As expected earlier this month, President Biden signed a $1.9 trillion COVID-19 stimulus bill with provisions to provide additional direct assistance to renters, homeowners, and businesses affected by the pandemic. Importantly, the new public law does not modify the CARES Act mortgage forbearance already in place since last March.

Our industry will be impacted by far-reaching legislation to come, making your involvement in MBA's advocacy programs crucial. Mortgage finance will be impacted not just by traditional policy concerns such as GSE reforms, housing assistance and tax-related modifications, but also by debates over major new infrastructure investments, climate change risk management requirements and enhanced consumer data privacy standards.

In the coming weeks, we will need your help to call on Congress to strengthen the nation's economy in the wake of the pandemic, maintain and increase access to homeownership, and strengthen affordable housing and community development. We will need MAA to be louder and stronger than ever to ensure that Congress does not end up harming, more than helping, real estate and housing with any targeted changes to federal taxes that reduce support for capital formation and investment and negatively impact consumers.
 

1. Senate Banking, Housing, and Urban Affairs Committee Holds Hearing on State of Housing in America 

Last week, the Senate Banking, Housing, and Urban Affairs Committee held the first of what is expected to be a series of oversight hearings on housing policy this year. Chairman Sherrod Brown (D-OH) called for new solutions for low-income borrowers to access small-dollar mortgages to purchase homes. There was widespread agreement by Senators on the need to remove barriers to housing construction in order to address the lack of affordable housing. Several Democratic Senators focused on the impact of the pandemic and expressed concerns regarding foreclosures and evictions as relief measures expire. Ranking Member Pat Toomey (R-PA) outlined his principles for housing finance reform legislation, and Senator Mike Rounds (R-SD) expressed support of the FHFA's enterprise capital framework, but questioned its treatment of credit risk transfers. Notably, Nikitra Bailey, EVP, Center for Responsible Lending, testified that, "...servicers may be sorely tested when forbearance comes to an end as upwards of two million borrowers may need assistance in a limited time frame, and execution by large organizations is always a challenge, particularly with something as complicated, and important, as a mortgage." She also recommended that "Congress should simply require private loans to adopt the foreclosure moratorium and forbearance policies offered by one of the GSEs or FHA, as well to mirror the federally-backed loans in providing a post-forbearance solution that does not increase borrowers' monthly payments. In addition, Congress should provide servicers of private-label securities a safe harbor from investor lawsuits when they follow these provisions." However, this testimony did not lead to a broader discussion about mortgage servicing.

Why it matters: Several Senators used the hearing to preview specific legislation they will continue to advocate for enactment. This includes Senator Mark Warner's (D-VA) draft legislation to provide first-generation homeowners with subsidized 20-year mortgages; Senator Catherine Cortez Masto's (D-NV) effort to expand HMDA data reporting requirements; and Senator Elizabeth Warren's (D-MA) re-introduction of the American Housing and Economic Mobility Act that provides a major expansion of the National Housing Trust Fund.

What's next: MBA will continue to work with Senators who mentioned their specific housing legislative priorities as the committee starts work on considering a housing title that could be included in comprehensive infrastructure legislation.

2. GSE Limits on Second Homes, Investor Properties Come Into Focus; MBA Registers Concerns

This month, Fannie Mae and Freddie Mac (the GSEs) began industrywide outreach regarding new limits on second homes and investor properties. On March 10th, Fannie Mae issued a lender letter in which it announced that the vast majority of loans for second homes and investor properties must be underwritten with Desktop Underwriter (DU®), effective for deliveries beginning April 1, 2021. Both GSEs also have sent notices requiring lenders to meet a 7 percent delivery threshold for second homes and investor properties, typically effective with May or June deliveries and often with respect to a short (e.g., year-to-date) lookback period. MBA has raised with senior Federal Housing Finance Agency (FHFA) staff and the GSEs several significant implementation concerns regarding lender-level (rather than aggregate GSE) limits on products, potential impacts on existing pipelines, and inconsistent communications on how these limits will be measured and implemented.

Why it matters: These limits arose from the January 2021 amendments to the GSEs' Senior Preferred Stock Purchase Amendments (PSPAs), put in place by the Treasury Department and FHFA. The revised PSPAs require each GSE to cap purchases of second homes and investor properties at 7 percent of total single-family acquisitions over a rolling 52-week period. The revised PSPAs also include limits on "risk-layered" loans (effective immediately, like the limits on second homes and investor properties), as well as limits on cash window deliveries that will take effect in 2022.

