Fighting An ‘Unmitigated Disaster’

MBA seeks right-size capital standards and correct loan assumption fees

Insider

MBA 2023 Chairman-Elect

We’re as focused as ever on aligning requirements across the alphabet soup of federal agencies. I don’t have to tell you that FHA has different rules than Ginnie Mae, which has different rules from Fannie (Mae) and Freddie (Mac), which have different rules from the VA. It’s maddening, isn’t it? And it hurts borrowers.

We’re making this clear to the powers that be. Our message to them is simple. If they align their requirements across the board, we’ll be able to help more borrowers, more quickly, and more affordably, too. Alignment is a no-brainer, and we’ll keep fighting to make it a reality.

We’re also focused on capital standards and requirements for banks and non-banks which service mortgage loans. The current requirements are far too high – and going even higher. At the rate they’re going, they threaten to drive banks and non-banks alike out of the servicing business.

That would be an unmitigated disaster. Who would do your essential work? Who would fulfill the high responsibility of helping people keep their homes? The answer is no one – and the MBA is letting lawmakers know it. We’re talking with FHFA, Ginnie Mae, bank regulators, you name it. And across the board, we’re telling them: Right-size capital standards – and stop this wrong before it’s too late.

Another current focus for us is fixing loan assumption fees. Demand for assumptions is skyrocketing in this time of high-interest rates, understandably so. Yet the current situation is financially unsustainable, and your companies are losing huge amounts on each transaction.

Fortunately, there’s a simple fix. The VA, FHA, Fannie, and Freddie should increase their allowable fees, and index them to inflation, too. The MBA has formally made this request, and conversations with regulators are ongoing. It’s the only way to ensure we can keep helping so many borrowers – and we won’t rest until you get relief.

The same is true on every other pressing policy issue. The CFPB recently asked for information on mortgage refinances and forbearances, with an eye toward regulation in the near future. We’re pushing back with the message that while streamlined refinances are good, the CFBP should lower costs, not raise them.

And when it comes to loss mitigation, we’re talking all the time with FHA, the USDA, the VA, and FHFA. We’ve asked the VA to create a permanent partial claim program, and when it comes to the GSEs, we support expanding borrower access to Payment Deferral and Flex Modification. The pandemic proved that these programs work – and with a recession on the horizon, borrowers need them to keep working.

Whatever the issue, believe me when I say the MBA is talking to the decision-makers, and we know how to get results. There’s no better proof than what recently happened with flood insurance.

Since 2017, the MBA has strongly urged HUD to update its mandatory requirements, and after five years of endless advocacy, we succeeded. Just four months ago, HUD announced that FHA lenders can finally accept private flood insurance policies. That’s good for your companies and the borrowers you serve – and we’ll keep fighting to make this policy even better.

On that note, the MBA has launched a PR initiative to tell your story. We’re touting the millions of people you helped during the pandemic, and the countless ways you keep people in their homes. Our goal is for policymakers to walk away thinking, “wow, thank God for servicers.”

The truth is, you do your work behind the scenes, but you deserve to be at the forefront of the conversation. Through our new campaign, we’ll make sure you are. Like I said, you’re heroes – and it’s time more people, especially those in power, knew it.