News Archive

News

Release of Pandora Papers Sparks New Legislation

October 12, 2021

On October 3, the International Consortium of Investigative Journalists (ICIJ) released what is known as the Pandora Papers, which are comprised of 11.9 million confidential documents that detail the financial secrets and offshore dealings of dozens of heads of state, public officials, and politicians from 91 countries and territories.

The Pandora Papers detail how these public officials, as well as billionaires and celebrities, use offshore companies to acquire mansions, private jets, and stakes in companies, with little or no transparency.

Read more from Bloomberg about What the Pandora Papers Reveal about Offshore Wealth.

In response to these revelations, Members of Congress introduced new legislation, called the ENABLERS Act, to make it more difficult for lawyers and accountants to help corrupt politicians and other bad actors hide their money.

Representatives Tom Malinowski and John Curtis of the Congressional Caucus against Foreign Corruption and Kleptocracy said of the release of the Pandora Papers:

Disclosures within the Pandora Papers are the clearest demonstration yet of the historic threat posed by foreign corruption. Billions of dollars of dirty money belonging to adversarial actors are flooding the United States, undermining our national security. It is imperative that we take all necessary measures to stem this tide... The United States must also work closely with its democratic allies to ensure that dirty money does not simply seek out the lowest common denominator. It is incumbent upon us democracies to purge the dirty money in our systems, deny corrupt foreign officials safe haven, and stand with the victims of kleptocracy.

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
The Pandora Papers detail how these public officials, as well as billionaires and celebrities, to acquire mansions, private jets, and stakes in companies, with little or no transparency.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Release of Pandora Papers Sparks New Legislation
October 14, 2021
The bipartisan infrastructure bill continues to be negotiated by a group of 22 senators with an end possibly in sight.

News Alert

Alert: Key Provisions in 2022 Multifamily Caps

October 13, 2021

Today, October 13, 2021, the Federal Housing Finance Agency (FHFA) published the 2022 Multifamily Loan Purchase Caps for Fannie Mae and Freddie Mac. The volume caps for each GSE will increase from $70 billion to $78 billion for a $156 billion total, up from $140 billion in 2021. FHFA largely maintained the mission-driven requirements, with 50% of all purchased loans required to satisfy mission-driven criteria. Note that mission-driven definitions were expanded (see below). FHFA slightly raised the requirement that 25% of the purchased loans be affordable at the 60% area median income (AMI) (up from 20% in 2021).

Click here for CREFC’s Side-by-Side Analysis of the 2022 Multifamily Caps. The document includes a detailed chart on how the mission-driven criteria changed in the new caps.

2022 Multifamily Caps Overview

  • Volume Caps total $156 billion ($78 billion each), which is an increase from $140 billion ($70 billion each);
  • 50% of GSE multifamily loans must be mission-driven (same as 2021, but mission-driven definition has changed in several places, see below);
  • 25% of the purchased loans must be affordable at the 60% AMI

Mission-Driven Definition Changes

  • Loans on affordable units in cost-burdened renter markets can qualify if rents are affordable at 100% AMI and 120% AMI (cost-burdened and very cost-burdened). Previously, an 80% threshold was used across the board.
  • Loans to finance energy or water efficiency improvements can qualify as mission-driven if affordability and energy/water reduction metrics are satisfied. The GSEs’ various green programs can qualify under the new definition.
  • The general 80% AMI affordability floor was removed for the “targeted affordable housing” definition, and case-by-case inclusion is allowed when loans do not meet the exact criteria outlined in that definition.
CREFC will continue to analyze the new caps and mission-driven criteria. Please contact Sairah Burki or David McCarthy with any questions.

Click here for CREFC’s Multifamily Caps Side-by-Side.

