissible method of performing notarizations. Moreover, the Tennessee Secretary of State recently adopted emergencyrules to provide consumers with the option of using RON for electronic documents. Tennessee’s RON rules are consistent with the MISMO RON Working Group’s modelstandards, which along with the MBA-ALTA state model RON bill continues to help establish a national consensus among state policy makers for RON rules and laws. 


    For more information, please contact William Kooper (202) 557-2737 or Kobie Pruitt(202) 557-2870.

    MBA and State Partners Meet with Commissioner Taylor to Discuss AMC Licensing and Regulation in Washington, D.C.
    On Tuesday, MBA, the Mortgage Bankers Association of Metropolitan Washington (MBA/MW), the Maryland Mortgage Bankers and Brokers Association (MMBBA), and the Real Estate Valuation Advocacy Association (REVAA) met with Commissioner Stephen Taylor of the Washington, D.C., Department of Insurance, Securities, and Banking to discuss the importance of implementing regulations to establish Dodd-Frank-required minimum standards for appraisal management companies (AMCs). Without legislation or clear, written guidance regarding enforcement of AMCs by the August 2019 deadline, these entities will be barred from participating in all federally related transactions in the District. In addition, AMCs and lenders would immediately have to stop using unlicensed individuals for non-appraiser services such as broker price opinions, property condition reports and more.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruittat (202) 557-2870.

    Tennessee Adopts Emergency Rules to Implement its Remote Online Notarization Law
    Effective immediately, the Tennessee Secretary of State has adopted emergencyrules to provide consumers with the option of using remote online notarization (RON) for electronic documents. Tennessee’s RON rules are consistent with the MISMO RON Working Group’s model standards, which along with the MBA-ALTA state model RON bill continue to help establish a national consensus among state policy makers for RON rules and laws.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruittat (202) 557-2870.

    Compliance Essentials Webinar on ECOA Case Law
    Join MBA Education and the Compliance Essentials program on May 15 to examine the roots of ECOA regulations and how courts have interpreted them in shaping the current body of fair credit law. In particular, the webinar will discuss the courts’, as well as the CFPB’s, views of disparate impact under ECOA and the status of disparate impact under the current administration. The webinar will conclude with observations about complying with ECOA in a changing regulatory and legal environment. To register for this webinar, please click here.

    For more information, please contact Lisa Volb at (202) 557-2919.


  • May 03, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    Congress returned to work after a two-week recess. The House Financial Services Committee held a hearing examining a proposal to significantly increase federal spending on affordable housing as an infrastructure modernization imperative. Also, the CFPB released two proposed rulemakings related to HMDA. And MBA President and CEO Bob Broeksmit took part in a panel discussion on housing finance reform at the Milken Institute Global Conference 2019.



    Industry Update

     

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    Upcoming Congressional Hearings

    May 7 - U.S. Senate Banking Committee: Privacy Rights and Data Collection in a Digital Economy

    May 8 - U.S. House Committee on Financial Services: A Review of the State of and Barriers to Minority Homeownership

    May 8 - U.S. House Committee on Financial Services: Full Committee Markup 

     

     

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    MBA Working For You

     

    CFPB Issues Two Proposed Rulemakings Relating to HMDA
    This week, the Bureau of Consumer Financial Protection (CFPB) issued a Notice of Proposed Rulemaking (NPRM) and an Advance Notice of Proposed Rulemaking(ANPR) related to the Home Mortgage Disclosure Act (HMDA). The NPRM proposes two alternatives that would permanently increase the coverage threshold from 25 to either 50 or 100 for closed-end mortgage loans, and also extend for two years the 500 loan threshold for open-ended lines of credit with a permanent threshold of 200 loans. The ANPR seeks information on the costs and benefits of collecting and reporting the data points in the 2015 HMDA Rule added to Regulation C, and certain pre-existing data points that the 2015 HMDA Rule revised. It is important to note that ANPRs are often a prelude to a notice of proposed rulemaking, so any changes in these areas would be made well into the future. The Bureau has posted a summary of the proposed rulemaking and an unofficial, informal redline of the proposed amendments to Regulation C to assist industry and other stakeholders in reviewing the proposed changes. The summary is available here and the redline is available here. Comments on the NPRM are due 30 days after publication in the Federal Register, and comments on the ANPR are due 60 days after publication in the Federal Register.

