ACUMA ONpoint
ACUMA ONpoint
The ABCs of Regulatory Shake-Ups: Navigating Mortgage Policy Changes from FHFA, HUD, and NCUA
The regulatory landscape for credit union mortgage operations is experiencing a seismic shift as new leadership takes control at key federal agencies. This thought-provoking conversation with policy expert Annmarie Conboy-DePasquale from Brownstein Hyatt Farber Schreck unpacks the latest developments affecting credit unions and their members.
Key discussion points you don't want to miss:
- Newly confirmed FHFA Director Bill Pulte has wasted no time making his presence felt, appointing himself chair of both Fannie Mae and Freddie Mac boards while removing numerous board members.
- Meanwhile, HUD has partnered with the DOGE team to target waste, fraud, and abuse within the agency. While its core mission of supporting affordable housing won't fundamentally change, workforce reductions could significantly impact program delivery.
- The discussion also examines NCUA's emphasis on streamlining regulations under Chairman Kyle Hauptman. It explores recent executive orders affecting Community Development Financial Institutions (CDFIs) – a particularly concerning development considering credit unions hold approximately 65% of CDFI assets nationwide.
For mortgage professionals supporting communities through lending, understanding these policy shifts is essential to navigating an increasingly complex regulatory environment. As one agency after another embraces "efficiency" as its mantra, what will the housing landscape look like when the dust settles?
Sponsored by Loan Vision
The views and opinions expressed in this podcast do not necessarily reflect the views or positions of Acuma, its board of directors, its management staff or its members. The podcast discussion presented is conversational in nature and for general information only.
Speaker 2:Hello and welcome to Atkinson Point Podcast, the policy series where we focus on policy issues impacting the credit union mortgage industry. I'm your host, peter Benjamin. Before we get to our episode, just a quick word from our sponsor.
Speaker 3:This episode is being brought to you by Loan Vision. Is your credit union looking to turn your accounting department into a profit driver? Loan Vision can help. Our platform delivers real time data, loan level insights and automations to streamline workflows and improve control over financial performance. Transform your cost centers into revenue generators by equipping your team with the tools needed to better serve your members. And don't miss our monthly webinar series, where we share key strategies and best practices to help credit unions optimize their mortgage operations. Register today at wwwloanvisioncom under our upcoming event speech.
Speaker 2:Joining us today, as our resident expert is Anne-Marie Conboy, Policy Advisor with Brownstein AM. It's been a while. How are you doing today?
Speaker 4:I'm doing well. Congress is in recess, double recess, for the first time this year, which is very exciting for us here in Washington. But more exciting is my return to the podcast. So thank you again for having me.
Speaker 2:No, no, the pleasure is all ours. You are a fan favorite, so thank you very much for being here. Excited to kind of break down the topics today, and I think on the docket is pretty much essentially a agency round robin. So without further ado, let's just jump right in.
Speaker 4:So after you, please, great. Well, yes, hopefully we have something for everyone today as we hit on these various agencies, hopefully. I wanted to start off with FHFA and just talk about the new director over there, bill Pulte, who was confirmed on March 13th. He had a little bit of bipartisan support coming out of the Senate and he had not really a rocky confirmation hearing at all because he was overshadowed there by the presence of Jonathan McKernan, who is the nominee to lead the CFPB. But Pulte, since he took office last Thursday, has been very, very active on Twitter or X. I have a hard time remembering to say X, so forgive me if I repeatedly say Twitter.
Speaker 2:I won't, I won't, you know, say anything if you just say Twitter, just just go with Twitter, it's easier.
Speaker 4:Thank you, you're welcome. I would encourage anyone who's interested in FHFA's ongoings to follow Pulte on Twitter, because he tweets many times a day often as he sometimes moves between activities, so it's an interesting window into his daily routine over there. He so far has said that he is going to be focusing right off the bat on eliminating mortgage fraud and getting a handle on fraud generally at the GSEs and at the agency. He said that he's going to prioritize that over efforts to potentially privatize the GSEs. So conservatorship is not going to be his top issue for now.
Speaker 4:And on the theme of pushing on mortgage fraud and fraud at the GSEs, one of the first things he's done out of the gate is to kind of clear house a bit at the boards of Fannie Mae and Freddie Mac. On Monday and this is a break from the last two FHFA directors Pulte appointed himself to chair the boards of both Fannie Mae and Freddie Mac and he removed eight board members at Fannie and six at Freddie. He also added about three members to each of the boards. One of those is Chris Stanley who has some affiliations with SpaceX, twitter and Doge. So we can see right away the overlay between Doge activities and Pulte's leadership at FHFA.