 

Contact

Sairuh Burki
Managing Director, Regulatory Affairs
703.201.4294
SBurki@crefc.org


David McCarthy
Managing Director, Head of Policy
202.448.0855
DMcCarthy@crefc.org
The volume caps for each GSE will increase from $70 billion to $78 billion for a $156 billion total, up from $140 billion in 2021.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Alert: Key Provisions in 2022 Multifamily Caps
October 13, 2021
Today, October 13, 2021, the Federal Housing Finance Agency (FHFA) published the 2022 Multifamily Loan Purchase Caps for Fannie Mae and Freddie Mac. The volume caps for each GSE will increase from $70 billion to $78 billion for a $156 billion total,

News

LIBOR Update – Quarles Gives Firm Warning on Year-End Deadline; Walker & Dunlop Announces First SOFR Leveraged Loan

October 12, 2021

On October 5, Federal Reserve Governor and Vice Chair for Supervision Randal Quarles delivered a strong warning to market participants that they must transition away from LIBOR. Speaking at the Structured Finance Association Conference in Las Vegas, Quarles reinforced that LIBOR will not be available for new contracts after the end of the year and that the Fed will be watching.

Reviewing banks' cessation of LIBOR use after year-end will be one of the highest priorities of the Fed's bank supervisors in the coming months.

FHFA Housing Proposal and Current Level

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
Randal Quarles a strong warning to market participants that they must transition away from LIBOR.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
LIBOR Update – Quarles Gives Firm Warning on Year-End Deadline; First SOFR Leveraged Loan Announced
October 12, 2021
On October 5, Federal Reserve Governor and Vice Chair for Supervision Randal Quarles delivered a strong warning to market participants that they must transition away from LIBOR. Speaking at the Structured Finance Association Conference in Las Vegas,

News

Unraveling Treasury’s Rental Assistance Redistribution Plan

October 12, 2021

On October 4, Treasury published guidance on its procedures for reallocating a portion of the $25 billion Emergency Rental Assistance passed as part of the yearend 2020 stimulus. This first bucket of money is known as “ERA1” and is treated separately from the additional $21 billion supplied by the American Rescue Plan. Under the law, Treasury had to begin reallocating excess ERA1 funds from state and municipalities (grantees) on September 30, 2021. Highlights from the procedures are as follows:

  • Key Thresholds
    • States/counties/cities (grantees) that have obligated at least 65% of their ERA1 funds will be eligible to receive reallocated funds.
    • Grantees that have distributed less than 30% of their ERA1 funds may be subject to losing a portion of their funds.

  • Excess Funds:
    • Grantees that have spent less than 30% of their ERA1 funds as of September 30, 2021, will be subject to reallocation. The ratio to be reallocated will increase by 5% each calendar month.
    • Grantees below the 65% obligation threshold are required to submit a Program Improvement Plan, regardless of how much they have spent. Failing to submit a plan will result in a reallocation of 10% the original grant amount.
    • A grantee below the 30% expenditure threshold can submit a Program Improvement Plan to potentially gain a 15% boost to its expenditure ratio and avoid reallocation.
    • On March 31, 2022, a final assessment may sweep any unobligated funds.

  • Obligated Funds: Obligated funds (spent funds and committed funds) will not be recaptured. Treasury’s conditions for obligated funds are:
    • Funds have actually been spent providing financial assistance and housing stability services under ERA for eligible households;
    • Funds are needed to pay for assistance promised in a commitment letter issued to induce a landlord to enter a rental agreement with an eligible household; or
    • Contractual obligations, including assistance that has been approved but not distributed, or if a Grantee entered into a binding agreement or funding commitment requiring the Grantee to disburse the funds to a third party for eligible ERA1 purposes.

  • Mitigating Factors: Treasury may waive reallocation if the grantee declares by November 15 it has obligated 65% or spent at least 30%, develops a Program Improvement Plan, or if Treasury determines exigent circumstances delayed distribution.

  • Reallocation Process
    • Eligible grantees (65%+ funds obligated) can request additional funds starting October 15.
    • Treasury will evaluate requests based on demonstrated capacity and amount of reallocated funds available and award funds accordingly.
    • If requests exceed amount of reallocated funds, Treasury will still calculate the approved amount for each grantee, aggregate that amount, calculate a percentage based on available funds, and reduce the reallocation awards across the board by the shortfall.
    • Treasury will prioritize reallocating funds within the same state.
    • Grantees may voluntarily request to reallocate some or all of their funds to an eligible grantee in the same state.


