Mortgage Action Alliance Newsletter

Congress left town last week, having passed a Continuing Resolution to keep the federal government funded into December, and will return for a lame-duck session one week after the November midterm elections. Before adjourning, the House passed a package of Dodd-Frank fixes that included MBA-supported changes to the Ability to Repay rule and its calculation of “points and fees.”Also last week, MBA President and CEO David H. Stevens was joined by MBA’s Chairman-Elect Bill Cosgrove, CMB and Vice Chairman Bill Emerson, as well as other industry leaders, at a meeting with senior Obama administration officials and executives from Fannie Mae and Freddie Mac to discuss ways to expand access to mortgage credit.

Key MBA Actions

House Passes Package of Dodd-Frank Fixes, Including ATR “Points and Fees

This past Tuesday, the House of Representatives passed H.R. 5461, a package of four bills aiming to amend the Dodd-Frank Act. The legislation, which passed by a vote of 327 to 97, combined four separate bills that had previously passed either the House or Senate in an overwhelming fashion. One of the included bills was H.R. 3211, the Mortgage Choice Act, which would fix the way “points and fees” are calculated under the CFPB’s Ability to Repay (ATR) rule, to ensure more loans receive the legal protections afforded to Qualified Mortgages. MBA worked with its member companies and sister trades to send a letter to House members, which helped to advance this legislation to the House floor and ensured its passage. Members of the Mortgage Action Alliance (MAA) also weighed in strongly by contacting their Representatives in support of the bill. H.R. 5461 now moves to the Senate for further consideration. MBA and MAA will continue to push for a vote on this legislation when Congress returns after the November midterm elections.

MBA and Industry Trade Groups Urge CFPB to Provide Authoritative Guidance on RESPA–TILA Implementation; CFPB also Set to Host New Informational Webinar

MBA and more than one dozen industry groups submitted a letter last week asking the CFPB to increase its outreach efforts ahead of implementation of the RESPA–TILA Integrated Disclosure rule on August 1, 2015. The letter, while recognizing the efforts the Bureau has made through webinars and other channels, echoed previous MBA sentiment that, due to the complexity of this and other rules, the Bureau should provide reliable, written guidance developed with input from stakeholders on outstanding issues. The letter also asked that the CFPB continue its participation in industry conferences and forums related to the implementation of the rule, provide more exemplar forms for a variety of transactions, work with vendors to ensure they are ready for the August 1 deadline, and that the Bureau review duplicative and contradictory state laws which threaten to add complexity to the implementation of the integrated disclosures. Relatedly, the CFPB will be holding a new webinar on Wednesday, October 1 from 2:00–3:30 PM Eastern to address the rule’s loan estimate form, with a focus on questions raised by technology vendors. To participate you will need to be registered. In advance of the webinar, MBA will be collecting, compiling, and providing to the CFPB outstanding questions on the integrated disclosures.

MBA Submits Comments on FHFA Strategic Plan

Last Monday, MBA submitted comments on the single-family and multifamily components of FHFA’s Strategic Plan for Fiscal Years 2015-19. On the single-family side, MBA urged FHFA to focus on policies that expanded borrowers’ access to credit. Noting that many first-time homebuyers and low-to-moderate income borrowers are being priced out of the market, MBA identified several specific priorities that would help accomplish this goal: implementation of MBA’s deeper, up-front risk-sharing proposal; moving the GSEs to issue a common, fungible, TBA-eligible single security to improve liquidity; and revision of the rep and warrant framework to provide lenders with needed clarity. MBA also strongly argued that the recently proposed Federal Home Loan Bank (FHLB) membership limitations be abandoned because they would significantly undermine the FHLB system, causing further harm to the housing market. On the multifamily side, MBA urged FHFA to underscore the importance of multifamily rental housing and the GSEs’ role in providing liquidity and stability, as well as to consider additional strategic steps to continue strengthening the market.

FHFA OIG Issues Report on Rep and Warrant Framework; MBA Preparing Response to Report’s Conclusions

In additional FHFA news, the Agency’s Office of the Inspector General (OIG) issued a report last week critical of FHFA’s recent efforts to clarify the GSEs’ rep and warrant framework. The report argued that the GSE quality control systems are insufficiently prepared for the changes that were announced, and that as a result the GSEs will assume greater risk than under the current framework. MBA believes that the OIG’s conclusions are mistaken and is preparing a formal response to the report. MBA has committed to leading the effort with FHFA and the GSEs to provide lenders with needed clarity and key reforms of the rep and warrant framework, to help FHFA fulfill its statutory mission of facilitating a liquid, stable, resilient national housing market. Expanding the credit box is critical to making the housing recovery a sustainable one, and the lack of clarity on lenders’ rep and warrant liability is directly responsible for the credit overlays that are preventing many borrowers from obtaining a mortgage.

FHA Releases Draft Loan Quality Assessment Methodology

FHA posted a draft of its Loan Quality Assessment Methodology for feedback. This Methodology is one part of FHA’s Blueprint for Access strategy announced earlier this year, which aims to expand access to mortgage credit for underserved borrowers. Generally, the Methodology is based on three core concepts: identifying a loan defect; capturing the sources and causes of the defect; and assessing the severity level of the defect. MBA has been working closely with FHA for the past year to design processes to improve transparency and consistency in FHA’s loan quality assessments and will continue to do so with regard to this Methodology.