    For more information, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.

    House Subcommittee Focuses on Diversity & Inclusion in Financial Services
    This past Wednesday, the Subcommittee on Diversity and Inclusion of the House Financial Services Committee held a hearing entitled, “Good for the Bottom Line: A Review of the Business Case for Diversity and Inclusion,” to examine data and discuss research that details the benefits that can be achieved when financial services organizations implement robust diversity and inclusion practices in hiring and advancement practices.

    During the “Q&A” portion of the hearing, Subcommittee Chairwoman Joyce Beatty (D-OH) focused her questions to the expert panel on paths to success for both the hiring and retention of diverse employees in both the private and public sector. Ranking Subcommittee Member Ann Wagner (R-MO) noted that diversity and inclusion are essential for future growth and innovation in the financial services industry and asked panelists for specific strategies to implement to ensure diverse work forces in the industry.

    For more information, please contact Ernie Jolly at (202) 557-2741 or Dan Grattan at (202) 557-2712.

    House Financial Services Committee Discusses Affordable Housing in Context of Infrastructure Spending
    This past Tuesday, the full House Financial Services Committee held a hearing examining a proposal to significantly increase federal spending on affordable housing as an infrastructure modernization imperative. The hearing focused on Chairwoman Maxine Waters’ (D-CA) legislative draft entitled, “The Housing is Infrastructure Act of 2019.” This legislation would authorize $92 billion in funding for several housing infrastructure projects, including a huge reinvestment in public housing. Specifically, it calls for $70 billion for the Public Housing Capital Fund (PHCF) to pay for public housing backlogs; $5 billion for disaster mitigation efforts; and $5 billion for the Housing Trust Fund (HTF) to provide housing for the lowest-income households. Witnesses included low-income housing advocates, professionals serving public housing authorities, and industry representatives (NAHB and NMHC).

    During the hearing, Chairwoman Waters discussed the affordable rental housing shortage throughout the United States, citing the National Low Income Housing Coalition’s (NLIHC) estimates of a shortfall of approximately 7.2 million affordable rental housing units. Republicans recognized the significance of the affordable housing issue, though they cited significant costs and issues with local regulations in affordable housing development as a hurdle. Ranking Member Patrick McHenry (R-NC) and Andy Barr (R-KY) also expressed support for HUD’s Rental Assistance Demonstration (RAD) program.

    During the “Q&A” portion of the hearing, Rep. Rashida Tlaib (D-MI) expressed concerns that banks are discriminating against low-income and minority Americans seeking mortgages. Diane Yentel of NLIHC responded that ensuring underserved communities have access to credit is paramount, and spoke in support of Fannie Mae and Freddie Mac’s Duty to Serve plans.

    For more information please contact Ernie Jolly at (202) 557-2741 or Dan Grattan at (202) 557-2712.

    Senate Banking Committee Holds Hearing Regarding Regulatory Guidance
    This past Tuesday, the Senate Committee on Banking, Housing, and Urban Affairs held a hearing entitled, “Guidance, Supervisory Expectations, and the Rule of Law: How do the Banking Agencies Regulate and Supervise Institutions?” The witnesses included: Greg Baer, President and Chief Executive Officer, Bank Policy Institute; Margaret Tahyar, Partner, Davis Polk & Wardwell LLP; and Patricia McCoy, Professor of Law, Boston College Law School. During the hearing, Chairman Mike Crapo (R-ID) urged regulators to provide clear guidance and uniform instructions to examiners. Ranking Member Sherrod Brown (D-OH) and Senator Catherine Cortez Masto (D-NV) both raised concerns about the April 11, 2019, Office of Management and Budget (OMB) memo, “Guidance on Compliance with the Congressional Review Act," which applies an Office of Information and Regulatory Affairs (OIRA) oversight process to independent banking regulators. In response to a question from Senator Cortez Masto, McCoy stated, “OMB and OIRA have no statutory authority to tell the federal bank regulators how to conduct their cost benefit analysis. In fact, they are barred from doing so.”

    For more information, please contact Erin Barry at (202) 557-2913 or Tallman Johnsonat (202) 557-2866.