Distribution Data
Treasury has not yet released the September distribution report, which will be critical in demonstrating which jurisdictions could gain or lose funds. The August data provide a preview of jurisdictions in the running for additional funds. Excluding the city and state allocations from the total, the following states are at or near the 65% threshold, which counts expenditures and not obligations, and could be eligible for reallocation.

FHFA Housing Proposal and Current Level


FHFA Housing Proposal and Current Level The following states are more than 10% below the 30% expenditure and could be in danger of reallocation.

FHFA Housing Proposal and Current Level


FHFA Housing Proposal and Current Level CREFC continues to monitor state moratorium and rental assistance distribution.

For additional updates, please see CREFC’s State Legislation and Policy Tracker.

 

 

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
Optional caption for image. DO NOT STYLE this CONTENT. Only use plain text or italics. No bold or headings. Each story MUST have an image. Do not make any inline styling to the image. Just place it without sizing or any other settings. Your images need to be around 800px wide, no less. Height can vary.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Unraveling Treasury’s Rental Assistance Redistribution Plan
October 12, 2021
On October 4, Treasury published guidance on its procedures for reallocating a portion of the $25 billion Emergency Rental Assistance passed as part of the yearend 2020 stimulus. This first bucket of money is known as “ERA1” and is treated separately

News

Debt Limit Crisis Punted to December

October 12, 2021

Senate leaders agreed to a short-term debt limit increase to avert a default crisis. The agreement lifts the nation’s debt limit by $480 billion and extends Treasury’s borrowing authority into early December. Government funding also expires on December 3, and the agreement creates a deadline to force Congress to again vote to increase the debt limit and again avoid another government shutdown in early December.

Rank-and-file Senators were unhappy with the outcome, which does “nothing to solve the debt ceiling problem long term for Americans,” writes Axios. And acrimony among Senators is unprecedented. Politico reported that after the vote, Democratic Leader Chuck Schumer gave a “fiery” speech dinging Republicans. A photo below shows centrist Senator Joe Manchin's (D-WV) obvious dismay at the tone of Schumer’s remarks who unloaded his frustration with Republicans. After the speech Politico reported “senators on both sides of the aisle approached [Schumer] to voice their displeasure” with the tone of Schumer’s remarks.

Republicans’ goal has been to force Democrats to pass a debt limit using reconciliation; the agreement is intended to give Democrats more time to use the arcane process. Republicans want to force Democrats to provide the dollar amount they want to spend (rather than a suspension of the limit), reduce the number of reconciliation bills that Democrats can use for other policy priorities on a party-line vote, and avoid putting Republican Senators on the record as supporting enormous government spending. The de-escalation by Republican Senate Leader Mitch McConnell came as it became increasingly clear that there was no easy way out of this stalemate, reported PunchBowl News. The outlet described three alternatives Senators were unwilling to pursue:

  1. Republicans were not willing to end their filibuster of the debt limit.
  2. Democrats did not have the votes to go “nuclear” and end the filibuster.
  3. Democrats were not willing to use reconciliation because of time constraints.
Republican leaders hoped to avoid a roll call vote on cloture (a vote to close debate on a measure), but many Republican Senators held out and forced the procedural vote. The cloture vote succeeded 61-38, which allowed Democrats to vote to lift the debt ceiling 50-48. The following Republicans voted for cloture that allowed Democrats to lift the debt limit: Mitch McConnell (R-KY), John Barrasso (R-WY), Roy Blunt (R-MO), Richard Shelby (R-AL), Mike Rounds (R-SD), Shelley Moore Capito (R-WV), Susan Collins (R-ME), Lisa Murkowski (R-AK), John Thune (R-SD), John Cornyn (R-TX), and Rob Portman (R-OH).

The House is in a two-week recess but will return to DC on October 12 to pass the short-term debt limit increase. The legislation is formally called the “Senate Amendment to the House Amendment to S. 1301 – Temporary Extension of Public Debt Limit.” Politico provides this helpful three-minute video that explains why debt ceiling limits invariably produce political uncertainty. Why is legislating so difficult? A 50-50 Senate. Politico provides a deeper explanation of the current dynamics in the divided chamber.


