Force-placed insurance is a necessary tool to protect homeowners, mortgage lenders, investors, and the broader     economy. Subjecting force-placed flood insurance to greater federal requirements has the potential to subject lenders and their investors to a significant risk of loss, raising costs for all homeowners.MBA believes that State-level regulations already effectively address the issues highlighted by the proposed Merkley amendment and state insurance regulators have proven themselves very willing to address issues related to force-placed insurance. This is especially true for states that have experienced high rates of force-placed insurance, such as Florida, California, and New York. Additional duplicative federal requirements would only serve to complicate the process and limit the ability of state regulators to implement state-specific solutions. This  concern is compounded by the fact that the amendment seeks to subject only one aspect of force-placed insurance to additional federal regulation, meaning that lenders, investors, and state regulators would be forced to implement differing sets of requirements for force-placed insurance in the same state.

While MBA commends the Senate for its efforts in considering flood insurance, we remain concerned that the       duplicative oversight of force-placed flood insurance instituted by the Merkley amendment would subject mortgage lenders and homeowners to risk of loss and higher insurance costs.This morning, MBA sent a letter to Majority Leader Harry Reid and Minority Leader Mitch McConnell further explaining why the Merkley amendment would negatively impact the real estate finance industry. You can read MBA’s letter by clicking here; but we still need your help. We need you to reach out to your members of Congress NOW to weigh in and reinforce our industry’s position: adding the Merkley Amendment to the Homeowner Flood Insurance Affordability Act would encroach on the purview of state regulators by subjecting one type of force-placed insurance – flood insurance – to duplicative and unnecessary federal requirements which will hurt mortgage lender and homeowners.

To take action and contact your Senators, click HERE to go to the MAA homepage, and click the “TAKE ACTION” button. If you  don’t have, or forgotten, your MAA username and password, click on “forgot password”   to get started. Please call Annie Gawkowski at 202-557-2816 if you need assistance.

MAA  is the premier grassroots lobbying organization of the real estate finance industry. The mission of the Mortgage Action Alliance is to further build a network of individuals dedicated to strengthening the industry’s voice and lobbying power in Washington, DC and state capitals.

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Key MBA Actions

FHFA Announces Revisions to MI Master Policy Requirements

Last week, FHFA announced what it has termed “the first major overhaul of mortgage insurance master policy requirements in many years.” The GSEs were required to develop aligned requirements for master policies by the end of this year under the 2013 Conservatorship Scorecard. Some key changes include: requirements that master policies support various loss mitigation strategies that were developed during the housing crisis to help troubled homeowners; the establishment of specific timeframes for processing claims, including requests for additional documentation; standard setting with respect to determining when, and under what circumstances, coverage under the mortgage insurance (MI) policy must be maintained and when it may be revoked; and the promotion of information sharing among mortgage insurers, servicers, and the GSEs. These new requirements will be incorporated by each mortgage insurer into their master policies and filed with their state insurance regulators for review and approval. FHFA and the GSEs expect that the master policies will become effective in 2014 and promise additional information regarding effective dates in the coming weeks.

MBA Releases Document Outlining its Understanding of Affiliate Fees in QM and HOEPA Points and Fees Calculations

There has been significant industry confusion concerning the extent to which affiliate fees are included in the points and fees calculation, particularly when only a portion of a fee is retained by an affiliate. In order to help alleviate this confusion, MBA has put together a document outlining its understanding of the CFPB’s definitive guidance, based on discussions with Bureau staff, on the treatment of affiliate fees in the Qualified Mortgage (QM) and HOEPA points and fees calculations. The document also includes hypothetical questions and answers to better illustrate the concepts. Important to note, MBA is also of the understanding that CFPB will consider addressing this issue in authoritative written commentary. As background, this document is the product of constant dialogue between MBA and CFPB staff to attempt to gain clarification on the Dodd-Frank rules in order to distribute it widely to industry stakeholders. In addition, because MBA has received a number of inquiries on the issue of bona fide discount points, please see MBA’s guidance on how to apply discount points under the QM’s points and fees cap, which was generated through this same engagement process with CFPB.