    Ginnie Mae Solicits Feedback on Potential Changes to MBS Pool Eligibility Parameters
    Today, Ginnie Mae published a Request for Input (RFI) as it considers making changes to the parameters governing loan eligibility for pooling of mortgages into its security. This RFI is a part of the agency’s continuing effort to monitor and support the market performance of the Ginnie Mae mortgage-backed securities (MBS). The publication of the RFI follows policy changes already implemented by Ginnie Mae and the Department of Veterans Affairs (VA) to address abnormal prepayment patterns in some mortgages pooled in Ginnie Mae MBS that negatively affect MBS pricing, to the detriment of home mortgage loan affordability.

    The RFI provides background information and analysis for consideration and specifically requests input concerning the potential removal from, or the restriction of, certain cash-out refinance mortgages within the Ginnie Mae II MBS. An item for consideration is the potential for VA cash-out refinances in excess of 90% loan-to-value to be excluded, or restricted, from the multi-issuer pools, given their performance history in the securities and the program requirement differences relative to FHA and the GSEs. All responses to the RFI are to be submitted to Ginnie Mae by May 22, 2019.

    In February, MBA submitted comments to VA detailing a series of recommendations to deter VA loan churning. MBA is also in regular communication with VA and Ginnie Mae regarding these issues, and we remain committed to ending the practice of loan churning targeted at service members, veterans, and surviving spouses, while preserving their legitimate refinancing opportunities.

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

    MBA CEO Bob Broeksmit Discusses Housing at Milken Global Conference 2019
    This week, the Milken Institute held its Global Conference 2019 in Beverly Hills, CA. MBA President and CEO Bob Broeksmit took part in a panel discussion entitled, “Housing Finance Reform: Will We Finally Get the Stone Up the Hill?” The panel was moderated by Eric Kaplan, Director at the Milken Institute Center for Financial Markets. Other panelists included Jeb Mason, Partner at The Cypress Group; and Lisa Rice, President and CEO of the National Fair Housing Alliance. Among the topics discussed were the various reforms needed to address the future of the secondary mortgage market.

    For more information, please contact Rob Van Raaphorst at (202) 557-2799. 

    New York DFS Announces Merger of Enforcement and Consumer Protection Divisions; Appoints Katherine Lemire to Lead the New Group
    On Monday, the New York Department of Financial Services (DFS) issued a press release announcing Katherine Lemire’s appointment as Executive Deputy Superintendent of the Department’s newly created Consumer Protection and Financial Enforcement Division. Since the departure of Richard Cordray from the CFPB, several states have announced, or are considering, the establishment of CFPB-like bodies. This week’s news follows the general contours of previous announcements in other states – these “mini-CFPBs” are being created through executive branch reorganizations that combine existing agencies with responsibility for industry oversight and consumer protection into a single entity. This approach bypasses the state legislatures, and limits industry/stakeholder opportunities to weigh in. In this case, the new DFS unit will be formed through the merger of two existing DFS units: the Enforcement and Financial Frauds division and the Consumer Protection division. According to the DFS release, combining the two divisions will give Lemire broad authority over issues ranging from student loans to Holocaust claims. MBA will continue work with the NYMBA to monitor DFS’s action to determine if this announcement represents the expansion of the Department’s existing mandates regarding lender examinations and enforcement.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

    Remote Online Notarization is now Law in Iowa and Washington
    This week, Iowa Governor Kim Reynolds and Washington Governor Jay Inslee signed legislation to make Iowa (SF475) and Washington (SB5641) the seventh and eighth states to enact RON in 2019. There are now 18 states that have established RON as a permissible method of performing notarizations for real estate finance transactions. Both bills follow the contours of the MBA-American Land Title Association (ALTA) model state RON bill, which is helping to establish a national consensus among state policy makers for RON laws and rules. To view the model bill, all the support materials for the MBA-ALTA campaign, and the latest RON developments, please visit MBA’s RON Resource Center at www.mba.org/RemoteOnlineNotarization.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

    Sign Up for the Fourth Annual MAA Action Week 
    The Mortgage Action Alliance (MAA), MBA’s free grassroots lobbying network, will be holding its fourth annual Action Week May 13-17. Action Week is a national, industry-wide campaign dedicated to helping real estate finance professionals learn how to become more engaged in political advocacy. 

    Last year, 49 companies ran company-wide enrollment campaigns, 20 state and local associations recruited new MAA members, and 12 individuals spread the word on social media to their professional networks. 