Contact

Justin Ailes
Managing Director, Government Relations
202.448.0853
jailes@crefc.org

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org
Republicans’ goal has been to force Democrats to pass a debt limit using reconciliation; the agreement is intended to give Democrats more time to use the arcane process.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Debt Limit Crisis Punted to December
October 12, 2021
Senate leaders agreed to a short-term debt limit increase to avert a default crisis. The agreement lifts the nation’s debt limit by $480 billion and extends Treasury’s borrowing authority into early December. Government funding also expires on Decemb

News

Federal Reserve Governor Brainard Anticipates Supervisory Guidance as Banks Manage Climate Risks

October 12, 2021

On October 7, Federal Reserve Governor Lael Brainard gave a speech at the 2021 Federal Reserve Stress Testing Research Conference where she shared that the Fed is developing scenario analysis to “model the possible financial risks associated with climate change and assess the resilience of individual financial institutions and the financial system to these risks.” She noted the importance of modeling both the transition risks arising from changes in policies, technology, and consumer and investor behavior and the physical risks of climate-related damages.

In her remarks, Brainard outlined several key considerations related to scenario analysis:

  • Learning from other countries – a group of regulators from across the world has been sharing best practices regarding climate-related risk management within the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), which the Fed joined last year.
  • Overcoming implementation challenges such as the absence of historical precedents and the need to consider interdependencies across the financial system (e.g., resilience of insurance and other hedging strategies).
  • While incorporating the effects of policy changes in the modeling of transition risks is currently possible, the “building blocks for assessing the economic consequences of physical risks in the presence of substantial uncertainty are still in development.”
  • Appreciating that the consequences of climate change will vary by region and economic sector.
  • Eliminating critical data gaps. Brainard noted the important role the Securities and Exchange Commission (SEC) must play in ensuring consistent, comparable, and, ultimately, mandatory data and disclosures across the financial system. (See our article for more detail on the SEC’s work in this regard.)
Brainard closed her remarks by stating that both the prudential (Federal Reserve’s Supervision Climate Committee) and macroprudential (Federal Reserve’s Financial Stability Climate Committee) work programs will benefit from the development of climate scenario analysis.

 

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
Brainard closed her remarks by stating that both the prudential (Federal Reserve’s Supervision Climate Committee) and macroprudential (Federal Reserve’s Financial Stability Climate Committee) work programs will benefit from the development of climate scenario analysis.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Federal Reserve Governor Brainard Anticipates Supervisory Guidance as Banks Manage Climate Risks
October 12, 2021
On October 7, Federal Reserve Governor Lael Brainard gave a speech at the 2021 Federal Reserve Stress Testing Research Conference where she shared that the Fed is developing scenario analysis to “model the possible financial risks associated with cli

News

CREFC IRP v8.2 with Key LIBOR-to-SOFR Data Fields Set for Implementation this Reporting Period

October 12, 2021

Adopted and announced by CREFC on July 31, 2021, the Investor Reporting Package™ (IRP™) Version 8.2 (SOFR) will be first implemented as expected this reporting period—October 2021.

The IRP v8.2 contains changes relative to the implementation of various SOFR tenors in anticipation of the sunset of LIBOR. IRP v8.2 is a supplement to the full IRP narrative of v8.0 and the Loan Modification/Forbearance Best Practices (v8.1).

Since the announcement, the IRP Committee has adopted a new definition for the new field added as part of v8.2, the “Index Rate Adjustment Factor (L153).” The new definition can be found on the v8.2 Change Matrix linked below.

The CREFC IRP is a transparent, standardized set of bond, loan, and property- level information provided for all CMBS securitizations. Initially rolled out in 1997, Version 1.0 contained 100 of the most important bond/loan property level fields. Version 8.0 took effect on September 30, 2016 and now contains more than 400 data points.

Comments or questions? Contact Kathleen Olin at 202-679-9129.