CFPB Releases Semi-Annual Update to Rulemaking Agenda

Last Tuesday, the CFPB posted its semi-annual update to its rulemaking agenda on the Bureau’s website. This agenda outlines the CFPB’s rulemaking plans and priorities, in particular their focus on “both continuing to work on rulemakings mandated by the Dodd-Frank Act and turning [their] attention to significant issues in other major markets for consumer financial products and services.” Of interest to the mortgage industry is the listing of pre-rule activities for the Home Mortgage Disclosure Act (HDMA or Regulation C) scheduled for February, as well as “Further Amendments to 2013 Mortgage Rules” – where the CFPB intends to conduct further analysis on the definition of rural and underserved counties, provide additional guidance on Appendix Q’s debt-to-income standards under QM to help facilitate the development of automated underwriting systems, and other topics as warranted. The full agenda may be found here and includes the Dodd-Frank rulemakings scheduled to come into effect this January.

HUD Extends Annual Recertification Filing Deadline for Title I and Title II Lenders and Mortgagees with a December 31, 2013 Fiscal Year End

Recently, HUD announced in Mortgagee Letter 2013-42 that it has extended the deadline for FHA-approved Title I and Title II lenders and mortgagees with a December 31, 2013 fiscal year end to file the annual recertification package, including the submission of financial information and annual renewal fees. FHA-approved lenders and mortgagees have 90 days after the end of their fiscal year to complete the recertification process. Going forward, HUD is requiring that all lenders and mortgagees use the new Lender Electronic Assessment Portal (LEAP) for the recertification process. However, because LEAP recertification functionality will not be deployed until after March 31, 2014, lenders and mortgagees with a fiscal year end of December 31, 2013 will be unable to access LEAP within the required timeframe. For all FHA-approved lenders and mortgagees affected, the filing date has been extended until 30 days after the deployment of LEAP recertification functionality. According to HUD, the lenders and mortgagees in question should be prepared to complete the recertification process, including the submission of financial information and fee payments, no later than May 31, 2014.

WASHINGTON, D.C. (November 25, 2013) — Today, the Mortgage Bankers Association’s (MBA) Research Institute for Housing America (RIHA) released a new report entitled “A Profile of Housing and Health among Older Americans” authored by Professors Michael D. Eriksen of Texas Tech University, Gary V. Engelhardt of Syracuse University, and Nadia Greenhalgh-Stanley of Kent State University.

“The study found older Americans who own their homes are more financially secure and generally experience fewer impediments to good health than their peers who rent,” said Professor Eriksen.  “Owning a home provides the single largest asset in most Americans’ retirement portfolios, while renters have far more difficulty modifying their living space to adapt to any of the myriad physical ailments that tend to affect older people.  Our report serves as a useful reference for all parties interested in the implications of housing on an aging society, a situation America now faces with large numbers of the Baby Boomer generation rapidly heading into retirement age.”

This new RIHA report examines the housing and health status of older Americans roughly a decade after the Commission on Affordable Housing and Health Facility Needs for Seniors in the 21st Century released its report detailing the challenges facing all levels of government and society in ensuring support for housing and health needs as the population ages.  This latest study provides a profile of the housing, functional status and health status of the near old (individuals aged 55 through 64) and older Americans (aged 65 and older) using the most recent data available from the Health and Retirement Study, a joint product spearheaded by the National Institute on Aging and the University of Michigan.

“Housing demand over the next decade will be significantly impacted by the aging of the U.S. population.  Real estate finance must also evolve to meet these changing needs, whether older Americans age in place and continue to own their homes, or whether they rent,” said Mike Fratantoni, Executive Director of RIHA, and Vice President, Research and Policy Development for MBA.

The principal findings are as follows:

There were more than 47 million near old and older American households in 2010, of which 80 percent were homeowners.

• Housing      is still the dominant asset in the portfolios of older Americans.       Median housing equity for older American homeowners was $125,000;      the median housing-equity-to-income ratio was 2.4:1; and 50 percent of the      typical older homeowner’s portfolio was composed of housing wealth.
• 44      percent of older renters spend more than 30 percent of annual gross income      on rent, which suggests that the availability of affordable rental housing      is a concern for older Americans.
• Older      renters have almost double the number of limitations in their ability to      conduct daily activities relative to homeowners.
• 36      percent of older individuals have fallen in the last two years, and      one-third of these have been seriously injured in a fall.  The      likelihood of falls occurring rises steeply as housing quality declines.
• 31      percent of older Americans have residences that have special safety      features.  13 percent have modified their home to be either more      accessible or safer between 2008 and 2010.
• Approximately      half of those reporting a home modification between 2008 and 2010 (7      percent) had associated out-of-pocket expenses.  The median      out-of-pocket expenditure was $800; the mean expenditure was $2,260.

This report, along with other RIHA studies, can be found at www.housingamerica.org.