    This year, our goal is to recruit 100 organizations (companies, state/local associations and individuals) to run concurrent enrollment campaigns in an effort to activate all MAA members during Action Week. Join the growing list of companies participating in MAA Action week.

    Sign up and MBA Staff will provide materials and resources to help support your efforts.

    For more information, please contact Alden Knowlton at (202) 557-2816.

    Compliance Essentials Webinar on ECOA Case Law
    Join MBA Education and the Compliance Essentials program on May 15 to examine the roots of ECOA regulations and how courts have interpreted them in shaping the current body of fair credit law. In particular, the webinar will discuss the courts’, as well as the CFPB’s, views of disparate impact under ECOA and the status of disparate impact under the current administration. The webinar will conclude with observations about complying with ECOA in a changing regulatory and legal environment. To register for this webinar, please click here.

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

    Last Chance to Register for MBA’s Legal Issues and Regulatory Compliance Conference, May 5 – 8 in New Orleans, LA
    MBA’s Legal Issues and Regulatory Compliance Conference is happening next week, May 5–8, 2019, at the Hyatt Regency in New Orleans, LA. The conference has earned a reputation for being the “must attend” annual event, tailored to mortgage compliance and legal issues. There will be over 40 sessions covering regulation, legislation, and litigation. The conference is also a great way for attorneys to satisfy their continuing education or CLE credits, including getting an Ethics credit. To register, go here.


  • April 26, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    This past week, HUD issued a Mortgagee Letter delaying plans to impose new requirements on government entities that offer down payment assistance for mortgages backed by FHA. Also, Congress continued its two-week recess as members remained in their districts for the Passover/Easter/Spring District Work Period. They will return to Washington and be back in session next week.


    Industry Update

     

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    Upcoming Congressional Hearings

    Housing in America: Assessing the Infrastructure Needs of America’s Housing Stock

     

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    MBA Working For You

     

    HUD Delays Down Payment Assistance Changes by 90 Days 
    On Thursday, HUD issued Mortgagee Letter 19-07, extending the effective date to July 23 for down payment assistance and operating capacity requirements included inMortgagee Letter 19-06, published on April 18. Prior to the issuance of the new Mortgagee Letter (ML), these requirements would have been effective for FHA case numbers issued on or after April 18.

    The ML attempts to clarify the parameters of eligible down payment assistance (DPA) sources for FHA-insured loans. The requirements described in the ML have important implications for state/local housing finance agencies (HFAs), as well as DPA programs operated by federally recognized Indian tribes. In the ML, HUD notes that "It has come to FHA's attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority" when providing DPA. The new requirements could also potentially leave state/local HFAs susceptible to losses should they fund DPA to lenders that then choose to sell the mortgage and the servicing to another investor. In response to some of the issues raised by market participants, particularly the limits on programs operated by Indian tribes, there is pending litigation against HUD in the U.S. District Court for the District of Utah. HUD agreed to implement a 90-day stay from the date of the ML to allow governmental entities the opportunity to put systems in place to address the new requirements listed within the guidance.

    MBA is in constant contact with its partners at HUD and state/local HFAs, and will continue to provide additional updates on these new requirements as they are made available. 

    For more information, please contact Dan Fichtler at (202) 557-2780 or Julienne Joseph at (202) 557-2782.

    CFPB Intends to Adopt Changes for Civil Investigative Demands
    On Tuesday, the CFPB announced its intention to adopt changes to policies governing Civil Investigative Demands (CIDs). This important policy shift is consistent with recommendations made by MBA to address concerns over the Bureau’s use of overly broad CIDs. The new policy will aim to ensure CIDs clearly describe the specific conduct under investigation as well as the provisions of law thought to have been violated. Improved CID clarity will reduce the time and expense associated with responding to CIDs, facilitating a more efficient resolution of Bureau inquires. 

    For more information, please contact Justin Wiseman at (202) 557-2854 or Blake Chavis at (202) 557-2930.

