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June 8, 2012
The House shined a spotlight on multifamily housing this week as a key subcommittee held an oversight hearing into FHA's programs. Rodrigo Lopez, CMB, a multifamily lender based in Omaha, Nebraska, testified on MBA's behalf on the important counter-cyclical role FHA has played during the recent housing crisis.
In This Issue:
Bank Regulators to Expose U.S. Version of Basel III for 90-Day Comment Period - Potential Significant Impact for MSRs on Balance Sheet of Banks
On Thursday, June 7, 2012, the Federal Reserve Board of Governors voted to release for a 90-day comment period a proposed new risk-based capital standard fashioned after the Basel III framework. Basel III is a global regulatory framework for bank capital adequacy, stress testing and market liquidity risk that was agreed to by the members of the Basel Committee on Banking Supervision. The proposed rule released for comment is for the U.S. version of Basel III. The proposal would adversely impact banks that have significant mortgage servicing rights (MSRs) on their balance sheet. Under Basel III, the following items would be capped at 10 percent of a bank's common equity:
- Investments in non-consolidated banking, insurance and financial entities
- Mortgage Servicing Rights (MSRs)
- Deferred tax assets that arose from temporary differences
In addition, a bank must deduct from common equity the aggregate of the three above items that exceed 15 percent of common equity. Further, the amount of the three items above not subject to deduction from common equity would be risk-weighted at 250 percent. Currently, MSRs are risk-weighted at 100 percent. Mortgage loans backed by the government or an agency would get a zero risk weight, while those conditionally backed by the government get a 20 percent risk weight. Currently, most non-government residential mortgages are assigned a 50 percent risk weight. Under Basel III, risk weights would range from 35 percent to 200 percent based upon LTV ratios and loan type and documentation of the loan. MBA will be forming a working group of members to draft the industry's comment letter on the proposed rule. For more information please contact Jim Gross, (202) 557-2860.
Hill Briefing on RESPA/TILA Simplification
On Friday, June 8, 2012, MBA along with other trade associations participated in a briefing of Congressman and staff regarding the "Know Before You Owe" project for Real Estate Settlement Procedures Act (RESPA) and Truth In Lending Act (TILA) simplification. Considering that there is no statutory deadline for a final rule, a key message was that while MBA supports RESPA/TILA simplification, the rulemaking should not be completed until other Dodd-Frank rules having implications for the disclosures are finalized. The trade associations also pointed out that certain changes to the rules, such as tightening the tolerances and establishing a three-day waiting period prior to closing, should not occur. For more information please contact Ken Markison, (202)557-2930.
Adverse District Court Decision in MBA Lawsuit Against Department of Labor (DOL)
On Wednesday, June 6, 2012, the United States District Court in Washington, D.C. ruled against the Mortgage Bankers Association (MBA) in its suit against the Department of Labor (DOL) (attached). The suit involved DOL's reversal of its position whether the administrative exemption under the Fair Labor Standards Act (FLSA) applied to the typical loan officer. MBA's suit urged that the DOL's reversal required a rulemaking process. MBA is analyzing the opinion, but the Court seems to have decided that case law requires many years of reliance on an agency position before requiring a public notice and comment process when that position is reversed. MBA is consulting with counsel and member groups on next steps. For more information, please contact Ken Markison, (202)557-2930.
FHA Previews Upcoming Policy Announcements on CampusMBA Webinar
On Wednesday, June 6, 2012, Federal Housing Administration (FHA) representatives, including Director of Single Family Program Development Karin Hill, gave MBA members and other participants a preview of its policy work for the rest of the year. For the next several months, FHA will address credit policy and risk evaluation, mortgage insurance premiums, the administration's refinance initiatives, credit repair, addressing the gap created by FHA guidelines with lender overlays, lender insurance, loss mitigation and REO recovery. During the call, FHA staff also responded to several questions and issues regarding recent policy changes. For more information, please contact Tamara King, (202) 557-2758, or Andrew Szalay, (202) 557-2941.
Industry Developments:
Fannie Mae Issues Servicing Letter Resolving 2011 Compensatory Fees
On Monday June 4, 2012, Fannie Mae issued a confidential servicing letter to recipients of compensatory fees bills for 2011 liquidations, indicating that Fannie Mae will offer credits to foreclosures that were completed under the state timelines (using LPI to sale) and will apply an additional 30 days to the timelines to account for non-controllable pre-referral and post-referral delays. Fannie Mae will also take into consideration as credits are applied: payments already made, adjustments or rescission's already given, and any pending rebuttals awaiting a Fannie Mae response. New invoices that reflect these changes will be issued in June 2012, and servicers will have 60 days to respond. Fannie Mae indicates that guidance on compensatory fees for 2012 liquidations will be released in June 2012, with invoices for 2012 released early in the third quarter. For more information contact Fannie Mae or Vicki Vidal, (202) 557-2861.
Hearing Held to Address Federal Housing Administration's Multifamily Insurance Programs
On Thursday, June 7, 2012, the House Subcommittee on Insurance, Housing and Community Opportunity held a hearing to address the Federal Housing Administration's Multifamily Insurance Programs' proposed mortgage insurance premium increases. Rodrigo Lopez, President and CEO of AmeriSphere Multifamily Finance, spoke on behalf of MBA, urging that any premium increases are supported by responsible fiscal analysis and pointing to MBA's research efforts within the real estate finance industry. Lopez's testimony was mirrored by past chair of the National Association of Home Builders, Bob Nielsen. For more information, please contact Dion Spencer, (202) 557-2741.
MBA Comment and Congressional Letter(s):
MBA Sends Letter to FHA Supporting Home Rehab Program for Investors
On Tuesday, June 5, 2012, MBA sent Federal Housing Acting-Commission Carol Galante a letter on lifting the administrative moratorium prohibiting investors from participating in the Section 203(k) Rehabilitation Loan Program. MBA believes that the market and industry practices have changed significantly since the moratorium was put in place in the late 1990s and that now it would help reduce the high inventory of bank owned and vacant properties. In the letter, MBA addresses the concerns that triggered the moratorium, recommending how each risk is either already mitigated or how to allow individual investors to participate. For more information, please contact Andrew Szalay, (202) 557-2941.
Congressional Hearings:
June:
13 Senate Committee on Banking, Housing and Urban Affairs: A Breakdown in Risk
Management: What Went Wrong at JPMorgan Chase? (Key Witness: Jamie
Dimon, CEO of JP Morgan Chase)
Click here for Upcoming MBA Conferences and Events |
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Don't miss these great MBA/MW Events
- Charity Happy Hour on June 14 (Residential) Location: Old Anglers Inn in Potomac, MD
Register here for this free event.
- Lunch and Learn: Loan Officer Compensation and More on June 21 (Residential)
Location: Clydes of Tysons Corner
Register here by June 14th for the early bird rate.
- CREF Council's Summer Break Networking Event on July 18 (Commercial)
Location: RFD Washington
Details are being finalized and will be available soon.
- Mid-Atlantic Lender Conference on October 18 (Residential)Location: Waterford at Fair Oaks, Fairfax, VA
Exhibitor and Sponsorship registration is now open. Click here for details.
Visit our website for additional details and to register: www.mbamw.org
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Mortgage Bankers Association of Metropolitan Washington PO Box 1522, Olney, MD 20830-1522 (301)924-0633 fax (301)924-4124 info@mbamw.org www.mbamw.org   
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