MBA Scores Another Court Victory in Mortgage Loan Officer Overtime Case, New DOL Rulemaking Likely

The Mortgage Bankers Association last week won affirmation of its July victory over the Department of Labor in the trade group’s appeal of a government policy that declared mortgage loan officers did not qualify under the administrative exemption to overtime pay.

On Oct. 2, the U.S. Court of Appeals for the District of Columbia refused to grant a full-court review of its decision exactly three months earlier that sided with the MBA on how the DOL imposed overtime compensation requirements under the Fair Labor Standards Act.

The MBA filed suit in January 2011 challenging that the Labor Department did not follow proper rulemaking procedures, including the chance for public comment, when in 2010 DOL withdrew its previous opinion that certain loan officers qualify for the administrative exemption from overtime requirements under FLSA rules.

FLSA requires that covered nonexempt employees must receive overtime pay for hours worked over 40 hours per week at a rate not less than one-and-a-half times the regular rate of pay. However, FLSA provides an administrative exemption from overtime pay for salaried employees who earn more than $455 per week and whose primary duties are directly related to management.

A 2006 Bush administration DOL opinion letter suggested that mortgage loan officers are exempt from the overtime requirement. However, in its challenge of the Obama DOL’s 2010 reclassification of loan officers as nonexempt, the Mortgage Bankers argued that the Administrative Procedures Act and underlying case law required the DOL to follow notice-and-comment rulemaking to reinterpret a regulation.

Three former loan officers from Quicken Loans with pending claims for unpaid overtime had sought to intervene in the MBA’s legal action against the DOL by filing a petition in August asking the full appeals court to rehear the case after a panel of the Second Circuit upheld a lower court order to the DOL to vacate its 2010 administrative interpretation.

Robert Sheeder, a labor and employment attorney at Bracewell & Giuliani, noted in an analysis that the decision will have good-news/bad-news consequences for the mortgage industry.

“The D.C. Circuit’s refusal to rehear the case upholds the holding that the DOL’s attempt to reclassify loan officers constitutes a fundamental modification of its previous interpretation and that it can only modify that interpretation through the formal process of notice and comment rule making,” said Sheeder.

Until the DOL goes through the proper rulemaking process to legally reclassify their status, mortgage loan officers remain exempt.

On the flip side, Sheeder noted that the court took no position on the substance of the DOL’s interpretation. “As a result, mortgage lenders may face more claims regarding overtime payment once the DOL properly reclassifies loan officers,” he said.

The MBA did not return a request for comment on the case.

_______________________________
One Voice. One Vision. One Resource.

John T. Mechem

Vice President, Public Affairs

External Relations

Mortgage Bankers Association

1919 M Street NW, 5th Floor

Washington, DC 20036

www.mba.org

Phone: (202) 557-2924

Cell: (703) 634-9205

jmechem@mba.org

This week, two financial undertakings will be at the forefront of national attention: the continued push by the Senate and House with separate stop-gap funding bills to keep the federal government operating and FHA’s expected receipt of an estimated $1 billion cash infusion from the Treasury Department to shore up its reserves.

Key MBA Action

Fed, CFPB Release Results of the 2012 HMDA Data

The Federal Reserve Board has released its annual analysis of the 2012 HMDA data. In addition to the regular report, the Fed for the first time matched a five percent sample of the HMDA data to credit report data and compared results for loans originated in 2006 – at the height of the boom – and in post-boom 2010. MBA will be doing more in-depth reviews of the results and their implications, but the Fed report highlights the following findings that will be relevant in upcoming policy debates on the qualified mortgage (QM), GSE Reform, and FHA Reform:

-Government-backed loans (FHA, VA, RHS) accounted for nearly 45 percent of first-lien, owner-occupant home-purchase loans;

-Higher-priced mortgage loans (HPMLs) remained subdued at about three percent of all loans, down from a high of about 28 percent in 2006; and

-As in prior years, Black and Hispanic borrowers were more likely to receive HMPLs than were Asian and White borrowers. Additionally, denial rates were significantly higher for Black and Hispanic-white applicants compared with Asian and non-Hispanic white applicants.

