Earlier this week, the full House of Representatives voted along party lines to adopt a $3.5 trillion budget resolution framework for fiscal year (FY) 2022, following Senate passage earlier in the month. The budget resolution passed as part of a House rule that enabled a House floor vote on the Senate-passed $1.2 trillion bipartisan infrastructure bill by September 27. 

As previously reported, congressional Democrats are pursuing a dual-track strategy to pass major infrastructure and economic legislation- including tax increases that would impact real estate-through the budget reconciliation process that allows passafge in the Senate by a simple majority (rather than a 60 vote threshold). 

House and Senate committees will begin finalizing legislation in earnest over the next few days and weeks as congressional leaders give committees a September 15 target deadline to develop their portions of the reconciliation bill. MAA members need to take action TODAY to urge Congress to support and defend our industry tax priorities.

And finally, MORPAC passed an important milestone last week- over $1 million raised from a national grassroots network of thousands of individual donors giving what they can. To learn more, view the 2021 MORPAC Mid-Year Report, which includes a compilation of our achievements this year to date, and a much deserved call-out to our partners and contributors.
 

1. Bipartisan Infrastructure Bill Passes Senate, Clears Procedural Hurdle in the House

Earlier this month, the Senate voted 69-30 to approve the Infrastructure Investment and Jobs Act (H.R. 3684), which focuses on investments in bridges, roads, railways, and broadband. It does not include investments that the Biden administration has referred to as "human infrastructure," including affordable housing provisions or tax provisions that impact real estate. The House is expected to take up the Senate-passed bill by September 27, but that could slip depending on committee progress in drafting the aforementioned reconciliation bill.  

• Why it matters: MBA and Mortgage Action Alliance (MAA) opposition efforts successfully defeated a harmful amendment offered by Senators Chuck Grassley (R-IA) and Patrick Leahy (D-VT) that would have made significant changes to the False Claims Act (FCA). Despite industry pushback, a MAA Call to Action, and a failed amendment offered by Senator Mike Lee (R-UT) to repeal the use Fannie Mae and Freddie Mac guarantee fees ("g-fees") as a source of funding offsets, the final package did include an extension of the 10-basis-point increased level of g-fees through 2032 to raise an estimated $21 billion.
   
• What's next: Senators Grassley and Leahy can be expected to attempt to attach their amendment to other moving legislative vehicles before year's end. MBA will continue to oppose any attempts at legislative or regulatory change pertaining to the FCA that would reduce access to credit and lead to higher costs of Federal Housing Administration (FHA)-insured financing for first-time, low-to-moderate-income, and minority homebuyers.
   

2. Flurry of Legislative Activity as Tax and Infrastructure Negotiations Advance

In recent weeks, Senators Elizabeth Warren (D-MA) and Angus King (I-ME), and Rep. Don Beyer (D-VA), introduced the Real Corporate Profits Tax Act, a revised version of President Biden's minimum book tax (MBT) proposal that would impose a new 7% minimum tax on book income for companies with $100 million or more in annual net income. Additionally, Senate Finance Committee Chairman Ron Wyden (D-OR) introduced, the Decent, Affordable, Safe Housing for All (DASH) Act, a new bill that seeks to expand access to housing for first-time homebuyers and low-income individuals by investing in existing programs and establishing new tax credits geared towards renters and middle-income homeowners. 

• Why it Matters: The revised MBT, though intended to compel large multinational corporations to pay a more equitable effective tax rate, would apply to MBA member firms holding mortgage servicing rights that currently defer taxation on those assets until accompanying servicing cash flow is received. Smaller mortgage firms not directly subject to the MBT would still be impacted by the resulting "downstream" MSR pricing volatility the proposal would create, absent a housing carveout.
  
  The DASH Act would expand the Low-Income Housing Tax Credit (LIHTC), establish a Renter's Tax Credit and Middle-Income Housing Tax Credit (MIHTC), and create a new down payment tax credit for first-time homebuyers. Additionally, it would establish the Neighborhood Homes Investment Act (NHIA), a proposed federal tax credit targeted to the new construction or substantial rehabilitation of affordable, owner-occupied housing located in distressed urban, suburban, and rural neighborhoods, which was a key issue during MBA's virtual National Advocacy Conference earlier this year.
   