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
The IRP v8.2 contains changes relative to the implementation of various SOFR tenors in anticipation of the sunset of LIBOR. IRP v8.2 is a supplement to the full IRP narrative of v8.0 and the Loan Modification/Forbearance Best Practices (v8.1).
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
CREFC IRP v8.2 with Key LIBOR-to-SOFR Data Fields Set for Implementation this Reporting Period
October 12, 2021
Adopted and announced by CREFC on July 31, 2021, the Investor Reporting Package™ (IRP™) Version 8.2 (SOFR) will be first implemented as expected this reporting period—October 2021.

News

Democrats Weigh Size of Reconciliation, Programs to Cut

October 12, 2021

With the debt limit crisis delayed, Democrats have two months to come together on the specifics of President Biden’s ambitious social spending plan, the Build Back Better Act (BBB). These negotiations continue behind closed doors, and budget estimates and legislative language will take weeks to prepare.

There are three signature initiatives in the BBB plan:

  • An expanded child tax credit,
  • Paid family medical leave, and
  • Subsidies for childcare.

Centrist Senator Joe Manchin (D-WV) wants the overall size of BBB reduced to $1.5 trillion. While Machin wants $1.5 trillion and Senator Kyrsten Sinema (D-AZ) has been opposed to a $3.5 trillion number, where the final BBB will land is still far from clear. Senate moderates and progressives are very far apart and negotiations plus time may soften stances on both sides. A final number is hard to predict, but the greater than $1.5 trillion and less than $3.5 trillion is a good bet. Biden mused that a $1.9 to $2.3 trillion bill may be in play. Even with firm stances from Manchin and Sinema, a BBB is still more likely than no action at all.

2020 reapportionment results


Policymakers are now weighing which initiatives to include in BBB and how long each initiative will be funded. For example, extending the expanded $3,600-per-child tax credit for another four years would cost $450 billion. But the credit could be extended for a shorter amount of time.

Climate change provisions are another critical component of the negotiations for both domestic and geopolitical reasons. As ABC News outlines, progressives insist that climate remain a key part of BBB, and the upcoming UN Climate Change Conference (COP26) in Glasgow, Scotland at the beginning of November puts additional import on the need for President Biden’s signature policy initiative to demonstrate American leadership to address climate issues. Housing is also a key sticking point. Both the White House and Democratic leaders in Congress are contemplating whether to cut $300 billion in down payment assistance, affordable home construction, and a number of other housing programs, according to Politico. House Financial Services Chair Maxine Waters (D-CA) organized a letter signed by every Democratic member of her committee last week to President Biden, House Speaker Nancy Pelosi, and Senate Leader Chuck Schumer urging they include the Committee-passed housing provisions in BBB.

The Washington Post reports, “…inside the West Wing, debate is focused on whether to keep the full range of ambitious proposals but spend less on each of them or abandon some completely.” If constrained to $1.5 trillion, Democrats could fully fund only a handful of their most important policy priorities. “For instance, Democrats would already come close to reaching that number in spending if, hypothetically, their plans consisted of just three top priorities — tackling climate change, creating a national paid leave program, and extending a tax benefit that alleviates child poverty.”

After President Biden suggested last month that Democrats should pare their spending plans closer to $1.9-$2.3 trillion to compromise with moderate Senators’ desires, Congressional Progressive Caucus Chair Pramila Jayapal (D-WA) told The Associated Press that she continues to resist the President’s call for a compromise that is, “too low, and I said that I would really like to be closer to three [trillion].”

For context around just how much spending Biden’s proposed $3.5 trillion legislation would be, the Washington Post published two helpful charts. One compares Biden’s proposed social programs (and infrastructure and already-spent pandemic relief) to Roosevelt’s New Deal, Johnson’s Great Society, and Obama’s financial crisis and healthcare programs.

 

2020 reapportionment results

A second chart shows the percentage of social spending as a share of GDP.

