TO:                     MBA Board of Directors; RESBOG; COMBOG; MBA Legion; Multifamily Steering Committee; Washington Reps; MBA Residential Committees

FROM:                Steve O'Connor, MBA SVP Government Affairs

DATE:                December 19, 2008

SUBJECT:          MBA Advocacy Update

 

A troubled financial system and a dreary economic forecast continue to be the focus in Washington.  Today, the White House took action to avoid the collapse of the auto industry by granting a $17.4 billion loan to Chrysler and GM, using funds granted in the Emergency Economic Stabilization Act.  Also this week, the Obama team came closer to finishing an economic recovery plan that is scheduled to be completed by next week.  The hope is that Democratic Congressional staff will be able to use the plan to complete legislative language for an economic stimulus bill, estimated at $800 billion over two-years.  It is reported that the plan could be approved as early as late January, during President-elect Obama's first days in office. 

 

This week, President-elect Obama continued making high-level appointments, including the appointment of New York City Housing Commissioner Shaun Donovan as Secretary of HUD.  MBA applauds the decision and is eager to begin working with Donovan.  MBA has worked with Donovan in the past when he was active on MBA's Multifamily Steering Committee. 

 

In this Issue:

 

  • MBA Sends Memo on Advocacy Priorities to Obama Transition Team
  • MBA Submits Comments to FHLB on Affordable Housing Program Amendments
  • MBA Submits Letter to Treasury on Warehouse Lending
  • MBA Responds to Senator Durbin's Questions on Bankruptcy Cram Down
  • MBA Submits Responses on RESPA
  • MBA Releases Issue Paper on Credit Unions

 

Recent MBA Action:

 

MBA Sends Memo on Advocacy Priorities to Obama Transition Team

In a meeting on Tuesday, December 16, MBA Chief Operating Officer John Courson delivered a memo to President-elect Obama's Transition Team that laid out MBA's advocacy priorities for 2009.  John Courson reiterated MBA's eagerness to work closely with the Obama administration and the 111th Congress.  The memo follows up on previous discussions between MBA staff and the transition staff.  It outlines policies that support MBA goals toward restoring liquidity and stimulating housing and mortgage markets, assisting borrowers and preventing future problems.   

  

For more information, please contact Josh Denney at (202) 557-2816 (jdenney@mortgagebankers.org). 

 

MBA Submits Comments to FHLB on Affordable Housing Program Amendments

On Tuesday, December 16, MBA responded to an interim final rule authorizing Federal Home Loan Banks to use Affordable Housing Program funds to subsidize lender programs to assist borrowers in financial distress.  This new authority was included in the Housing and Economic Recovery Act.  However, the interim proposal is nearly identical to a proposed regulation issued by FHFA's predecessor in April on its own authority.  MBA submitted a comment letter responding to the April proposal, and it forms the basis for the attached draft.  We believe the interim final rule is a positive response to the current housing market crisis.  However, MBA suggests that the interim final rule be modified to more closely align it with the language and purpose of the statute it is implementing namely, by expanding eligible uses, loans and lenders. 

 

For more information, please contact Michael Carrier (202) 557-2870 (mcarrier@mortgagebankers.org). 

 

MBA Submits Letter to Treasury on Warehouse Lending

On Thursday, December 18, MBA sent a letter to Treasury Secretary Henry Paulson expressing concern over the growing threat to warehouse lending-a source of capital for many mortgage lenders.  Many warehouse lenders are exiting the business or adding restrictions to their warehouse lines of credit, causing independent (non-depository) mortgage lenders to struggle to maintain their ability to lend.  MBA believes Treasury could be helpful in a variety of ways and will continue to work on viable solutions.

 

For more information, please contact Tamara King (202) 557-2870 (tking@mortgagebankers.org).         

