Last week, the U.S. Department of Treasury (Treasury) and the Federal Housing Finance Agency (FHFA) announced the suspension of certain provisions of the Preferred Stock Purchase Agreements (PSPAs), which govern the conservatorship of Fannie Mae and Freddie Mac (the GSEs). Previously, artificial limits had been placed on the GSE acquisitions of loans secured by second homes and investment properties, loans with multiple risk factors, lenders' use of the cash windows, and multifamily lending volumes caps imposed in the PSPAs. MBA President & CEO, Bob Broeksmit, CMB, released a statement applauding Treasury and FHFA for the suspension of the caps, which caused market and pricing disruptions that negatively affected lenders and the borrowers they serve.

Earlier this year, MAA launched a call to action asking industry professionals to urge their Senators and Representative to contact the Treasury Secretary and the FHFA Director and highlight the disruptions caused by the rapid implementation of the caps. Nearly 6,500 MAA members from all 50 states responded and sent 23,000 messages to Congress. Subsequent advocacy efforts, including MBA's National Advocacy Conference (NAC) and Advocacy in August campaign, resulted in direct engagement to educate elected officials on the adverse impacts of the caps and ask that Congress contact Treasury and FHFA leadership to rescind the limits.

Last week, committees in the House of Representatives moved forward with efforts to advance the Democratic majority's $3.5 trillion spending plan. Following an official score from the Congressional Budget Office, the 2,600 page measure will ultimately head to the House Budget Committee as the next step before possible floor consideration. With the House proposal facing significant hurdles, President Biden embarked on a renewed effort last week to reassure wavering members of his own party to support his tax policy and budget reconciliation proposals.

Looking ahead, MAA will remain essential to our robust efforts aiming to impact policy. The announcement of these proposals will quickly begin to emerge as legislative and regulatory policy items where YOU will have an opportunity to weigh in. 

We will need MAA to be louder and stronger than ever to ensure that Congress does not end up harming, more than helping, our industry with any changes that reduce support for capital formation and investment, or negatively affects consumers, particularly in the residential sector.
 

1. Treasury and FHFA Suspend Key Limits on GSE Activities, Align with MBA Recommendations

On Tuesday of last week, the U.S. Department of the Treasury and the Federal Housing Finance Agency (FHFA) announced they are suspending certain limits on the business activities of Fannie Mae and Freddie Mac (the GSEs). Tuesday's suspension of certain provisions of the Preferred Stock Purchase Agreements (PSPAs) removes restrictions on the purchase of certain GSE loans. Specific to multifamily, FHFA announced that the suspension pauses the rolling 52-week, $80 billion multifamily caps that had been added to the PSPAs on January 14, 2021. While the suspension remains in effect, the Enterprises will be subject to the multifamily cap FHFA has established as conservator, currently set at $70 billion each for 2021. MBA had been advocating for these changes since they were put into place in January.  This announcement follows ongoing MBA engagement with Treasury and FHFA on this issue, including an MBA-led coalition letter highlighting the concerns with these limits shortly before they were suspended.

• Why it matters: These problematic limits had been a focus of intense MBA advocacy since their adoption in January, and their suspension is directly responsive to recommendations made by MBA. The suspension of these limits should enable the GSEs to better support several important segments of the housing market. Although the disruptive, backward-looking market share caps applied at the GSE and lender levels are gone, FHFA's announcement indicates the agency will continue to use its long-standing supervisory authorities to manage the GSEs' risk profile and mission compliance.
   
• What's next:  While these suspensions are in effect, Treasury and FHFA will consider further revisions to the PSPAs and will monitor the risks and performance of the GSEs. MBA will remain at the forefront of industry advocacy to ensure that any future changes to these agreements support sound, robust, multifamily mortgage markets.
   

2. Key House Committees Advance Tax and Housing Portions of Reconciliation Package

Last week, the House Ways and Means Committee (HWMC) and the House Financial Services Committee (HFSC) marked up their respective provisions related to the budget reconciliation package. The HWMC dedicated its markup to infrastructure financing and community development, as well as a series of corporate and individual tax provisions. These specific "pay-fors" included, among other items, changes to small-business "pass-through" deduction tax rules (Section 199(a)), raising the corporate tax rate, raising the top marginal personal income tax rate, raising the capital gains rate, and reforming international tax rules. At the same time last week, the HFSC voted along party lines to adopt a $322 billion package of increased spending for housing and other programs, in addition to emergency rental assistance program (ERAP) legislation. MBA's letter on certain housing provisions included in the legislation can be found here.