Some of the main findings from the analysis of the matched HMDA–credit record data include:

-The credit scores of Black and Hispanic-white mortgage borrowers at the time of loan origination tend to be lower – and subsequent delinquency rates higher – compared with Asian and non-Hispanic white borrowers. Delinquency was highly correlated with credit score, local area house price declines, and HPML status, but substantive differences in delinquency rates across racial and ethnic groups remain after accounting for these variables;

-The credit scores of individuals obtaining a mortgage in 2010 were much higher than in 2006, and delinquency rates on 2010 loans were much lower than those on 2006 loans;

-The proportion of conventional home-purchase loans originated in 2010 that became 60 days or more past due within two years of origination was just 0.5 percent, about one-twentieth the rate for the 2006 vintage.  The delinquency rate on 2010 FHA home-purchase loans was five percent—about one-third the rate of the 2006 vintage; and

-The fraction of all home purchase borrowers with a back-end DTI ratio above 43 percent (the QM threshold) declined only slightly between 2006 and 2010, from 25 percent to 22 percent.  However, loan performance (percentage that became 60 day DQ after two years) for all purchase loans improved dramatically, declining from 10 percent in 2006 to three percent in 2010.

-The last item will play an important role in ongoing discussions about the impact of QM on the market, and the need for a more flexible DTI standard in the QM rule, especially after the GSE “patch” expires.

On a related note, the CFPB has released an online tool that allows the public to look at interactive “heat maps” on lending activity (both applications and originations) by MSA and county, loan type, loan purpose and other factors. Additional functionality will be added in the future as part of CFPB’s efforts to make the market more transparent for consumers.

MBA Issues Analysis of CFPB Servicing Rule Amendments

Two weeks ago, the CFPB issued final rule amendments clarifying various provisions of the Servicing, Ability to Repay/Qualified Mortgage, Loan Originator Compensation and Appraisal rules. Since their release, MBA has completed a summary of the rule amendments that modify the Servicing provisions to Regulation X, and recently hosted a meeting of its Loan Administration Committee to identify remaining areas of concern. In its revisions, the CFPB was responsive to many of MBA’s comments, including narrowing the definition of “first notice or filing,” greatly reducing the scope of the proposed designated address requirements, and extending the definition of short-term forbearance from two to six months. MBA will continue to work with the CFPB to address MBA member issues and concerns in order to ensure effective implementation of the rules.

MBA Submits Comment Letter to FASB on Measuring Financial Liabilities of a Consolidated Financing Entity

On September 27, 2013, MBA submitted a comment letter to FASB on its proposed accounting for financial liabilities of consolidated financing entities.  By way of background, reporting entities that are deemed to be the Primary Beneficiary (PB) of a Variable Interest Entity (VIE) of a securitization like a mortgage-backed Security (MBS) are required to include the VIE’s assets and liabilities in their respective consolidated financial statements.  Upon initial consolidation, the PB can elect the fair value option to account for the financial assets and financial liabilities of the VIE.  Recently, the Emerging Issues Task Force (EITF) identified diversity in practice in the accounting for the difference upon consolidation between the fair value of assets and the fair value of the liabilities of the VIE.  As a result the EITF reached a consensus that PBs that elect fair value option must measure the financial liabilities of the VIE by reference to the fair value of the financial assets of the VIE.  MBA disagrees with the proposal, pointing out that frequently better market data is available for VIE liabilities traded in the market than the whole loan assets underlying the MBS.  MBA proposed that FASB use the following principles in the final rule:

-Reporting should be structured such that what flows to the consolidated income statement should be limited to changes in the fair value of retained interests in the VIE.

-A reporting entity should measure VIE financial assets by reference to fair value measures of financial liabilities or vice versa depending on which measurement is highest in the fair value hierarchy.

FHFA Launches Campaign to Inform Homeowners about HARP

The Federal Housing Finance Agency (FHFA) recently launched a campaign to inform homeowners about its Home Affordable Refinance Program (HARP). The campaign will seek to encourage homeowners who have been making their mortgage payments, but who owe more than their home is worth, to contact mortgage lenders offering HARP refinances to review their refinancing options. FHFA has launched a new website, www.HARP.gov in support of their campaign.  HARP, which ends in December 2015, requires borrowers to: be current on their loan payments, have an LTV ratio greater than 80 percent, have loans owned or guaranteed by Fannie Mae or Freddie Mac, and the mortgage must have been sold to them on or before May 31, 2009.  HARP refinances currently make up a large portion of refinance activity, and this effort may encourage homeowners to participate at a time when the refinance market is otherwise slowing.

