Senate Banking Committee Passes THUD Appropriations Bill: The bill contains many MBA priorities and also does not include authority for HUD to charge lenders a per-loan fee to fund FHA’s administrative costs. Instead, and as MBA has advocated for the last two years, the committee appropriated $13 million in specific funds to improve FHA’s information technology. The measure also maintains level funding ($130 million) for FHA’s administrative needs, and fully funds Ginnie Mae’s staffing, training, and technology needs at $23 million. For the third consecutive year, the committee maintained a prohibition on federal funds being used to facilitate eminent domain seizures of performing loans. The committee also included $47 million for housing and homeownership counseling. You can read MBA’s letter to the Committee here.
Senator Shelby Asks GAO and CBO for Input on Future of GSEs: Chairman Shelby’s letter to the CBO asked for a report on the implications of the GSEs being allowed to retain more of their earnings, as well as what the implications of this increased capitalization would be on the risk borne by taxpayers, the operations of the GSEs, and the mortgage markets. The letter to the GAO asked for a report on how the FHFA’s oversight has affected the market dominance of the GSEs, as well as any possible options for modifying the structure of the GSEs.
FHA Seeks Feedback on Draft Title I Section of its Single Family Housing Policy Handbook: FHA posted a draft Title I section to address FHA’s property improvement loan program in its SF Housing Policy Handbook 4000.1. The draft is available for review and feedback until June 6, 2016. This effort is a continuation of FHA’s progress toward a consolidated single source of authoritative guidance. MBA is currently reviewing the draft section and will continue to engage with members on changes. Additionally, FHA is hosting an industry briefing for all interested stakeholders to review the organization and structure of the draft section on May 3 from 2:00-3:00 PM EST (Dial-in: (800) 260-0719: Access code: 390049).
Rep. Mulvaney Introduces GSE Recapitalization Bill: The Housing Finance Restructuring Act (H.R. 4913), requires the Fannie Mae and Freddie Mac to retain capital until they reach a ten percent risk weighted capital. Under the terms of the conservatorships, both companies’ profits are currently swept up by the Treasury Department. H.R. 4913 would instead assume the two companies have fully paid back taxpayers and ends their conservatorship once they reach five percent risk weighted capital.
Prohibition on Using G-Fees as Spending Offsets Introduced in the House: Representatives Mark Sanford (R-SC), Brad Sherman (D-CA) and Randy Neugebauer (R-TX) introduced the Risk Management and Homeowner Stability Act (H.R. 4893). The bill would prohibit the use of the GSE’s g-fees as offsets in spending measures. MBA has long opposed increasing g-fees for any purpose other than to guard against mortgage credit risk. MBA members who were in DC for the National Advocacy Conference pressed their congressional representatives to cosponsor the legislation.
House Committee Advances CFPB Oversight Bill: The House Financial Services Committee approved H.R. 1486, which would subject the CFPB budget to the congressional appropriations process. The bill passed the committee on a strictly party-line vote of 33 to 20.
FHFA Announces Principal Reduction Program: To be eligible for FHFA’s program the borrower must: be an owner-occupant; 90+ DQ as of 3/1/16; have a mortgage with a UPB of $250,000 or less as of 3/1/16; have a mark-to-market LTV of over 115% and generally meet other streamlined modification criteria. Borrowers who meet this criteria will be offered a modification that appears to mirror the current streamlined modification with terms that “include capitalization of outstanding arrearages, an interest rate reduction down to the current market rate, an extension of the loan term to 40 years, and forbearance of principal and/or arrearages up to a certain amount to be converted later to forgiveness.” After the successful completion of a trial payment plan and acceptance of the final modification, the principal that would be subject to forbearance under the streamlined modification plan will instead be forgiven for eligible borrowers.
GAO Issues Report on Non-Bank Servicing
The report responds to a letter from Senator Elizabeth Warren and Representative Elijah Cummings requesting a study on the growth of non-bank mortgage servicing. The report discusses the benefits provided to the market by non-bank servicers, which include increased capacity for delinquent loan servicing and increased liquidity in the secondary mortgage market by broadening participation for mortgage servicing rights. It also cites the risks GAO believes that non-bank servicers pose to the system, which it identifies as caused by rapid growth and immature operational systems, mortgage servicing transfer issues and liquidity risk and MSR volatility. The report has two main recommendations: Congress should provide FHFA with authority to regulate non-bank servicers and the CFPB should develop a comprehensive list of non-bank servicers. MBA actively engaged with the Congressional offices behind the letter that led to this report and had multiple conversations with GAO during their study period.