    MISMO Remote Online Notarization Standards Nearing Completion
    Recently the Mortgage Industry Standards Maintenance Organization (MISMO) RON Working Group announced that it is close to finalizing its draft model standards for remote online notarization (RON) implementation. The release of the standards is appropriately timed to coincide with the increased velocity in which states are introducing and adopting legislation that will enable the use of RON. The MISMO standards, along with the MBA-ALTA state model RON bill, are helping to establish a national consensus among state policy makers for RON laws and rules. The MISMO RON Working Group has scheduled a webinar for Thursday, May 2
    , at noon (ET) to provide an in-depth look at the process and the technical requirements necessary to safely implement RON.

    For more information, please contact Janis Davis at (202) 557-2715 or Kobie Pruitt at (202) 557-2870.

    MAA Call to Action Urges Delay in New AMC Law in NY; Assembly Banks Committee Chairman Responds with Letter to NY Department of State
    This week, Mortgage Action Alliance (MAA) members in New York wrote to the State Assembly Banks Committee Chair, Kenneth Zebrowski, regarding the implementation of the Chairman’s legislation from last year to establish Dodd-Frank-required minimum standards for appraisal management companies (AMCs). The new law is scheduled to go into effect on April 27, 2019, and the New York Mortgage Bankers Association has significant concerns about the NY Department of State’s (NYDOS) extremely narrow interpretation of this law with respect to the licensing and regulation of AMCs. Specifically, NYDOS has not made a decision on the promulgation of rules that are necessary to implement the law, which is now only days away from becoming effective and enforceable. Without a delay or clear written guidance regarding enforcement, AMCs and lenders must immediately stop using unlicensed individuals for non-appraiser services such as broker price opinions, property condition reports and more.  Responding to industry concerns, Chairman Zebrowski wrote to NY Secretary of State Rossana Rosado and cited potential disruption to the real estate market, and requested NYDOS issue a memo stating that it will exercise enforcement discretion for a period of 90 days. 

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

    Register for MBA’s Legal Issues and Regulatory Compliance Conference, May 5 – 8 in New Orleans, LA
    MBA’s Legal Issues and Regulatory Compliance Conference is fast approaching, taking place May 5 – 8, 2019, at the Hyatt Regency in New Orleans, LA. The conference has earned a reputation for being the “must attend” annual event, tailored to mortgage compliance and legal issues. There will be over 40 sessions covering regulation, legislation, and litigation. The conference is also a great way for attorneys to satisfy their continuing education or CLE credits, including getting an Ethics credit. To register, go here.


  • April 19, 2019 8:00 AM | Michelle Martin (Administrator)

    Introduction
    This week, Congress continued its two-week recess as members remained in their districts for the Passover/Easter/Spring District Work Period. CFPB Director Kathy Kraninger gave a speech detailing her approach to the Bureau, and FHA issued guidance clarifying eligibility for downpayment assistance sources.  

    Industry Update

     

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    Upcoming Congressional Hearings

     

    No relevant hearings yet scheduled. 

    Click here for Upcoming MBA Conferences and Events

    MBA Working For You

     

    CFPB Director Kathy Kraninger Lays Out Vision for the CFPB
    CFPB Director Kraninger outlined her vision for the Bureau in a speech at the Bipartisan Policy Center touching on her views on the appropriate use of the Bureau’s regulatory, supervisory, and enforcement powers. A consistent theme was the need to emphasize the prevention of consumer harm before it occurs through education, regulatory clarity and use of the supervisory process. Of particular note was her announcement of a Fair Debt Collection Practices Act (FDCPA) rule in the near future that would place bright line limits on collection calls and provide clarity on the appropriate usage of new technology. Director Kraninger stated her belief that the need to prospectively address issues of consumer harm will spur CFPB to clearly define how to measure prevention of such harm. It is her hope that success will lead to fewer public enforcement actions.

    This speech was a welcome development and signaled a focus on several issues that are important to MBA and our members. Her emphasis on clear, bright line rules and commitment to understanding regulatory burden are crucial components of our CFPB 2.0 Road Map that lays out how the Bureau should continue its evolution into a stable, neutral, and vigorous consumer regulator. This is a vision that Director Kraninger specifically endorsed in the Q&A following her speech.

    For more information, please contact Justin Wiseman at (202) 557-2854.

    FHA Issues Guidance on Eligible Downpayment Assistance Sources
    On Thursday, HUD issued Mortgagee Letter 19-06, which clarifies the parameters of eligible downpayment assistance sources for FHA-insured loans. In the letter, HUD notes that “It has come to FHA’s attention that certain Governmental Entities may be acting beyond the scope of any inherent or granted governmental authority” when providing downpayment assistance.