 

MBA Responds to Senator Durbin's Questions on Bankruptcy Cram Down

On Tuesday, December 18, MBA responded to Senator Durbin's questions for the record that served as a follow-up to the November 19, Senate Judiciary Committee hearing on bankruptcy, at which MBA testified.  MBA also submitted explanations to MBA Chairman Kittle's statements made during the hearing.  In MBA's responses, MBA outlines data that were used to draw the conclusion presented to the Senate Judiciary Committee, as well as MBA's detailed analysis on the 150-200 basis point increase to borrowers that would result should cram down legislation be enacted.      

 

For more information, please contact Francis Creighton at (202) 557-2736 (fcreighton@mortgagebankers.org).

 

MBA Submits Responses on RESPA

On Wednesday, December 17, MBA provided written responses to questions for the record for the September 16, House Financial Services Subcommittee on Oversight and Investigation hearing, "HUD's Proposed Real Estate Settlement Procedures Act (RESPA) Rule" at which MBA Chairman David Kittle testified.  MBA's responses included its views on disclosure of compensation by mortgage brokers, MBA's proposed GFE and HUD-1 forms, estimated costs for the rule and legislative and regulatory changes needed for RESPA.  MBA's responses reiterated that it believes that it would be far less costly for the industry, and ultimately, consumers if RESPA reform and TILA reform were coordinated or combined.

 

For more information, please contact Ken Markison at (202) 557-2930 (kmarkison@mortgagebankers.org).

 

MBA Releases Issue Paper on Credit Unions

On Friday, December 19, MBA released its issue paper on credit unions that provides a brief history on credit unions and outlines similarities and differences between them and bank and thrift institutions.  Additionally, the issue paper serves as a primer on current regulatory and legislative issues involving credit unions. 

 

For more information, please contact Tamara King at (202) 557-2758 (tking@mortgagebankers.org) or Layla Moughari at (202) 557-2868 (lmoughari@mortgagebankers.org).   

 

MBA Maintains Financial Stability Resource Center, Housing and Economic Recovery Act and Conservatorship Resource Centers

Find comprehensive resources on the Emergency Economic Stability Act (EESA), the Housing and Economic Recovery Act (HERA) and the government-sponsored enterprise (GSE) conservatorship at the following Web sites: Financial Markets Stability Resource Center, HERA Resource Center and GSE Resource Center.

 

Industry Regulatory Developments

 

FASB to Issue Fast-Track Exposure Draft to Revise EITF 99-20

On Monday, December 15, the Financial Accounting Standards Board (FASB) agreed to issue a fast-track exposure draft to revise EITF 99-20, Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets.  The proposed amendment would change the trigger for recognition of other-than-temporary impairment.  The amendment would remove from EITF 99-20 the notion of "best estimate of cash flows that a market participant would use" and require that there has been "probable" adverse change in estimated cash flows.  The comment period would be approximately 10 days, and the exposure draft may be circulated as early as December 19, 2008.  The impetus for the change is the difficulty in obtaining and using consistent information based upon the limited observable trades in today's inactive market.

 

For more information, please contact Jim Gross (202) 557-2860 (jgross@mortgagebankers.org).

IRS Expedites Lien Relief Process for Homeowners Trying to Refinance

On Tuesday, December 16, the Internal Revenue Service (IRS) announced that it would provide an expedited process for homeowners that are behind on their taxes who request a discharge or a subordination of a tax lien.  For homeowners trying to sell or refinance their homes, the process usually takes about 30 days to complete this process.  In order to speed up this process for distressed borrowers, the IRS has committed to expedite these requests. 

 

For more information, please contact Jim Gross (202) 557-2860 (jgross@mortgagebankers.org).

 

Upcoming Events:

 

February

 

8-11                         MBA's CREF/Multifamily Housing Convention & Expo, San Diego, CA

 

17-20                       MBA's National Mortgage Servicing Conference & Expo, Tampa, FL

 

For more information on all of MBA's activities, including how to register, please visit MBA's Web site.

 

Top Industry News Headlines This Week

 

Obama Fed Pick Has Makings of Stern Regulator -American Banker

With President-elect Barack Obama's decision to send Daniel Tarullo to the Federal Reserve Board, the central bank is poised to gain more knowledge about some of the industry's most pressing challenges.

