Social Media

    

MBA News

MBA Statement on House GOP Tax Proposal

CONTACT:
Rob Van Raaphorst
rvanraaphorst@mba.org
(202) 557-2799

MBA Statement on House GOP Tax Proposal

WASHINGTON, D.C. (November 2, 2017) - David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association (MBA), made the following statement regarding the House Republicans tax plan:

“MBA strongly supports the goal of enacting tax reform that spurs jobs and economic growth, and the introduction of this bill is an important milestone on that road.  However, we have serious concerns about how the provisions introduced today will impact the housing markets in this country.  In particular, we believe that the proposed changes to the mortgage interest deduction, deductibility of state and local real estate taxes and the exemption for capital gains treatment when families sell their principal residence would have a negative impact on the housing market and potentially the national economy as a whole.  We are also concerned about the potential impact of certain provisions on the production of affordable housing, which is vital.

"On the positive side, we appreciate the bill retaining the deductibility of business interest for real estate, section 1031 like-kind exchanges for real property, and the low income housing tax credit that are important to maintaining strong housing and real estate markets. 

“We recognize this is the opening bid in the discussion on tax reform and we look forward to continuing to work with policymakers to find the right balance that both reduces the tax burden on American families and spurs economic growth, without posing unnecessary risk to the housing and real estate markets.”     

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mba.org.

 

MBA President and CEO David Stevens Testifies on Housing Finance Reform

 

CONTACT:
Rob Van Raaphorst
rvanraaphorst@mba.org
(202) 557-2799

MBA President and CEO David Stevens Testifies on Housing Finance Reform

WASHINGTON, D.C. (November 2, 2017)- David H. Stevens, CMB, President and CEO of the Mortgage Bankers Association (MBA), testified today before the House Financial Services Committee Subcommittee on Housing and Insurance. His full written testimony is available here. Below is Stevens' oral testimony, as prepared for delivery:

Chairman Duffy, Ranking Member Cleaver, and members of the Subcommittee, thank you for the opportunity to testify today.

Nine years have passed since the GSEs were placed in conservatorship, and yet their long-term status remains unresolved.

Extended conservatorship is economically and politically unsustainable, and it is an unacceptable long-term outcome. Without comprehensive reform, borrowers, taxpayers, and lenders will all face increased risk and uncertainty about the future.   

I will cut right to the chase, the time to act on comprehensive legislative reform is now. Despite the positive steps FHFA has taken as conservator, only Congress can provide the legitimacy and public confidence needed for long-term stability in both the primary and secondary mortgage markets.

That is why, to build on prior work surrounding GSE reform, and in the hopes of spurring legislative action, MBA convened a Task Force reflecting the full composition of MBA’s membership: residential and multifamily, bank and nonbank, small, medium and large. Our Task Force truly represented the full depth and breadth of the entire real estate finance industry rather than the narrow interest of any one specific market segment.

We tasked this group with developing a proposal that would address the future of the Secondary Mortgage Market, and in particular, an end-state model that can also fulfill an affordable housing mission.

Our proposal, which I have included as part of my written testimony, ensures equitable access for all lenders to the secondary market, prohibiting special pricing and underwriting based on loan volume as occurred prior to conservatorship, preserving the cash window and small pool execution options, and preventing vertical integration by the largest market participants.

Our proposal recognizes the need for any comprehensive GSE reform plan to balance three major priorities: consumer cost and access to credit; taxpayer protection; and investor confidence.

To achieve these policy objectives, MBA’s plan recommends recasting the GSEs’ current charters and allowing a multiple-Guarantor model that features at least two entities and preferably more.

Guarantors would be monoline, regulated utilities owned by private shareholders, operating in the single-family and multifamily markets. The core justification for utility-style regulation is that privately-owned utilities attract patient capital and derive certain benefits by virtue of their federal charters.

The Guarantors would be subject to rigorous capital requirements that would provide financial stability without unduly raising the cost of credit for borrowers. These requirements would be satisfied through multiple layers of private capital, including proven means of credit risk transfer.

The implicit government guarantee that existed before the conservatorship of Fannie Mae and Freddie Mac would be replaced with a legislated explicit guarantee at the MBS level only. This guarantee would be supported by a federal insurance fund with appropriately-priced premiums paid by the Guarantors, much like banks pay for FDIC insurance.

Our plan explicitly calls for deeper first-loss risk sharing that is transparent, scalable to all lenders, and capable of limiting taxpayer exposure only to catastrophic risk.

The Task Force also developed recommendations in two areas that have vexed past reform efforts: 1) the appropriate transition to a new system and 2) the role of the secondary market in advancing a national affordable-housing strategy.

Our proposal specifically notes the importance of leveraging the assets, infrastructure, and regulatory framework of the current system. We also believe that any workable transition must utilize a clear road map and be multi-year in nature.  

We developed an affordable-housing framework that covers both renters and homeowners of varying income levels. 

Our plan suggests other improvements to better serve the full continuum of households, including updating credit-scoring models, and better capturing nontraditional income. Our framework has outcomes that are transparent, well-defined, measurable and enforceable.

Mr. Chairman, as I noted, FHFA has put in place a number of policies and procedures to improve access to the secondary mortgage market and reduce the risks to taxpayers.  Now is the time for Congress to act to “lock in” these improvements.

Only Congress can alter the existing GSE charters, establish an explicit federal government guarantee, and create a regulatory mandate to maintain a level playing field.

We cannot go back to a housing finance system that provides private gains when markets are strong yet relies on support from taxpayers when losses occur.

Calls to simply recapitalize the GSEs and allow them to operate without further structural changes are misguided. Under such plans, the post-crisis administrative reforms already achieved could be reversed. 

The American people rely on a mortgage finance system that enables them to access quality, affordable rental housing, buy their first home, or build a nest egg to pass on to their children. We owe it to them to proceed with the hard work of reform without delay.

Thank you again for the opportunity to testify. I want to reiterate MBA’s long-standing commitment to working with this Committee on all elements of GSE reform. I look forward to your questions.

 

 

 

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,200 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, REITs, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mba.org.