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By summer of a Presidential Election Year, Congress becomes consumed with positioning themselves for success in November. The Senate and House this year will be in recess all of August and October campaigning. Each member will do their best to not only win their elections but gain support for key leadership and committee assignments in the new Congress.

The 2024 Presidential Election has proved to be anything but what’s expected. Now that the Republican National Convention has concluded with former President Donald Trump as the Republican Presidential nominee and U.S. Sen. J.D. Vance as his running mate, we await the Democratic National Convention to commence. This year’s uncertainty has prevailed as the Democratic nominees for President and Vice President have yet to be determined.

The elections are just the beginning of the uncertainty. A few recent Supreme Court decisions are expected to have widespread impact. In particular, the Court cut back the authority of federal agencies when it overturned Chevron vs. Natural Resources Defense Council  giving more power to the courts to interpret statutes and putting pressure on Congress to write more specific laws. Depending on the outcomes of the election, a frenzy of legislative activity could occur as retiring and defeated members form unexpected alliances to utilize their final chance to pass priority legislation. 

July update from the Council of FHLBanks, a trade association for the FHLBank System is available here.

This update includes the following chart that highlights various financial crises over the past 20 years. It demonstrates the value of the System’s regional structure and scalable business model, which allows the funding FHLBanks provide to expand and contract to meet member needs in a localized, personalized way.

FHFA Conditional Approval of Freddie Mac Pilot to Purchase Second Mortgages 

The FHFA announced its conditional approval for Freddie Mac to engage in a limited pilot to purchase certain single-family closed-end second mortgages.

The conditional approval of a pilot for Freddie Mac purchases of second mortgages includes several limitations on the product, including:

• A maximum volume of $2.5 billion in purchases;
• A maximum duration of 18 months;
• A maximum loan amount of $78,277, corresponding to certain subordinate-lien loan thresholds in the Consumer Financial Protection Bureau’s definition of Qualified Mortgage;
• A minimum seasoning period of 24 months for the first mortgage; and
• Eligibility only for principal/primary residences.

Upon the pilot’s conclusion, the FHFA will analyze the data on Freddie Mac’s purchases of second mortgages to determine whether the objectives of the pilot were met. 

CFPB Proposes Rule to Help Borrowers Experiencing Payment Difficulties

The Streamlining Mortgage Servicing for Borrowers Experiencing Payment Difficulties proposed rule would amend current regulations governing mortgage servicing. In general, the proposed rule would streamline existing loss mitigation requirements to provide borrowers with quicker loss mitigation solutions, add foreclosure procedural safeguards that begin as soon as a borrower requests loss mitigation assistance, revise certain early intervention requirements, and provide borrowers with access to certain mortgage servicing communication in languages other than English.

CFPB Request for Information Regarding Mortgage Closing Costs

The Consumer Financial Protection Bureau is seeking comments from the public related to fees charged by providers of mortgages and related settlement services.

The CFPB’s request for information seeks input from the public, including borrowers and lenders, about how mortgage closing costs may be inflated and constraining the mortgage lending market. Specifically, the CFPB asks for information about:

• Which fees are subject to competition? The CFPB is interested in the extent to which consumers or lenders currently apply competitive pressure on third-party closing costs. The CFPB also wants to learn about market barriers that limit competition.

• How fees are set and who profits from them? The CFPB wants to learn about who benefits from required services and whether lenders have oversight or leverage over third-party costs that are passed onto consumers.

• How fees are changing and how they affect consumers? The CFPB wants information about which costs have increased most in recent years and the reasons for such increases, including the rise in cost for credit reports and credit scores. The CFPB is also interested in data on the impact of closing costs on housing affordability, access to homeownership, or home equity.

Review the CFPB RFI here, Comments are due by Aug. 2, 2024.