 

Viewpoint: Guaranteed Way to Spur Housing Demand - American Banker

The U.S. housing market is still deeply troubled. There are a million excess houses on the market and foreclosures are running at record postwar rates. The housing bubble has ended, but prices are still falling rapidly with the risk that housing prices will overshoot on the downside.

 

Tax Break May Have Helped Cause Housing Bubble -New York Times

"Tonight, I propose a new tax cut for homeownership that says to every middle-income working family in this country, if you sell your home, you will not have to pay a capital gains tax on it ever - not ever."

 

The Community Reinvestment Act Is Not the Villain -New York Times

Howard Husock attacks the Community Reinvestment Act in an attempt to deflect blame for the economic meltdown from the real culprits - predatory lenders and the government that did not regulate them.

 

Obama Team Is Seeking Stimulus Bill by New Year - New York Times

President-elect Barack Obama's advisers hope to finish an economic recovery blueprint by Dec. 25 so that Democratic Congressional staff members can draft legislation by the new year, as the two branches of government try to converge on a two-year plan by late January that could total just under $1 trillion.

 

30-Year Mortgage Rates Sink to Lowest on Record -Washington Post

Interest rates on 30-year fixed rate mortgages dipped to their lowest level in at least 37 years after the Federal Reserve this week reaffirmed its commitment to a program designed to loosen consumer lending, according to a closely watched weekly survey released yesterday.

 

Bair Disputes OCC's Redefault Data on Mods -American Banker

Federal Deposit Insurance Corp. Chairman Sheila Bair defended loan modifications Wednesday, arguing that data released by other regulators was insufficient to cast doubt on their success.

 

HUD Chief Calls Aid on Mortgages A Failure - Washington Post

Secretary of Housing and Urban Development Steve Preston said the centerpiece of the federal government's effort to help struggling homeowners has been a failure and he's blaming Congress.

 

Obama Works to Overhaul TARP -Wall Street Journal

The incoming Obama administration is considering a series of initiatives to combat the financial crisis, including some efforts to help banks that the Bush administration has tried with limited success.

 

Low-Interest Mortgages Are the Answer - Wall Street Journal

Recent news articles suggest that the Treasury Department is considering a plan to offer a 4.5% mortgage for home buyers for a period of time. Let's hope it does. It would help arrest the decline in house prices that is at the base of the ongoing financial crisis and recession.

 

Fed's Cut Is a Zero-Sum Game -Wall Street Journal

Investors are trying to have their cake and eat it, too. No sooner had the U.S. Federal Reserve cut rates to practically zero than both stocks and long-dated Treasuries rallied.

 

Foreclosure Relief Progress at Fannie-American Banker

Fannie Mae said it is finalizing a new policy to let tenants stay in homes it has foreclosed on if they can pay the rent.

 

Treasury Pressured to Help Homeowners -Wall Street Journal

House Speaker Nancy Pelosi suggested Monday that Congress will force the Treasury Department to do more to help struggling homeowners if the administration seeks access to the second half of its $700 billion financial-rescue fund.

 

Home Buyers Turn to USDA for Mortgages -Wall Street Journal

Tightened lending standards are leaving builders and real-estate agents scrambling for new ways to move cash-strapped buyers into homes. One increasingly popular option: an obscure home-loan program offered by the U.S. Department of Agriculture.

 

Obama Taps N.Y. Housing Chief To Oversee a More Active HUD -Washington Post

President-elect  Barack Obama has picked New York City housing commissioner Shaun Donovan to be secretary of housing and urban development, a post that Obama said would play a lead role in his administration's efforts to stem the rising tide of foreclosures and rebuild the nation's efforts to expand homeownership.

 

Job cuts adding to growing number of housing defaults-USA Today

Unemployment is now the cause of almost half of all foreclosures on conventional mortgages, raising concerns that mounting joblessness will stall any housing recovery and could cause more foreclosures next year.