Senate Banking Committee Holds hearing on TRIA

Last Wednesday, the Senate Banking Committee held a hearing on reauthorization of the Terrorism Risk Insurance Act, which is set to expire at the end of 2014.  The hearing examined the current state of the terrorism risk insurance market, and the committee heard from representatives of Marsh & McLennan Companies, the Wharton School, and the Insurance Information Institute.  During the hearing, witnesses expressed the importance of reauthorization, and emphasized that the private market does not have the appetite to insure beyond a certain capacity for terrorism risk without TRIA because terrorism risk remains immeasurable. The program has previously been extended twice, most recently in 2007. Several bills have been introduced in the house to provide a five- or 10-year extension of TRIA; legislation has not yet been introduced in the Senate.  Given the crowded congressional calendar, we do not anticipate TRIA legislation to be considered before the beginning of next year.

Run a MAA Enrollment Campaign at your Company
Are you interested in conducting a MAA enrollment campaign at your office? Contact Annie Gawkowski at 202-557–2816 or agawkowski@mba.org to receive an enrollment campaign kit and learn more about how you can engage your colleagues and employees in the Mortgage Action Alliance.

MBA sent a second letter to the CFPB last week, alerting the Bureau to the effect that FHFA action to lower loan limits could have on the QM rule and access to credit.  The QM rule contains two primary qualification methods — with one path requiring a 43 percent or lower DTI ratio and the other temporary method being contingent on eligibility for GSE or government agency purchase or guarantee. The letter pointed out that should FHFA lower loan limits, many borrowers that could have qualified for safe and sustainable loans through the GSE route may not be eligible under the 43 percent DTI standard and thus could be unable to get a QM loan. MBA’s letter asked the CFPB to address this problem by changing the requirements to allow loans approved under GSE standards to be QMs whether or not they are eligible for purchase or guarantee based on the loan amount. MBA also asked that going forward the CFPB develop a permanent solution to ensure that credit worthy jumbo borrowers can still have access to QM credit.

Last Tuesday, MBA President and CEO David H. Stevens sent a letter to CFPB Director Richard Cordray calling for a grace period of six to 12 months before the CFPB takes enforcement actions under any of the new mortgage rules implementing the Dodd-Frank Act. The letter details the tremendous effort that is required to implement the various rules and have questions answered, while also keeping up with the CFPB’s additional clarifications and revisions. Given the liability that is attached to violations, MBA believes that while an extension of the effective dates of the rules is the ideal solution, a supervisory grace period for companies that have demonstrated good faith efforts to comply would be extremely helpful.

In recent months Congress and the Obama administration have shifted into higher gear on housing finance reform. During
that time, MBA has testified twice, hosted widely attended House and Senate briefings, and held numerous meetings with key members of the Senate and House, as well as the executive branch, to reinforce MBA’s policy priorities. While Congress is adjourned for its annual August recess, we wanted to be sure you were well aware of the progress on this issue, and give you further insight into how MBA is well-positioned to continue its role as a thought leader on housing finance reform.

As anticipated, several prominent pieces of legislation to overhaul the secondary mortgage market and reform FHA have been introduced, examined in hearings, and gone through markups in committee, while other proposals are still pending. MBA continues to influence the legislative debate, both as an advocate for the industry’s priorities and as a technical resource. MBA has also developed a series of steps that can be taken now, without Congressional action, to ease with the transition to a new end state for the GSEs and pave the way for housing finance reform.

Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) have signaled they will pivot to consideration of GSE reform legislation later this year. While other Banking Committee members, including Senator Jack Reed (D-RI), continue to refine possible draft reform concepts, in late June Senators Bob Corker (R-TN) and Mark Warner (D-VA) introduced S. 1217, the Housing Finance Reform and Taxpayer Protection Act. This bill, co-sponsored by a bipartisan group of ten Banking Committee Senators, seeks to reform the secondary mortgage market and phase out Fannie Mae and Freddie Mac. Under the legislation, Fannie and Freddie would be liquidated over five years, and replaced with a new FDIC-like agency called the Federal Mortgage Insurance Corporation to provide catastrophic reinsurance for mortgage-backed securities holders. In addition to this explicit government guarantee, private market investors would be required to hold 10 percent equity capital to cover the first losses on loans that default.