What's next: MBA is aware of the numerous operational challenges that these limits present, including challenges related to existing pipelines. MBA is in close communication with FHFA and the GSEs to develop more flexible approaches that will alleviate some of these challenges. MBA sent a letter to Treasury Secretary Yellen and FHFA Director Calabria to address MBA member concerns and will be meeting with senior Treasury staff next week to discuss these concerns.

3. Senate Confirms Marcia Fudge As HUD Secretary; Advances CFPB and SEC Nominees To Senate Floor

On March 10th, the Senate voted 66-34 to confirm Congresswoman Marcia Fudge (D-OH) to serve as Secretary of Housing and Urban Development (HUD).  MBA issued a letter of support for her nomination.  The same day, the Senate Banking Committee voted to advance President Biden's nominations of Gary Gensler as chairman of the Securities and Exchange Commission and Rohit Chopra as director of the Consumer Financial Protection Bureau.

Why it matters: Secretary Fudge will lead HUD and coordinate closely with other federal agencies, including the CFPB, to address important issues facing both homeowners and renters.  Both Chopra and Gensler will continue their agencies' ongoing economic response during the COVID-19 emergency.

What's next: The Senate is expected to confirm Gensler's nomination after the Easter break. Chopra's nomination for a five year-term as CFPB director was moved to the Senate floor despite a deadlocked 12-12, party-line vote in Committee.  Under the rules of the Senate, Majority Leader Chuck Schumer (D-NY) can move for a vote on Chopra's nomination to the full Senate after an additional four hours of debate.  Should Chopra's nomination be deadlocked in a 50-50 vote in the evenly divided Senate, Vice President Kamala Harris can cast the tie-breaking vote, something she has done three times since taking office.
 

As part of MBA's Remote Online Notarization (RON) campaign, MBA and ALTA have been collaborating at the state and federal levels to prepare model legislation that would provide the framework for any state to adopt a remote online notarization process. Currently, 30 states have enacted statewide RON legislation. Simultaneously at the federal level, MBA is coordinating a joint congressional letter with our state and local association partners encouraging the reintroduction and enactment of the Securing and Enabling Commerce Using Remote and Electronic Notarization Act of 2021 (SECURE Notarization Act). The SECURE Notarization Act would permit the immediate nationwide use of RON with the minimum standards necessary to protect consumer data and personal information. In addition, it would provide legal certainty by ensuring interstate recognition of RON. MAA members will also have the opportunity to lend their voice to this effort via a call to action that will follow the bill's introduction in the coming weeks.

If your state association would like to sign on to the SECURE Notarization Act joint effort by MBA, the American Land Title Association and the National Association of Realtors and their respective local partners, or if you have questions, please contact Kobie Pruitt at kpruitt@mba.org. No logos are necessary to sign on. Only official approval by email is needed.

State RON Roundup

Last week, Virginia Governor Ralph Northam signed legislation (HB 2064) that amends Virginia's current remote online notarization (RON) law to be more consistent with the national standard for RON adoption. HB 2064, includes provisions that establish standards for credential analysis and ID proofing, which were absent in the prior law and are necessary to protect consumer data and personal information. MBA worked with the Virginia MBA to ensure HB 2064 was consistent with the national standards for RON adoption present in the MBA-American Land Title Association (ALTA) state model bill and the non-partisan Uniform Law Commission's Revised Uniform Law on Notarial Acts (RULONA). 

In New Mexico, SB 12 unanimously passed both chambers of the legislature and is headed to Governor Michelle Grisham for her signature. MBA and the New Mexico Mortgage Lenders Association support this legislation, which would adopt RULONA. If Governor Grisham signs SB 12, New Mexico would become the 31st state with RON.
 

Registration is now open for MBA's National Advocacy Conference (NAC) May 11-12. NAC allows you to connect directly with elected officials online from your home or office. Your story matters-share it with key policymakers as they consider and pass legislation that affects all of us. NAC will provide a great opportunity for our industry to call on Congress to strengthen the nation's economy in the wake of the pandemic, increase access to homeownership, and bolster affordable rental housing and community development.

Share your experiences, your voice, and your passion for our industry May 11-12! Register today at mba.org/nac and take advantage of the $99 early bird rate. For more information, please contact Alden Knowlton at (202) 557-2816.

MAA Action Week returns May 3-14, 2021! This national, industry-wide campaign unites real estate finance professionals to become more engaged in political advocacy. Last year, our industry set record-level engagement via the Mortgage Action Alliance, which led to numerous policy wins at the federal and state levels. Now more than ever it is imperative that we maintain a strong, unified voice in Washington, DC, and state capitals across the country.

Throughout MAA Action Week, companies and organizations will utilize MBA-provided materials to encourage industry professionals to engage in advocacy. If you are interested in learning more about running a MAA campaign, please contact Rosie Sheehan at (202) 557-2933.