    To address this concern, HUD will now require new types of documentation from lenders to ensure that government entities are acting in their governmental capacities when providing funds to borrowers. Notably, the letter also appears to limit downpayment assistance by federally recognized Indian Tribes to properties located on Tribal land or to borrowers who are enrolled members of the Tribe.

    This guidance is effective for all loans with FHA case numbers assigned on or after April 18.

    For more information, please contact Dan Fichtler at (202) 557-2780, Julienne Josephat (202) 557-2782, or Andrea Oh at (202) 557-2922.

    FHFA Names Adolfo Marzol as Principal Deputy Director
    Shortly after Mark Calabria was sworn in as FHFA Director earlier this week, the Agency announced that Adolfo Marzol has been appointed to the position of Principal Deputy Director. Marzol, a respected industry veteran, has held senior leadership positions at Essent, Fannie Mae, Chase Mortgage, Equitable Mortgage, and HUD. In his role at FHFA, Marzol will report directly to Calabria and advise on a wide range of policy issues.

    The appointment of Marzol comes as FHFA not only undertakes a leadership change, but also as the Agency works to finalize the rollout of the Uniform Mortgage-Backed Security and make further progress on an updated capital framework for Fannie Mae and Freddie Mac. MBA looks forward to ongoing work with Calabria, Marzol, and the rest of the FHFA leadership team as these initiatives advance.

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

    MBA Comments on Proposed Maryland Lender Regulations
    This week, MBA submitted a comment letter to the Maryland Department of Labor, Licensing, and Regulation (DLLR) in response to its proposed changes to regulations that govern mortgage lending activities in the state. Published in the Maryland Registeron March 1, 2019, the proposal touches on multiple aspects of the mortgage business – origination, servicing, legal compliance, and technology policy. In addition, the recent proposal reflects an update to proposed regulatory changes that were previously offered in 2017. MBA and a variety of other stakeholders provided comment on the previous proposal and some of the concerns that were raised in those comments are addressed by DLLR’s most recent version of the proposal. MBA will continue to work with DLLR going forward and advocate for greater consistency in its proposed rules.

    For more information, please contact Kobie Pruitt at (202) 557-2870.

    Momentum for Remote Online Notarization Continues in Multiple States; MBA and NYMBA Reach out to the New York Legislature to Discuss RON
    At the end of last week, Arizona Governor Doug Ducey signed SB 1030 into law, making Arizona the sixth state in 2019 to enact RON. There are now 16 states that have established RON as a permissible method of performing notarizations for real estate finance transactions. In addition, the Maryland General Assembly (SB 678) and the Washington State Legislature (SB 5641) passed their own RON laws, which are now being prepared for signature by their respective governors. Both bills follow the contours of the MBA-American Land Title Association (ALTA) model state RON bill, which is helping to establish a national consensus among state policy makers for RON laws and rules.

    Recently, MBA also collaborated with the New York Mortgage Bankers Association (NYMBA), ALTA, and the New York State Land Title Association (NYSLTA) on a letter to the sponsors of New York RON Legislation (A4076/S4352) that does not comport with the developing consensus on how to safely implement RON. In the letter, the groups suggested that the sponsors review the MBA-ALTA state RON bill and consider adopting the language of the model. To view the model bill, all the support materials for the MBA-ALTA campaign, and the latest RON developments, please visit MBA’s RON Resource Center at www.mba.org/RemoteOnlineNotarization.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.

    MBA Education Webinar on Basics of Private-Label RMBS
    Join MBA Education on April 25 as subject matter experts present an introduction to private-label residential mortgage-backed securities (RMBS). This webinar will begin with a history of RMBS, including pre- and post-crises RMBS issuances. It will also cover basic RMBS structures and the related documentation and agreements. The roles of typical parties to those agreements, and the role of mortgage bankers in particular, will also be analyzed. Finally, select legal considerations, such as the requirements of Regulation AB and the enforcement of representations and warranties relating to the mortgage loans, will be discussed with a focus on how those issues apply to mortgage bankers. To register for the webinar, please click here.

