Mortgage Action Alliance - MBA's Grassroots Newsletter
July 6, 2010
Congress moved on multiple fronts last week, bringing the financial regulatory reform bill to the edge of enactment, and sending to the President's desk a pair of bills extending the flood insurance program and the settlement deadline for the homebuyer tax credit. The President signed both bills on Friday morning.The House approved the Dodd-Frank bill Wednesday by a vote of 237 to 192, though the week did not go by without some unexpected drama. While the legislation was expected to be approved by both the House and Senate in time to meet President Obama's Fourth of July deadline, last-minute objections over a $19 billion bank tax added in the dead of night led to the bill being reopened in order to remove the provision. The passing early Monday morning of Senator Robert Byrd of West Virginia also changed the vote count for passage. The Senate is still expected to pass the financial reform package, but not until Congress returns the week of July 12.
Recent MBA Action:
House Passes Regulatory Reform Conference Report; Senate Passage Delayed
A week after passing what was thought to be the final Dodd-Frank regulatory reform bill out of the conference committee, prospects for final passage in Congress were complicated by two major events. First, the death of Senator Robert Byrd (D-WV) early Monday morning cost Senate Democrats a crucial vote for the legislation, and necessitated the Senate adjourning early for memorial services. The Senator's passing, coupled with Senator Scott Brown's (R-MA) announcement that he would oppose the legislation after a bank tax was added to the bill at the end of the conference process, left Congressional leaders scrambling to wrap up the legislation before the July 4th deadline set by President Obama.
In an attempt to win back Senator Brown's vote, as well as several other moderate Republicans, the conference committee reconvened on Tuesday evening and removed the bank tax, replacing it with an increase in FDIC insurance fees and an earlier sunset of the TARP. With these changes, the House of Representatives passed the conference report Wednesday evening by a vote of 237 to 192.
The Senate, however, delayed a final vote on the legislation until after the Fourth of July break. That period will be critical to determining if the most recent legislative changes will sway enough Republicans to break the expected filibuster, and it will also provide time for the governor of West Virginia to fill that state's vacant Senate seat. MBA sent a letter to the conferees stating that while changes to the conference report modestly improved the legislation, it still believes that additional improvements can be made to limit the negative impact the bill will have on businesses and consumers. MBA will continue to monitor this issue as it develops.
MBA has prepared a detailed summary of the legislation, which is available here.
Congress Passes Homebuyer Tax Credit Closing Extension
On June 30, 2010, the Senate passed H.R. 5623, the Homebuyer Assistance and Improvement Act of 2010. The legislation extends the closing deadline for borrowers who qualify for the homebuyer tax credit from July 1, 2010 to October 1, 2010. To qualify for the tax credit, borrowers must have signed a binding contract prior to April 30, 2010. The extension was originally part of a larger tax package that failed in the Senate so the House moved quickly to introduce and pass the legislation on Tuesday. President Obama signed this bill into law on July 2, 2010.
Congress Passes Flood Insurance Extension; Mortgage Action Alliance Successful in Call-to-Action
On June 30, 2010, the Senate passed H.R. 5569, the National Flood Insurance Program Extension Act, which extends the program through September 30, 2010. The bill, which already passed in the House, was signed into law by President Obama on July 2, 2010. H.R. 5569 provides a few months of certainty to the flood insurance program, which Congress had allowed to lapse three times this year, while allowing additional time to pass a long-term extension sought by MBA. The bill is retroactive to June 1, 2010.
Earlier in the week, members of the Mortgage Action Alliance (MAA) swung into action to urge their senators to pass H.R. 5569. This is another example of a successful effort by our MAA members.
MBA Staff Meets with FHA Commissioner on Legislative Issues
On June 30, 2010, MBA met with Federal Housing Administration (FHA) Commissioner Stevens, his senior staff, and other trade groups to discuss H.R. 5072, the FHA Reform Act of 2010. MBA reiterated its support for the bill, however MBA also noted provisions of the bill that concern members, such as indemnification and proving that potential FHA borrowers have not engaged in strategic defaults. MBA will continue to work with FHA and Members of Congress to ensure that the bill swiftly moves through the legislative process in a manner that will secure the financial health of FHA and also support the industry.
MBA Meets with Fannie Mae to Discuss Loan Quality Initiative
Last week, MBA members met with Fannie Mae staff to press for modifications to the Fannie Mae Loan Quality Initiative (LQI). Fannie Mae acknowledged that the guidance would benefit from further clarification in order to avoid confusion and operational/customer challenges for their customers. They agreed to send draft LQI document revisions to MBA to share with MBA members and provide feedback before they are re-published. We expect to get something from them this week.
MBA Files Comment Letter with FDIC on Proposed Rule for Treatment of Securitized Assets on the Balance Sheet at the Time of FDIC Receivership or Conservatorship
On June 29, 2010, MBA commented to the Federal Deposit Insurance Corporation (FDIC) on its proposed treatment in receivership or conservatorship of assets on the books of banks as a result of FASB Statements 166 and 167. The proposed rules contain stringent guidelines for future securitizations to be afforded a "safe harbor" when a bank is placed into FDIC receivership or conservatorship. The safe harbor rules would require the issuer to retain a five percent "skin in the game" in addition to a five percent cash holdback for representation and warranty claims. The rule would restrict the number of tranches, preclude pool level insurance, and not allow servicer advances on loans greater than 90 days delinquent. In its letter, MBA points out that the SEC and Congress are also in the process of considering new rules to regulate the securitization of assets. MBA recommends that the FDIC withdraw the proposed rule and work with other government agencies to come up with comprehensive rules that are more focused on solving the root causes of the recent credit crisis.
