NAR submitted a letter to the Federal Reserve, Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation on their proposed amendments to bank capital standards for large banks, also known as Basel III Endgame.
The proposed amendments change the risk weights for mortgages and servicing rights and would have a damaging impact on the mortgage lending markets, especially for first-time buyers, low- and middle-income borrowers, and minority communities. The changes would also affect lending for small- and medium-sized lenders who rely on warehouse funding.
NAR urges the joint agencies to repropose or retract the amendments, especially given the lack of statistical analysis and support for the proposed changes. NAR believes the changes go too far given the current solid state of mortgage underwriting and the performance of loans since the implementation of the Dodd-Frank Act. The mortgage market has absorbed major challenges, including the failure of a few regional banks, as well as the COVID-19 pandemic.
As part of NAR’s effort to ameliorate the impacts of the proposal, NAR joined three different coalitions to urge change. NAR joined the National Housing Conference among others to send a letter that amplified NAR's message on the negative impacts of the proposal. A separate letter with the Mortgage Bankers Association, National Association of Home Builders, and several other groups asked for specific changes to ameliorate the impacts to borrowers with limited down payments and to eliminate changes that would undermine non-bank lenders’ ability to support home buyers more broadly. Finally, NAR worked with the Reinsurance Association of America and the Housing Policy Counsel to push for changes that would allow for reinsurance and other sound and proven offsets to capital to be used in lieu of the proposed changes.