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


  • April 12, 2019 8:00 AM | Michelle Martin (Administrator)
    Introduction
    This past week, Treasury Secretary Steven Mnuchin testified before both the full House Financial Services Committee and the House Appropriations Subcommittee on Financial Services and General Government regarding a broad slate of economic items and the Treasury Department's FY 2020 budget request, respectively. In the Senate, Cheryl Stanton was confirmed as Administrator of the Labor Department's Wage and Hour Division. Congress will now leave for its traditional two-week Passover/Easter/Spring recess. 

    Industry Update

     

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    Upcoming Congressional Hearings

     

    No relevant hearings yet scheduled. 

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    MBA Working For You

     

    Bicameral Progress on IRS Modernization
    On Tuesday, the full House of Representatives passed H.R. 1957, the Taxpayer First Act of 2019, by voice vote. H.R. 1957 and its Senate companion, S. 928, introduced by Senators Charles Grassley (R-IA) and Ron Wyden (D-OR), is the first legislative reform to the Internal Revenue Service (IRS) in nearly two decades. Among the many provisions, the bill includes language to automate the 4506T tax transcript process. MBA submitted a letter supporting the validation of income as an important component of sound residential mortgage lending. The Senate Finance Committee held a hearing on modernization and reform issues on Wednesday with IRS Commissioner Charles Rettig. In addition to discussing general IRS reform, Chairman Grassley used this opportunity to discuss the importance of H.R.1957/S. 928, and said it is his hope that the Senate will take action on this bill quickly. Debate around the bill’s provision that codifies the IRS’s “Free File” system will determine how quickly it moves through the Senate.

    For more information, please contact Tallman Johnson at (202) 557-2866 or Bill Killmer at (202) 557-2736.

    HFSC Subcommittee Discusses Community Reinvestment Act
    On Tuesday, the House Financial Services Committee (HFSC) held a hearing in the Subcommittee on Consumer Protection and Financial Institutions entitled, “The Community Reinvestment Act (CRA): Assessing the Law’s Impact on Discrimination and Redlining.” The witnesses included advocacy groups, academics and a reporter. During the hearing, Subcommittee Chairman Greg Meeks (D-NY) advocated for the elimination of “loopholes” in CRA, specifically in three areas: (1) instances where CRA credit is provided on loans in low- and moderate-income (LMI) assessment areas even when those loans are not to LMI borrowers; (2) the application of CRA when a bank has a deposit-taking branch in an assessment area; and, importantly, (3) in cases when CRA does not yet apply to non-bank lenders. Republicans such as HFSC Ranking Member Patrick McHenry (R-NC) and Subcommittee Ranking Member Blaine Luetkemeyer (R-MO) advocated for CRA modernization that reflects new financial-service delivery methods. MBA will carefully monitor this dialogue as it progresses to ensure that effective CRA reform for banks moves forward, and that CRA burdens are not extended to non-depository institutions.

    For more information, please contact Dan Grattan at (202) 557-2712 or Bill Killmer at (202) 557-2736.

    Secretary Steven Mnuchin Testifies in House Financial Services
    On Tuesday, the House Financial Services Committee (HFSC) heard from Treasury Secretary Steven Mnuchin at a sometimes spirited hearing entitled, “Annual Testimony of the Secretary of the Treasury on the State of the International Financial System”. During the hearing’s period reserved for questions and answers, Mnuchin faced a broad range of inquiries, including a focus on both the role of the Financial Stability Oversight Council (FSOC) and implementation of Financial Accounting Standards Board's (FASB) Current Expected Capital Loss (CECL) accounting standard. Some committee members expressed concerns that CECL could have “drastic pro-cyclical” repercussions on the GSEs and credit unions. Rep. Blaine Luetkemeyer (R-MO) asked whether Treasury would support a delay of implementation in order to conduct a quantitative impact study. Sec. Mnuchin replied that FSOC is discussing CECL and that he hopes Treasury can work together with Congress on GSE reform on a bipartisan basis.

    For more information, please contact Dan Grattan at (202) 557-2712 or Bill Killmer at (202) 557-2736.