• Why it matters: Importantly, the HWMC-passed revenue raisers did not include changes to the current law treatment of Section 1031 like-kind exchanges or the readjustment of the value of an appreciated asset for tax purposes upon inheritance ("step-up in basis"). Included in the HFSC markup were legislative proposals offered by both the majority and minority offices, including H.R. 5196, the Expediting Assistance to Renters and Landlords Act of 2021, as introduced by Chairwoman Maxine Waters (D-CA), and H.R. 3913, the Renter Protection Act of 2021, as introduced by Ranking Member Patrick McHenry (R-NC). MBA signed a joint trade association letter to HFSC leadership in advance of the markup, which outlined recommendations to implement improvements to the distribution of ERAP funds to renters and landlords in need.
   
• What's next: Timing on floor consideration of the $3.5 trillion proposal is unclear, as House and Senate leadership - as well as the White House - have been heavily engaged in negotiations on the tax reform, drug pricing, clean energy provisions, and total size of the package. Senate Democratic leaders are expected to reveal their own set of alternative tax and housing proposals to complement/counter the House package in the coming days and weeks.

3. FHFA Announces Amendments to the GSE Capital Rules

On Wednesday of last week, FHFA announced a Notice of Proposed Rulemaking (NPR) proposing amendments to the Enterprise Regulatory Capital Framework Rule that applies to Fannie Mae and Freddie Mac.

• Why it matters: Specifically, the NPR would revise the Prescribed Leverage Buffer Amount (PLBA) and the capital treatment of Credit Risk Transfers (CRTs). FHFA is proposing a recalibration of the PLBA because a consistently binding leverage ratio could lead to perverse outcomes at the Enterprises, including promoting risk-taking and creating disincentives for CRT and other forms of risk transfer. The proposed rule would replace the fixed 1.5% PLBA with a dynamic leverage buffer determined annually and equal to 50% of an enterprise's stability capital buffer.
   
• What's next: MBA will review the NPR and work with members to develop and submit a response. 
   

Advocating Directly with Congress

Over the past two months, MAA members have engaged to meet directly with Members of Congress to advocate on the key issues impacting the real estate finance industry. 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.

To date, MAA members have participated in meetings with elected officials across Arizona, Connecticut, Florida, Maryland, New Jersey, New Hampshire, Texas, and Virginia. 

These important conversations will continue on an ad hoc basis as MBA and MAA remain at the forefront to advocate. Please email Rosie Sheehan (rsheehan@mba.org) to lend your voice and join a meeting.

MORPAC Turns 50 and Hits $1million! 

MORPAC, the only Political Action Committee representing the entire real estate finance industry, was established in 1971 and turns 50 this year. After a time of staff transition and on the heels of its best initial fundraising quarter ever in an "off" election year, MORPAC hit $1 million in receipts a few weeks ago - earlier within a calendar year than ever before! This figure includes contributions from 1,265 individuals, with 817 first-time MORPAC donors. MORPAC and MAA (the Mortgage Action Alliance) are important components of MBA's ongoing advocacy strategies and efforts. The combined MBA advocacy staff teams look forward to our continued work together to heighten our association's public policy effectiveness - and grow both MAA and MORPAC - in the weeks and months ahead.  We look forward to seeing you at the MBA Annual Convention in San Diego - and our Advocacy Reception on October 18, 2021!
 

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. Also, be sure to stop by our Advocacy Engagement area located in the skywalk for free giveaways and opportunities to connect directly with our MBA Legislative and Political Affairs team! 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: The Lane (900 Bayfront Ct; 2nd Floor, San Deigo, CA, 92101)

MAA Action Week

Coming up November 1 - 5, 2021, MAA will be hosting another MAA Action Week campaign! This national, industry-wide campaign unites real estate finance professionals to become more engaged in political advocacy. Help us maintain a strong, unified voice in Washington, DC, and state capitals across the country by committing to run a MAA campaign with your company, state association or professional network!

MBA staff make these campaigns as easy as possible by providing a host of materials to encourage industry professionals to join MAA and engage in advocacy. If you are interested in learning more about running a MAA campaign, please contact Rosie Sheehan at rsheehan@mba.org or (202) 557-2933.

As part of Action Week, be sure to join us on Tuesday, November 2, for our next Quarterly MAA webinar! This webinar is free to all MAA members using the code "MAA2021" and the link to register can be found here.