It has been a BUSY 30 days and the next 12 months look to be no different from an advocacy standpoint. Please review the few highlights below and please respond to the question posed below regarding an upcoming FHA call and any questions you would like to pose directly to FHA or ask in advance. This meeting will be critical, so please take a few moments to ENGAGE. No other platform provides direct access to Washington D.C. experts and lobbyists and if you’re keeping up with the news, community advocacy is more needed now than any time in the last 5 years.
DC Virtual Fly-In
This is arguably one of the most valuable aspects of CMLA. Rob and Dave lined up meetings with the White House, Treasury, and FHA. We’ve already had several meetings with FHFA in 2021 and we wanted the dust to settle regarding the CFPB having a new director.
- White House: I’m always amazed at what each administration, agency, regulator, etc. learns when they meet with TRUE COMMUNITY LENDERS. As the White House listened to members talking about their constituency, the impact of rising home prices, and the desire of the CMLA members to serve affordable housing mandates, they realize they are talking to the boots on the ground. We, as community lenders, are best equipped to carry out the mission of each administration. We learned that home price appreciation and the affordability aspect are top of mind for the Biden administration. With the infrastructure plan having just passed, they can turn more attention to housing which is receiving major attention (true attention) for the first time in years in Washington.
- Treasury: You may be asking, why do we meet with Treasury? Aren’t they too far removed and not really involved in housing and housing policy? As we’ve seen with the PSPAs, Treasury is critical to housing policy right now. We spoke with capital markets experts to impress upon them the need to educate and encourage the Federal Reserve to never repeat using the bond bazooka like in March and April 2020. We also discussed how we as community lenders are best equipped to carry out affordable housing missions and the need for Treasury to work with the Fed and other regulators to do something about HFAs, bond programs, and LO comp rules. We as lenders can better serve communities when we don’t have handcuffs. For example, did you know CDFIs don’t have the same ATR/QM limitations as nearly ever other lender? Treasury oversees those.
- FHA: A truly fantastic discussion and great meeting. We met with Julienne Joseph, Deputy Assistant Secretary of FHA. She started the conversation by sharing what was important to FHA and what was coming down the line. She was very knowledgeable about community lenders and how we are well equipped to advance the mission of FHA and broader housing goals. We stressed upon them the importance that the premiums and life of loan insurance MUST be reviewed and CHANGED. It simply must be changed. As we saw with yesterday’s actuarial report, the FHA Reserve Capital Ratio grew to 8.03% from the mandated 2.0%. Clearly, the fund is healthy. However, we are already receiving pushback from FHA that they are concerned with delinquencies and are not ready to look at policy changes. CMLA wholeheartedly disagrees with this. While we would like to see aggressive cuts and the removal of the life of loan insurance, we are starting with a .25% reduction. This isn’t where we want to end up as an advocacy, membership, and industry, but we must start somewhere and this would be relatively palatable.
- CSBS: Servicers, pay attention! Colorado is the first state to put into law the recommendations of the CSBS regarding capital and liquidity standards for IMBs. So, if you’re going through a Colorado state audit in the near future, expect to have to comply with these new rules (see below). It’s expected that a majority of states will adopt by 2023. Also, we got an update on the One Company, One Exam initiative. The beta/pilot is coming to an end for a large national lender. CSBS was happy with the results and we should expect for them to continue to push this forward in the coming years. I’d like to have this implemented immediately, but we must wait. This OC/OE initiative will allow for less state audits and more coordination so that we don’t spend all our time working with auditors. Conceivably it will reduce our compliance costs. We continue to engage with CSBS on these important initiatives.
THE ASK: The leadership of CMLA believes that FHA is the low hanging fruit regarding meaningful changes that will impact our borrower base. To that end, we are working to schedule a meeting prior to year end. Ahead of that meeting, we need to hear what is important to you regarding all things FHA. Here are a few examples:
- Do you have a recent situation where a borrower could not qualify because of the cost of MIP?
- Are you a Ginnie Mae issuer that would like to service your own book of business when DPAs are used, but due to MRI requirements and limitations to lenders providing DPA except through government agencies and non-profits, you choose not to provide the program?
- Would you like to see changes to FHA rules regarding LO comp, branch leases, etc.? This has to be considered against CFPB and other requirements, but limitations exist via FHA that shouldn’t.
- These are just a few of the changes we would like to advocate for in the next 45 days.
Thank you for your membership and interest. It is so critical to be engaged now before final decisions are made in DC. Community lenders must be MORE VOCAL, not less vocal, and partner with the current administration, agencies, and regulators.