    OMB Asserts Authority Over Regulatory Actions by the Fed, FHFA and Other Independent Agencies
    Yesterday the Office of Management and Budget (OMB), an agency in the Executive Office of the President, released a memo instructing the independent government agencies such as CFPB, FHFA, the Fed and others on the need to provide for Congressional review under the Congressional Review Act (CRA) of almost all of their actions—notice and comment rulemakings, interpretative rules or statements of policy and guidance. (There are some defined limited exceptions, such as for Fed monetary policy decisions.) Most significantly, the memo instructs these agencies to get a determination from OMB if a particular action is a “major” rule as defined by the CRA before taking any action to implement it. This requirement could significantly delay independent agency action while these OMB reviews are occurring. It is also a clear shift from past practice, where these agencies did not have their actions subject to oversight by other parts of the Executive branch. 

    For more information, please contact Justin Wiseman at (202) 557-2854. 

    Senate Confirms Cheryl Stanton to Head DOL’s Wage and Hour Division
    On Wednesday, the U.S. Senate voted to confirm Cheryl Stanton to lead the Labor Department’s Wage and Hour Division, which is tasked with enforcing federal labor laws such as overtime and prevailing wage requirements. The Senate voted along party lines, 53-45, to confirm Ms. Stanton. President Donald Trump first nominated Stanton for the position in September 2017, but the Senate did not take action to confirm her in the 115th Congress. MBA sent a letter of support for Stanton on February 2, 2018. 

    For more information, please contact Tallman Johnson at (202) 557-2866 or Bill Killmer at (202) 557-2736.

    MBA Submits Comments on Agencies’ Community Bank Leverage Ratio (CBLR) Proposal
    On Monday, MBA submitted comments on the proposed CBLR framework issued by the OCC, Fed and FDIC (agencies) in February. The proposal, which was congressionally mandated, provides guidance to taxpayers on implementation of Section 201 of the Economic Growth, Regulatory Relief and Consumer Protection Actof 2018. Section 201 established a simple alternative methodology to measure capital adequacy for eligible community banks, providing significant regulatory relief. The agencies’ proposal provides eligibility factors and other required guidance for community banks that want to opt in to the new simplified regulatory capital rules. MBA appreciated the agencies’ efforts to provide clear and useful guidance, but strongly opposes both the inclusion of a 25% MSA threshold as an eligibility factor, and the proposed 9% CBLR level as the acceptable level under the framework. These requirements would disqualify many small community banks for which the simplified framework is actually intended. MBA recommended that the agencies increase the MSA threshold to a minimum of 50%, and reduce the acceptable CBLR level to 8%. This would allow more community banks, especially the smallest banks in rural areas, to qualify for this simplified regulatory capital framework. 

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

    Important Advocacy Victory in Maryland -- Harmful Licensing Law Defeated 
    In another victory for coordinated and sustained industry advocacy, legislation (SB 485/HB 593) introduced at the request of the Maryland Attorney General to amend the state’s Collection Agency Licensing Act (MCALA) to require statutory trusts to become licensed debt collection agencies was ultimately defeated when the Maryland legislature adjourned on Monday of this week. The legislation would have reversed the well-reasoned decision of the Maryland Court of Appeals in Blackstone v. Sharma, 461 Md. 87 (2018), where the court held that statutory trusts created for the purpose purchasing and holding mortgage backed securities did not require licensure. A coalition led by MBA and the Maryland Mortgage Bankers and Brokers Association ensured the defeat of what could have been a harmful, first-in-the-nation licensing bill that would have increased servicing costs without any substantive new protections or benefits for consumers. The advocacy effort included testimony in the Senate andHouse of Delegates, in-person meetings with legislators on key committees, as well as several Mortgage Action Alliance (MAA) Calls to Action.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruittat (202) 557-2870.

    Remote Online Notarization Campaign Continues: Maryland Legislature Passes RON Bill
    This week, following the unanimous approval by the Maryland Senate, the state’s House approved SB 678 to permit remote online notarizations (RON) in the state. If signed by Governor Hogan, Maryland will join five other states – Utah, Kentucky, North Dakota, South Dakota and Idaho – that have enacted RON laws in the past month, with progress observed in several other states. SB 678 follows the contours of the MBA-American Land Title Association (ALTA) model state RON bill which, with the help of MISMO’s draft model RON implementation standards, is helping establish a national consensus among state policy makers for RON laws and rules. To view the model bill, all support materials for the MBA-ALTA campaign and the latest RON developments, please visit the MBA’s RON Resource Center.

    For more information, please contact William Kooper at (202) 557-2737 or Kobie Pruitt at (202) 557-2870.


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