Speaker 2:Okay, so question on that. So there's a lot of questions. You know I'm a focus primarily on you know what you first said. You know and I'm a think back to you know various. You know, I guess the prior administration where you could easily argue whether blog posts or I guess any administration really are blog posts and tweets considered policy or even guidance right or guidelines Like how is one to know if a tweet is considered new policy?
Speaker 4:That is a great question and I think it's one that we are seeing play out right now. I think blog posts, the use of blog posts as guidance, has been controversial in recent years and it also is notably a fairly easily reversed way of doing policy, which can be problematic for regulated entities who, from day to day, may see blog posts updated or removed or posted. But the question of the role that tweets play, I think, is at the forefront, and I'll just say this very quickly. But OMB, the Office of Management and Budget, earlier this year issued a very wide-ranging memo that was then revoked. However, the White House press secretary tweeted that the memo was still in effect. So there's active litigation right now on that issue that relates to the role that tweets may or may not play.
Speaker 2:Okay, so it's in a nutshell. It almost seems like tweets are fair game, no matter what. It's the wild, wild west, but you almost have to step gently and almost view them as though they're going to eventually be policy, that if it's tweeted or if it's in a blog, you have to assume that eventually it's going to be in play. Is that safe to say, or am I reading what you just said wrong?
Speaker 4:I would say I think it's. They are things that you very much want to be aware of in the current environment, Also because often we're seeing policymakers preview what they are going to do by a tweet before it happens. So I think there's a lot of value in what these regulators and other senior leaders are posting on Twitter and their other social media platforms.
Speaker 2:OK now coming back to GSE reform, but I'm also going to make this a double topic question GSE reform. But I'm also going to make this a double topic question. So GSE reform and mortgage fraud, we'll say fraud in housing. This is not the first time I heard that GSE reform is what was almost like a grandstand topic, that all we have to reform the GSEs, get them out of conservatorship. That was a big conversation. All they wanted to talk about, right, it was you and I have talked about this. You know, zach and I have talked about this. Lee and I have talked about this and I have questioned okay, why? Now? You know, et cetera, et cetera, et cetera. And then all of a sudden, now it's like is all of a sudden mortgage fraud becoming the priority?
Speaker 2:I understand that when you know volumes down, mortgage fraud is up. I mean that's. You know tale as old as time, song as old as rhyme. You know that's. You know tales old time, song as old as ryan. You know that's. That that's just always happens. But polty seems to be approaching this as though there's actual fraud within the gse's. Am I, am I reading that right or am I reading that wrong?
Speaker 4:I would say you know, in the first hundred days of an administration there is a lot of pressure on administration officials to show productivity and show progress and I think, something like mortgage fraud, it is easily presented to the public in terms of you know, if there are metrics that can be tracked over time, incidences of reported fraud, things like that, targeting issues that can be easily measured and are easy to understand, you see that a lot early on, whereas something like privatization, it's a much more complex, nuanced, long-term play. So I think that plays into it as well. And at the same time that he's talking about mortgage fraud, he's also talking about improving efficiency at the GSEs and at the agency itself. And if you are going to be dramatically scaling back workforce, it's difficult to undertake very substantive, complex initiatives at the same time.
Speaker 2:So why not call it corruption instead of fraud? Is is just corruption too harsh for word.
Speaker 4:I think I think it's a bit too harsh of a word. I also think corruption and this is just my personal view is a word that we use more often when we talk about things that involve the government government corruption, things like that. I think fraud is used in many more. The word fraud is used in many more circumstances, applies to far more business arrangements, or at least that's the way I hear it messaged. More so I think it.
Speaker 2:There's another question of what resonates versus what doesn't there okay, and you know, you know, because obviously actions speak louder than words. You know going in and doing a sweep and firing of board members. You said eight and six, I remember correctly.
Speaker 4:Yeah.
Speaker 2:That almost speaks to a level of Corruption that he thought there may be corruptions happening at JC. I'm not, I don't know. I'm not accusing, I'm not saying, I'm not assuming, but actions speak louder than words and you almost have to. One would argue that that's what he's getting at, but, like you said, it's a very harsh word. It's probably a safer bet just to say fraud. Anyways, I digress.