2020 reapportionment results



 

Contact

JUSTIN AILES
Managing Director, Government Relations
202.448.0853
jailes@crefc.org
Both the White House and Democratic leaders in Congress are contemplating whether to cut $300 billion in down payment assistance, affordable home construction, and a number of other housing programs, .
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
Democrats Weigh Size of Reconciliation, Programs to Cut
October 12, 2021
With the debt limit crisis delayed, Democrats have two months to come together on the specifics of President Biden’s ambitious social spending plan, the Build Back Better Act (BBB). These negotiations continue behind closed doors, and budget estimate

News

CFPB Publishes Small Business Lending Data Collection Rule

January 1, 2021

On October 8, the Consumer Financial Protection Bureau (CFPB) published its proposal to begin collecting data on applications for credit by small businesses, including those owned by women or minorities. The data collection rule is required by the Dodd Frank Act Section 1071 and is intended to facilitate the enforcement of fair lending laws and enable policymakers, communities, and creditors, to identify needs and opportunities for women-owned, minority-owned, and small businesses.

The proposal, known as Section 1071, was initially released at the beginning of September but the publication in the Federal Register starts the clock for comments. Comments are due in 90 days on January 6, 2022.

Section 1071: HMDA for Small Business Lending

While the scope and information collected under Section 1071 will focus on business lending, the exercise is similar to the Home Mortgage Disclosure Act (HMDA), which requires lenders to collect and report data on single family and multifamily mortgage loans. Click here for the CFPB’s summary of the rule.

Key Considerations for CRE and Multifamily Lenders

CREFC has been analyzing the nearly 1,000 page proposal, but several issues will be important for CRE lenders.

  • Covered Financial Institution Definition (who must comply with the rule):
    • “Financial Institution” includes any partnership, company, corporation, association (incorporated or unincorporated), trust, estate, cooperative organization, or other entity that engages in any financial activity.
    • Originates at least 25 covered credit transactions for small businesses in each of the two preceding calendar years.
    • Analysis: This broad definition is not limited to banks or entities otherwise regulated by the CFPB. As such, insurance companies and nonbank lenders could be subject to the rule.
  • Covered Credit Transactions Definition (what loans must be reported):
    • “Business Credit” as defined in Regulation B, which broadly includes credit primarily for business or commercial purposes, with some limited exclusions (e.g., securities credit).
      • Analysis: The broad definition likely includes CRE mortgages. Additionally, multifamily loans that may be subject to HMDA reporting would still be eligible to be included in 1071.
    • Proposed Exclusions: factoring, leases, consumer-designated credit used for business purposes, and credit secured by certain investment properties would not be covered credit transactions.
      • Analysis: The CFPB commentary (pg. 54) around “certain investment properties” is convoluted (pg. 234), but appears that the exclusion only applies to single-family residential mortgages (1-4 units) that are non-owner occupied, rented for income, or held for sale.
  • Small Business Definition:
    • Section 1071 would partially use the general Small Business Administration’s (SBA) definitions on business concern and small business concerns.
    • Instead of using the SBA employee thresholds (which vary depending on the particular industry), the CFPB is proposing to use a $5 million or less in gross annual revenue
  • Data Collection
    • The CFPB released a chart of 23 proposed data points that would be collected. The fields include information about the business applicant, the type and purpose of the credit, and pricing information.

CREFC will be engaging with members on this issue. Please contact David McCarthy with questions or to get involved.

Contact

David McCarthy
Managing Director, Head of Policy
202.448.0855
dmccarthy@crefc.org
The proposal, known as Section 1071, was initially released at the beginning of September but the publication in the Federal Register starts the clock for comments. Comments are due in 90 days on January 6, 2022.
The information provided herein is general in nature and for educational purposes only. CRE Finance Council makes no representations as to the accuracy, completeness, timeliness, validity, usefulness, or suitability of the information provided. The information should not be relied upon or interpreted as legal, financial, tax, accounting, investment, commercial or other advice, and CRE Finance Council disclaims all liability for any such reliance. © 2021 CRE Finance Council. All rights reserved.
CFPB Publishes Small Business Lending Data Collection Rule
October 12, 2021
On October 8, the Consumer Financial Protection Bureau (CFPB) published its proposal to begin collecting data on applications for credit by small businesses, including those owned by women or minorities. The data collection rule is required by the Do

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