• What's Next: Senator Wyden leads and Senator Warren and Congressman Beyer serve on the congressional tax-writing committees (Senate Finance and House Ways and Means, respectively), so they are well-positioned to push to include some version of these proposals (and others that have been introduced) in the Senate/House reconciliation package this fall.
   

3. MBA Details Concerns with Ginnie Mae Proposal to Revise Capital, Liquidity, and Net Worth Requirements; RFI Deadline Extended

Earlier this month, MBA submitted extensive comments to Ginnie Mae in response to its Request for Input (RFI) on updated issuer capital, liquidity, and net worth requirements. MBA highlighted its significant concerns with the proposed introduction of a risk-based capital ratio requirement that features harsh treatment of issuers' mortgage servicing rights (MSRs). In its letter, MBA discussed the potentially adverse impact that this requirement could have on issuers, the MSR market, and consumers. MBA also issued several recommendations for Ginnie Mae and other federal and state agencies that would improve financial resiliency in a more effective manner.

• Why it matters: The introduction of a risk-based capital ratio requirement is a novel approach to Ginnie Mae's oversight of issuers and needs thorough analysis and back-testing before its implementation should be considered. If this requirement were put in place for 2021 reporting, it could destabilize markets rather than serve to strengthen financial resiliency.
   
• What's next: As a result of MBA's advocacy and recommendations, Ginnie Mae has extended the deadline for responses to the RFI to October 8, and Ginnie Mae also confirmed that it will reconsider its proposed 2021 implementation of these new requirements, as well as pursue alignment with the efforts being undertaken by the Federal Housing Finance Agency (FHFA) and the Conference of State Bank Supervisors (CSBS). MBA will continue its advocacy to ensure any changes adopted by Ginnie Mae are appropriately calibrated and implemented on a reasonable timeline.
   

Tell Congress: Preserve Industry Tax Priorities in Budget Reconciliation

Earlier this month, MAA launched a call to action urging advocates to contact their Senators and Representatives and urge them to preserve industry tax priorities to support real estate investment and homeownership during budget reconciliation and tax negotiations. This represents a critical opportunity for our industry weighs in with lawmakers to urge the appropriate balance in of any new provisions - to help preserve tax policies that are paramount to our industry - and to the customers and end users you serve. Already more than 2,400 MAA members have sent nearly 10,000 messages to 98 US Senators and 87% of the US House.

A special thank you to the following for leading the way on this issue! Below are the top 5 companies by action takers.

1. Fairway Independent Mortgage Inc. - 1,494
2. New American Funding - 98
3. PrimeLending - 70
4. Evergreen Home Loans - 56 
5. Colonial Savings - 50
    

It's not too late! Add your voice TODAY by taking action on this critical and timely issue.

Advocacy in August

This month marked the start of MBA's annual Advocacy in August campaign, an initiative to keep MAA members engaged with our industry's advocacy efforts during this critical time that your elected officials are back home during the extended Congressional recess. Across the country, MAA members will meet with their legislators to advocate on behalf of the real estate finance industry and the customers we all serve. These in-person and virtual meetings with policymakers are a key component of MBA's advocacy efforts, as they add a name, a face, and personal story to complex industry issues and enumerate their impact on your customers, making them relatable to Members of Congress and Senators, many with, with little to no background regarding our industry.

Last week, Eric Gates, President & CEO of Apex Home Loans, and Nathan Burch, Senior Vice President of Vellum Mortgage, sat down with Sen. Warner's (VA) Sr. Policy Advisor, Michael Beresik, to discuss and underscore the various positions included in the current tax call to action.

These important conversations will continue throughout the remainder of August and into September as MBA and MAA remain engaged on key issues. Please email Rosie Sheehan (rsheehan@mba,org) to lend your voice and join a meeting.

Save the Date for MBA's Advocacy Reception at Annual!

We hope you will join MORPAC Chairman, Jeff Taylor, and MAA Chairman, Steven Plaisance, in San Diego, CA during MBA Annual21 to celebrate MBA's MORPAC and MAA Advocacy programs and get a chance to hear about them in person. Click here to register today. Hope to see you all there!

What: Advocacy Reception to Celebrate MAA and MORPAC
Date: Monday, October 18, 2021
Time: 4:00pm-5:30pm PT
Place: San Diego, CA