MReport January 2020

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M R EP O RT | 59 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT FHA's Montgomery: 'Optimistic About the Future' More than 600,000 mortgages went to first-time buyers over the past year. I n a hearing before the House of Representatives Financial Services Com- mittee this week, The Honorable Brian Montgomery, Commissioner of the Federal Housing Administration (FHA) gave an update on the FHA in 2019, with a focus on how the administration is improving its ability to promote access to homeownership, particularly for underserved borrowers. In his statement, Montgomery discussed HUD's Housing Finance Reform Plan, which proposes a number of recommendations to reduce risks to the MMI Fund, protect taxpayers, and also ensure that FHA maintains its focus on providing access to mortgage financing to low- and moderate-income families who are not served by traditional underwriting. According to Montgomery, in 2019, FHA insured forward mortgages for 990,000 households, of which 616,000 went to first- time homebuyers. Additionally, FHA insured 31,000 Home Equity Conversion Mortgages (HECM). As of September 30, 2019, FHA had active insurance on more than 8.1 million forward mortgages totaling more than $1.2 trillion in UPB, and HECMs totaling $64.2 billion in outstanding balance, Montgomery notes. Montgomery also discussed natural disasters in 2019, and how the FHA is adapting to keep homeowners in their homes following disasters. The FHA will be making the Disaster Standalone Partial Claim" a standard mortgage relief option available for all survivors of major disaster. Montgomery states that this option permits many homeowners to resume making payments without modifying their loan or re-amortizing the loan term, avoiding both the foreclosure process and payment increases. It also streamlines income documentation and other requirements to expedite relief. "We are optimistic about the future of FHA and, while we not celebrating yet, FHA's future is looking much brighter," Montgomery stated. "However, I cannot overstate that there is a lot of hard work remaining. I look forward to working with Congress to address these challenges and ensure that FHA continues to effectively serve its customers and fulfills its fiduciary duty to taxpayers." Supreme Court Sets Date for CFPB Constitutionality Case Arguments regarding the Constitutionality of the Bureau to be heard in March 2020. I n a scheduling order released by the Supreme Court, the Court announced that it will be hearing the case of Seila Law LLC v. Consumer Protec- tion Bureau on March 3, 2020. The case will include arguments against the Bureau's leadership structure, as the law firm named in the case, Seila Law, alleges that the structure of the agency grants too much power to its director. According to American Enterprise Institute Senior Fellow Peter J. Wallison, there is more at stake than just the constitutionality of the Bureau. On Real Clear Politics, Wallison argued that this CFPB case is an example of Congress enacting "broadly phrased laws, essentially delegating the key legislative choices to administrative agencies and violating the Framers' constitutional plan of separation." Additionally, he suggested that the Dodd-Frank Act was another "dangerous step." Seila Law alleges that the structure of the CFPB grants too much power to its director. According to court papers, given the CFPB's broad law enforcement powers, the fact that the president may only remove the Director of the CFPB "for inefficiency, neglect of duty, or malfeasance in office" is unconstitutional. In May, the CFPB beat Seila Law before a panel of the 9th U.S. Circuit Court of Appeals. Last year, in a split decision, a Washington appeals court reversed a previous ruling, declaring the structure of the Consumer Financial Protection Bureau to be constitutional after all. The Court of Appeals for the District of Columbia Circuit ruled in January 2018 that the CFPB's structure is constitutional and that the director of the agency can only be fired by the president for "inefficiency, neglect of duty, or malfeasance in office." The court's ruling read, in part, "None of the theories advanced by PHH supports its claim that the CFPB is different in kind from the other independent agencies and, in particular, traditional independent financial regulators." CNBC reported that a decision in the case is likely by the end of June. "We are optimistic about the future of FHA and, while we not celebrating yet, FHA's future is looking much brighter." — The Hon. Brian D. Montgomery, Assistant Secretary for Housing—Federal Housing Commissioner, HUD

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