In the House of Representatives, Financial Services Committee Chairman Jeb Hensarling (R-TX) introduced H.R. 2767, the Protecting American Taxpayers and Homeowners Act (PATH). In addition to proposing a final resolution to the GSE conservatorships, the bill also addresses important Dodd-Frank Act reforms and the FHA single-family program’s long-term solvency. Among its many provisions, the PATH Act would wind down Fannie Mae and Freddie Mac over a period of five years and replace the companies with a new, non-government public utility to securitize mortgages without a government guarantee. It would establish FHA as an independent agency and make numerous changes to the single-family program, including raising down payment requirements, lowering loan limits, and reducing FHA’s guarantee to 50 percent on single family mortgages. For FHA multifamily housing programs, the PATH Act would introduce income limitations for all FHA insured multifamily mortgages. The bill would also make a number of regulatory changes, including fixing the “points and fees” definition in the Qualified Mortgage rule and delaying its implementation for an additional year, repealing the Dodd-Frank Act’s risk retention requirements and Premium Capture Cash Reserve Account, delaying the implementation of the final Basel III rules pending an economic impact study, and prohibiting Fannie Mae, Freddie Mac, and FHA from doing business in localities that use the power of eminent domain to seize underwater mortgages.

MBA will continue to encourage Congress to ensure that any final bill creates a vibrant, competitive secondary market, includes some level of explicit government guarantee, and works for lenders of all sizes and business models to support both the owner-occupied and the multifamily rental housing markets. We need you to reach out to your members of Congress NOW to weigh in and reinforce our industry’s position.

Please click below to go to the MAA homepage and click on the “Take Action” button to get started. Please note, you will be submitting a letter to the House as well as to the Senate in this particular instance. If you don’t have, or have forgotten your username and password, click on “forgot password” to retrieve it.

MBA President and CEO David Stevens testified last week before the House Financial Services Committee on the Republicans’ new housing finance reform legislation. Stevens made clear MBA’s priorities that Fannie Mae and Freddie Mac need to be wound down and replaced with a new system that relies primarily on private capital but also has an explicit government backstop. Stevens also expressed concerns with a number of the bill’s changes to FHA.

Also last week, the leaders of the Senate Banking Committee unveiled their own bipartisan bill to reform FHA.

Key MBA Action

MBA Testifies on Housing Finance Reform

On July 18, MBA President and CEO David Stevens testified at a marathon hearing before the House Financial Services Committee on a new comprehensive housing finance reform bill, the Protecting American Taxpayers and Homeowners Act, known as the PATH Act. In addition to proposing a final resolution to the GSE conservatorships, the bill also addresses important Dodd-Frank Act reforms and FHA single-family and multifamily programs’ long-term solvency.

In his testimony, Stevens reaffirmed that “any new [secondary market] structure should rely primarily on private capital, but must also provide liquidity throughout economic cycles, with an explicit government backstop.” He also raised concerns with the bill’s FHA provisions and urged the committee to re-examine changes to FHA’s single-family mortgage insurance coverage, repurchase requirements, and loan limit floor, as well as multifamily income limits. He stated, “Each of the policy choices in this bill carries with it the potential of reducing affordable credit options for many otherwise qualified borrowers in the single-family and multifamily markets.”

MBA’s testimony also expressed support for a number of the bill’s regulatory changes, chief among them the inclusion of the Consumer Mortgage Choice Act, which would amend the way “points and fees” are calculated to determine a loan’s Qualified Mortgage status, as well as the bills restrictions on using eminent domain to seize underwater mortgages.

The Financial Services Committee has scheduled a mark-up of the bill for Tuesday, July 23. MBA will continue to stay highly engaged in this debate and will support key amendments intended to ensure any final bill adheres to our key principals and creates a vibrant, competitive secondary market that works for lenders of all sizes and business models to support both the owner-occupied and the multifamily rental housing markets.

Senate Johnson-Crapo FHA Bill

On July 15, Senate Banking Committee Chairman Tim Johnson, D-S.D., and Ranking Member Mike Crapo, R-Idaho, released a discussion draft of their FHA Solvency Act of 2013. The Johnson-Crapo bill will give the FHA tools to improve its financial condition, including strengthened underwriting standards, enhanced lender accountability measures, and reforms to the FHA’s reverse mortgage program.

Specifically, the bill raises the capital reserve ratio for FHA’s Mutual Mortgage Insurance Fund over 10 years to 3 percent, requires a minimum annual mortgage insurance premium, requires HUD to consolidate guidelines for lenders and servicers regarding the requirements, policies, processes and procedures and helps stabilize FHA’s reverse mortgage program by giving the HUD secretary greater operational and regulatory flexibility, while preserving opportunities for public comment.

The Banking Committee will hold a hearing on the bill this week and is expected to mark the legislation up in the committee before Congress breaks for August recess. MBA staff is holding ongoing discussions with the committee staff to help revise and improve the discussion draft.

Please click here to read Dave Stevens’ statement on the release of the bill.

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