House Approves MBA-Supported Emergency Funding for Rural Housing
Late on July 1, 2010, after nearly two months of delay, the House of Representatives passed a supplemental appropriations bill containing an MBA-supported provision that will allow the U.S. Department of Agriculture's Single Family Guaranteed Rural Housing Loan Program to continue operating for the remainder of the fiscal year. The provision, which is identical to one included by the Senate in its supplemental appropriations bill, provides USDA with additional loan commitment authority and also permits the Department to charge a higher upfront guarantee fee and institute a new annual fee. MBA has worked with a bipartisan group of House and Senate members to ensure this issue was addressed. The House and Senate bills must still be merged before going to the President for his signature, a process that is expected to conclude once Congress returns from its Fourth of July recess.
MBA Supports REMIC Technical Correction
On June 25, 2010, MBA and the Commercial Real Estate Finance Council sent a letter urging the Internal Revenue Service to make technical corrections to its Final Real Estate Mortgage Investment Conduit (REMIC) Regulations to Collateral Releases (Final Regulations) in order to avoid unintended consequences. The letter was in response to the Final Regulations that were issued in September 2009 that could result in mundane collateral releases triggering a requirement that could result in the loss of a loan's REMIC status, which would be devastating to a CMBS issuance.
CampusMBA to Host LIVE Online Workshops on Provisions of Regulatory Reform Bill
CampusMBA is holding three LIVE Online workshops to provide industry professionals with the information necessary to understand the provisions of the Dodd-Frank regulatory reform bill taking shape in Congress. The first session will take place on July 13 and will focus on an overview of the legislation. Then, on July 17 a second session will address Title 14 with a third session planned for August 10 to discuss servicing and secondary market provisions. Join MBA public policy staff for a comprehensive overview of key provisions such as: the new "qualified mortgage" underwriting criteria and safe harbor; the new "qualified residential mortgage" exemption from risk retention requirements; loan officer compensation; and other anti-steering changes, appraisal and servicing changes. These 90 minute workshops will give mortgage professionals a glimpse into the future of the industry.
Click here for more information or to register.
MBA to Host "Green" Lending Webinar for Single-Family Members
On July 14, 2010, from 1:00 to 2:30 p.m. (Eastern) MBA will host a free webinar on Green Lending for its residential-focused members. The webinar features experts from the Federal Housing Administration (FHA), Energy Programs Consortium and the industry to introduce members to the mortgage products for making home improvements that are environmentally sustainable and energy efficient. There is a growing interest by policy-makers in Washington and mayors across the country, as well as many consumers, to reduce energy consumption and costs and to use sustainable materials in construction and improvements. This webinar gives you the essential knowledge about these trends and how they may impact mortgage lenders in the near future. This webinar is free and is a service to MBA members only. There is no need to register, but please RSVP to Andrew Szalay at aszalay@mortgagebankers.org so an appropriate number of phone lines and web connections can be made available.
Industry Regulatory Developments:
FHA Conference Call on the Implementation of the Final Rule to Strengthen Risk Management
MBA participated in an industry call hosted by Federal Housing Administration (FHA) senior staff to answer questions regarding Mortgagee Letter (ML) 10-20, Implementation of Final Rule FR 5356-F-02, Federal Housing Administration: Continuation of FHA Reform - Strengthening Risk Management through Responsible FHA-Approved Lenders.
This ML is the first one that provides implementation guidance of the Final Rule that increases net worth, eliminates FHA approval of correspondents, and makes significant changes to the principal-authorized agent relationship. FHA senior staff reviewed timelines and key provisions of the rule. One important note is that changes to the principal-agent relationship will not occur until January 1, 2011. FHA expects to issue additional MLs regarding this Final rule in September. MBA will provide additional opportunities to members to ask FHA staff about the implementation and implication of this Final Rule. For more information, please contact Faith Cooper (202) 557-2873 FCooper@mortgagebankers.org in our Education Department to be included on the email list to receive information about this webinar.
FHA Commissioner's Message Discusses RESPA Implementation and SAFE Act
The latest Message from the Commissioner focuses on the topics of FHA RESPA implementation and the S.A.F.E. Act. FHA has performed numerous industry outreach efforts during this implementation phase of the RESPA rule and recently FHA posted additional detailed guidance through its "Frequently Asked Questions." The most popular topics are pre-approval and the use of worksheets. The "Message" also discusses the recent HUD Office of General Counsel guidance on "Home Warranty Companies' Payments to Real Estate Brokers and Agents." The rule was published on June 25th. In regards to S.A.F.E., the proposed rule that HUD published in the Federal Register on December 15, 2009 setting forth the minimum requirements that a state would have to meet in order to be compliant with the S.A.F.E. Act has not been finalized. Thus, HUD cannot provide definitive guidance regarding certain compliance issues at this time.