by Christianna Kersey, Esq.

Cohn Goldberg & Deutsch, LLC*

USFN Member (DC, MD)

and by Lance Olsen, Esq.

McCarthy Holthus, LLP*

USFN Member (AZ, AR, CA, CO, ID, NV, NM, OR, TX, WA)

In mid-January, attorneys and servicers converged upon Amelia Island, Florida, to partake in USFN’s annual Executive Servicer Summit. With September 2022 plans upended due to inclement weather, all were eager to be together for this informative and premier event. As part of the summit, USFN was honored to welcome the Senior Vice President of the Mortgage Bankers Association, Bill Killmer, to discuss the intersection of politics and policy, as we navigate through unknown waters.

 Killmer grew up in Texas, but spent time as a youth in Washington, D.C., when his father worked for the federal government. He attributes this exposure as the inspiration for his desire to serve and be a part of government. As an adult, Killmer moved to Washington, D.C. in the mid-80’s, working for the Department of Labor under George H.W. Bush. Later, he worked for the National Association of Home Builders before ultimately landing at the Mortgage Bankers Association, interestingly on the same day in 2010 that Dodd Frank was signed into law. A veteran of nearly three decades in the housing arena, Killmer is responsible for managing the real estate finance industry’s federal legislative, grassroots, and political fundraising activities, in close coordination with the MBA member leadership and its public policy, economics, public affairs, and lobbying teams. Killmer is an expert when it comes to politics and policy, and his interview did not disappoint. He addressed topics such as elections, policy, and a general market overview for a very enlightening session.

               To start the conversation, Killmer touched on the midterm elections and how they would affect the future of the default industry. Obviously, the highly anticipated “Red Wave” did not occur and was, rather, merely a “Ripple.”  With better than expected midterm results, the administration may be emboldened to continue aggressive pursuit of increased regulatory oversight. The MBA will continue working with the administration and the CFPB on better regulatory clarity, FHFA, GSE, and HUD refocusing, remote online notarization minimum standards, and affordable housing and minority homeownership.   

As an example of the MBA’s work in an atmosphere of political division, Killmer discussed the Inflation Reduction Act and how the MBA focused on managing and limiting risks rather than pursuing change goals that likely would not be possible. Among the interests protected in that Act were certain treatments of capital gains, 1031 exchange opportunities, and the tax treatment of mortgage servicing rights.

The conversation then turned to the CARES Act. The general narrative in D.C. is that the Act functioned well and an extension of some programs offered to consumers is appropriate, notwithstanding the end of the COVID crisis. Some of these include extending the partial claim process to organizations like the Veteran’s Administration and making more flexible modification options available to more government loans. From here, we could not miss the opportunity to reflect on the Homeowners Assistance Fund program. Killmer’s opinion is the HAF Program was beneficial, but created some challenges in that the structure of allowing state control has led to an inconsistent roll out, as well as inconsistencies concerning where funds may still be available and where they have already been exhausted.

Lastly, we touched on the CFPB and its predicted focus moving forward. The belief is that current leadership may seek behavior modification and compliance through increased communication and expression of intent, and less by formal rule making or statutory change. This could be particularly true while cases remain pending examining the structure of the CFPB and possible limits on the authority of the CFPB to mandate and regulate. In the near future, the CFPB will likely continue to focus on payday lenders and credit reporting, but there will always be attention paid to fair lending, access to markets, and debt collection practices. 

After reflecting upon policy and politics, the dialogue turned to when and how the MBA chooses to get involved in state and local issues. We learned that the MBA gets involved at the state level when the need arises, typically at the request of state level organizations or when an issue could have national implications. Killmer indicated that the MBA typically acts for the state organizations as a clearinghouse that shares education, experience, information, and resources. One example of the national MBA engaging at a state level is in providing assistance to states that have yet to establish remote online notary allowances. In such circumstance, the MBA can help establish a framework and provide a floor for protections adopted by the state legislative process. 

Asked to predict the future of the economy and, thus, the focus of the MBA, Killmer offered his belief that unemployment will eventually rise, opening up labor markets, and that interest rates will slide back a bit on the way to stabilization – perhaps to 5.5% in 2023 and down to 4% by 2024. We could see a rise in delinquency rates with the increase in unemployment and interest rates remaining above levels of the past several years, thus creating less refinance opportunity. That said, homebuyer qualifications remain strong as do property values and overall loan performance. The MBA’s immediate goal will continue to be a focus on assisting its members through a difficult business environment that includes inflation, a tight labor market, and high interest rates – risks that don’t typically exist at the same time. Other MBA priorities will include addressing regulatory costs that increase the cost of borrowing and lending, improving repayment assessment to enhance affordability, reforming GNMA advancing obligations, and educating and advocating for evolving Fair Lending and UDAAP Risks arising from CFPB actions.

As a final point, we closed with a discussion on advocacy and how we, USFN, can get involved with the MBA’s advocacy program. Killmer suggested joining the Mortgage Action Alliance. As a member, you will receive a call to action when an important piece of legislation is being considered by federal or state lawmakers. Another way to get involved is by contributing to MORPAC. For more information, you can go to mba.org/MORPAC. Lastly, we should get our colleagues involved. We need everyone’s help to make the voice of the industry stronger.

In conclusion, as we embark into 2023, we should continue to think about the current environment in policy and politics and how USFN can position itself as an advocacy leader in the industry. By evolving our education programs and participation in industry events, we can build strong bonds with other trade groups to voice change in the real estate finance industry.

Copyright @2023

USFN e-Update - February 2023