Speaker 4:I would also say on that point, I think the removal of board members also would could suggest that halty just feels they, you know, were inefficient at addressing the issue or it was not. It did not match on their priority list where it falls on his priority list and so he felt they needed to part ways. But I I certainly could not speak to his specific motivations.
Speaker 2:No, no, not asking to all right. And and just just to be clear, this is the same polty whose family owns a building company, you know, a residential building company, but also owns a mortgage company. Right, same polty, one of the same, correct? Yeah okay, so I just want to make that clear, right? Um, anyways, let's keep going. So enough on fhfa, unless you have something else you want to add on FHFA.
Speaker 4:That was everything I had.
Speaker 2:Okay, perfect, all right. So who's next? Who is next?
Speaker 4:Who is next? That's a great question, Also usually the question on Doge's mind. Seriously, Before they moved over to FHFA, Doge was over at HUD and continues to make some waves at HUD, I think. Since the last policy version of this podcast, Doge and HUD have stood up a joint task force focused on, again, broadly eliminating waste, fraud and abuse. So we're seeing that word fraud pop up again across their messaging Scott Turner, the HUD director, and Pulte I think we'll see them working together or having some similar messaging in some ways, particularly because Doge is looking into both of their operations.
Speaker 4:And so abuse, fraud, waste those are words I think we'll continue to hear repeatedly over the next few months, if not through the end of the year. Some of the cuts so far have been targeted towards their fair housing initiatives. So that's one area where litigation is pending right now and litigation is something else that I think we're going to see on so many fronts over the next few months and it can almost feel impossible to keep up with all of the different challenges that are going on and the TROs and the various court orders and the judgments. So if there is a particular program that anyone listening is interested in, I would encourage folks to keep close tabs on those over the coming months.
Speaker 2:I mean, and so obviously you know, HUD was established to support, you know, and I'm gonna use a very broad term, support the housing needs of, you know, the low to moderate income, you know, families, essentially, and again broad term and a very generalization. Does HUD come out of this, on the other end, the same, or even remotely the same, supporting those housing initiatives of low to moderate income families?
Speaker 4:I don't think that we will see its core mission shift, but I do think we will see a significant reduction in the workforce that supports those initiatives and, just given the size of the agency, that has a lot of ripple effects in terms of the support that people can seek from the agency. And we haven't seen yet the scope of exactly where they're going to target. But I think the theme will be a smaller, more streamlined HUD.
Speaker 2:Okay, so you know, obviously it's going to impact anything from, you know, fhfa, you know, you know you name it. It has a very wide ranging ripple effect throughout housing To various grant programs across the United States. Well, I guess it's still very much TBD, right? We just don't know yet until really the cards play out, right.
Speaker 4:Yes, I think this is a time of a lot of churn across the federal government and there are a lot of things that we just don't know yet and that are playing out almost on an hour-by-hour basis for some of these agencies. Really, Okay.
Speaker 2:Okay, I mean I don't know. I mean it's I don't know. And again, I've read a lot of the reports on HUD and I've read a lot of articles and this is not me saying it Some articles I read saying that there had to be change at HUD. And again, I'm not saying this, but no one deserves to lose their job. I guess my concern is especially as this but no one deserves to lose their job. I guess my concern is especially as someone in the credit union space and someone who's focused on fulfilling our mission of putting families in homes. If one less family doesn't get that house, is that worth the outcome? That's what I don't understand, or that's what I don't know, and that's what I'm really concerned about.
Speaker 4:I think a lot of people feel that way, peter, and anyone who's spent any time on Capitol Hill in the past few weeks can tell you that every phone in every office, on both sides of the aisle, is ringing off the hook because constituents are concerned about how cuts will impact or have impacted them their opportunities, the programs that they want to take advantage of. So I think it's a question a lot of people are asking.
Speaker 2:I mean I read this op-ed in Housing Wire and it was about HUD specifically and like there was this mindset and this mantra within HUD and among some HUD employees. Again, I don't know if it's true, but it was, you know, do the bare minimum right. And so on the flip side of that coin it's was that one less family not getting that home anyways. But again, no one deserves to lose their home, no one deserves to lose their job. But it's our jobs as real estate professionals, as credit and mortgage professionals to support families, support our communities and as long as we can come out of this and put as many families in homes as we possibly can, I think that's that's our mission. So it's horrible. That's our mission. So it's horrible. It's scary in many ways because we don't know, but it's scratching my head half the time.
Speaker 4:Half the time I read these articles I'm like what the heck is going on? Yes, it's a very dynamic time. And I think there's almost an incredible amount of information to try and parse through and I think you and your team do a great job of distilling information for your members and trying to keep your focus on the things that really do impact them and kind of fielding out the the broader noise.
Speaker 2:Thank you very much. There's there's a running joke within my team that whenever they have like a meeting, internal meeting, like there's this running joke that every once in a while I'll pop into their meetings. And there's this idea like I come in a meeting and it's like this how can I screw this up? And that's what Doge is like. But yeah, hey, how can I mess this meeting up? But yeah, anyways.
Speaker 4:I'm doubtful that that's how it plays out, but I'll have to check with the with others yeah, I mean, you know, I have crazy ideas.
Speaker 2:Uh, anyways, all right, who's next hud? Okay, who's next?
Speaker 4:I will do a quick hit on ncua while we're talking about agencies. Something to flag for anyone looking for some reading is that the agency put out its annual report just the other day and that kind of goes through a lot of their recent, their activities over the past year, and then it also touches on where they kind of see themselves going, looking forward. So Kyle Hopman is the first addition since he's become chairman. So he said and you pause me if you've heard these words before today but he wants to focus on making NCUA's operations more efficient, streamlining and eliminating outdated or overly burdensome regulations, improving processes, clarifying the examination program and trying to make sure the regulatory scheme is quote easy to navigate for current and future credit unions. So again, some similar verbiage to what we've heard before. Not super specific, but an interesting read.
Speaker 2:So I mean, what is it about efficiencies that this administration seems to be beating the drum about?
Speaker 4:I think it comes back partially to that. The federal government is so large and one could assume that there are inefficiencies that exist and in an effort to root those out, I think the current administration and Elon Musk's team are willing to go as far as they can, and I think the courts will tell them in many cases when they have gone too far. But I think it's an umbrella for so many other things, because when we talk about efficiency or when efficiency is talked about these days, we're the the. The scope of things that could be considered inefficient is so broad. So anytime I hear efficiency, I always think of it as kind of the header on the page and then I'm thinking, well, what actually? What are the bullet points? What are we actually talking about? If efficiency is the? What actually? What are the bullet points?
Speaker 2:what are we actually talking about? If efficiency is the title, what are the chapters? Okay, I mean, I mean, you know my change background, change management background, you know, wants it to always improve, right? It's? You know, once, even once you improve a process, you you let it play out and then you start from the beginning anyways, and to kind of improve it once again.
Speaker 2:Um, but in many ways it seems like we're just throwing out that buzzword. Just to throw out that buzzword, yes, there's probably a lot of redundancies and a lot of inefficiencies, but in many ways it kind of goes back to, you know, one of the organizations I worked for prior to joining. You know the credit union space work for prior to joining. You know the credit union space. You know they, they, they had this crazy idea of that.
Speaker 2:They could fix the credit, the, the, the mortgage process and redefine what the mortgage process was, and they ended up going under because they invested all this money and technology and manpower and you name it, and all they did was just over-engineer it and it ended up being their downfall because they couldn't figure out how to make it more efficient, because in the end, the process was the process. For a reason it worked out best for the consumer, it worked out best for the staff, it worked out best for the technology, you name it. That was the reason why the process was, and is it possible that, in the end, some of the things that are inefficient or being viewed as inefficient, are actually the right thing to do?
Speaker 4:Yeah, of course, I think there's every possibility that things that perhaps should not be cut or scaled back will be. I think also there are two sides to every coin, so things that are trimmed, some people will celebrate and others will raise the red flag and say, hey, this is going to be really problematic. I think your considerations are very thoughtful and if you have time on the side, you might consider phoning into the Doge meetings once in a while and making those points to them, because I think they're very warranted.
Speaker 2:I mean, it's just. Has it gotten to that point yet where they've said I must throw out the S word? But I don't make this explicit oh heck, we shouldn't have fired that person. We kind of sort of needed them and you know they tried backfilling that person. I mean, has that point happened yet?
Speaker 4:There have been instances I've heard at some agencies where they have needed to call back people who were initially either put on administrative leave or handed termination notices interesting.
Speaker 2:You know, no, you know, you know we don't, but you don't know, you don't know. Um, all right, so ncua. And by the way, when you said reading, you meant you know bedtime reading, put you to sleep type reading, type stuff, right absolutely. I think if that you know, you find that calming power to you okay, good, all right, um anything else, um that we have to go over today I just wanted to quickly mention the executive order that the president signed last week on cdfis community development financial institutions.
Speaker 4:So the order would be quite a significant shift in the president's views on cdfis. During trump 1.0, his first term, he signed a law that made a significant multi-billion dollar investment in CDFIs during the pandemic. And CDFIs historically have been a bipartisan initiative On Capitol Hill. The chairman of both the Banking Committee and the Financial Services Committee have been supportive of CDFIs, have been supportive of CDFIs. There's been bipartisan concern with the scaling back and changes that the president is proposing.
Speaker 4:And executive orders, it's worth reminding, in many cases they direct agency action, so it foreshadows future activity as opposed to being an immediate change in policy. There are, of course, many circumstances where executive orders do result in immediate changes to policy, but things that require agency rulemaking or agency actions take a little bit longer to implement. There was also an executive order last month that, as part of a laundry list of ways that the president asked agencies to reduce the size of the federal bureaucracy, directed the CFPB to get rid of its credit union advisory council. The CFPB did act on that and they put a notice on the webpage that says this has been dissolved. The advisory council met about twice a year for maybe two hours a session, so it's not a necessarily a huge loss in in related activity, but I just wanted to flag that as well.
Speaker 1:Yeah.
Speaker 2:Well, thank you very much for that. The CDFI thing is is is very interesting. You know, on paper, I think it's it's going to be a much larger number of impacted acumen members than what we actually think. I mean. Just two years ago we had a whole session dedicated to partnering with CDFIs and leveraging down payment assistance programs through CDFIs. So I'm intrigued to see how this plays out and how the large scale impact to mortgage programs the large scale impact to mortgage programs so well.
Speaker 4:And on that point, Peter, I will say quickly I was doing some research after I read the executive order and the Federal Reserve Bank of New York, in 2023, had done a survey of CDFIs and at that point so late 2023, about 65% of the total assets across certified CDFIs were held by credit unions and it looked like about late last year, somewhere between a third and a fourth of the about 1500 CDFIs were credit unions. Just for a big, some big picture of statistics, that's, that's I mean.
Speaker 2:If we think about it. You know what last I mean. I haven't looked at the 2024 HMDA data, but when you look at twenty, twenty three hundred data, there are only about thirteen hundred mortgage mortgage originating credit unions. So, that's essentially every single mortgage originating credit union.
Speaker 4:Yeah, and I don't think we're gonna see this go quietly I think there'll be more concern from both sides okay, well, before we wrap up any final thoughts so, in the spirit of march madness, I did have two fun facts about basketball and the federal government, if you would indulge me.
Speaker 2:I most certainly will.
Speaker 4:So only one US president played college basketball, according to the NCAA Do you have any idea who that might be Peter. I have no idea. It was Richard Nixon. He played at Whittier College in California.
Speaker 2:Okay, he played at Whittier College in.
Speaker 4:California. Okay, he also played football, and the NCAA noted specifically in their post that he never actually made it to the field. And then there's one current member of congressional leadership who played college basketball, and that would be senate majority leader John John Thune, who played D2 basketball at Biola University.
Speaker 2:That's awesome. That is awesome Good. Those are good, fun facts. Thank you very much for those. Thank you, that's awesome. That's awesome. Well, thank you very much for your time today. I always enjoy sitting down the chat with you and, as always, we appreciate everything that you do and the rest of the Brownstein team does for our members and our community.
Speaker 4:Of course. Thank you again for having me.
Speaker 2:Of course, and to close out, thank you again to Lone Vision for sponsoring today's episode and to all of you. We know your time is valuable. Thank you again for tuning into the latest episode of Acuma's On Point Podcast. We hope you enjoyed it. Until next time. Be well, my friends.
Speaker 1:Thanks for listening. We'll see you next time at the Acuma On Point Podcast. If not already, be sure to subscribe and give us a five-star rating For more great episodes and information. Be sure to visit us online at acumaorg and to get the latest updates. Head over to our LinkedIn page.
