PUB 20 ISSUE 4 NEW MEXICO PUBLISHED BY NEW MEXICO BANKERS ASSOCIATION, FOUNDED IN 1906 PHOTO BY: JIM RENFROW Winter Travels By Mark Horn Page 6 What Is ESG? A Brief Overview By John W. Anderson Page 8 America’s Persistent Housing Crisis By Mark Anderson Page 16
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OVER A CENTURY: BUILDING BETTER BANKS — HELPING NEW MEXICO REALIZE DREAMS The mission of the New Mexico Bankers Association (NMBA) is to serve member bank needs by acting as New Mexico banking’s representative to government, the public and the industry; providing resources, education and information to enhance the opportunities for success in banking; promoting unity within the industry on common issues; and seeking to improve the regulatory climate to the end that banks can profitably compete in the providing of financial and related products and services. ©2024 The New Mexico Bankers Association (NMBA) | The newsLINK Group, LLC. All rights reserved. The New Mexico Bankers Digest is published four times each year by The newsLINK Group, LLC for NMBA and is the official publication for this association. The information contained in this publication is intended to provide general information for review, consideration and education. The contents do not constitute legal advice and should not be relied on as such. If you need legal advice or assistance, it is strongly recommended that you contact an attorney as to your circumstances. The statements and opinions expressed in this publication are those of the individual authors and do not necessarily represent the views of the NMBA, its board of directors, or the publisher. Likewise, the appearance of advertisements within this publication does not constitute an endorsement or recommendation of any product or service advertised. The New Mexico Bankers Digest is a collective work, and as such, some articles are submitted by authors who are independent of NMBA. While the New Mexico Bankers Digest encourages a first-print policy, in cases where this is not possible, every effort has been made to comply with any known reprint guidelines or restrictions. Content may not be reproduced or reprinted without prior written permission. For further information, please contact the publisher at 855.747.4003. PRESIDENT’S MESSAGE 6 WINTER TRAVELS By Mark Horn, President, New Mexico Bankers Association EXECUTIVE VICE PRESIDENT’S MESSAGE 8 WHAT IS ESG? A BRIEF OVERVIEW By John W. Anderson, Executive Vice President, New Mexico Bankers Association WASHINGTON UPDATE 12 AGAINST A RISING TIDE OF REGULATION, BANKS MUST ROW TOGETHER By Rob Nichols, President and CEO, American Bankers Association 14 FROM VISION TO VELOCITY: THE MAKING OF THE FEDNOW SERVICE By Jay Kenney, SVP & Southwest Regional Manager, PCBB 16 AMERICA’S PERSISTENT HOUSING CRISIS By Mark Anderson, NMBA Legal and Legislative Assistant 19 NEW MEXICO MORTGAGE FINANCE AUTHORITY’S PROGRAMS ASSIST WITH HOMEOWNERSHIP, WEATHERIZATION AND REHABILITATION By Kristie Garcia, New Mexico Mortgage Finance Authority 22 IN MEMORIAM 23 BANK NEWS Our Mission Contents President Mark Horn Pinnacle Bank 107 E. Aztec Ave. Gallup, NM 87301 President-Elect Kyle Beasley Bank of Albuquerque 100 Sun Ave., NE, Suite 500 Albuquerque, NM 87109 Secretary Treasurer Elizabeth Earls U.S. Bank, NA 1900 Jefferson, NE Albuquerque, NM 87109 Immediate Past President David Hockmuth Wells Fargo Bank, NA 200 Lomas, NW Albuquerque, NM 87102 TERMS EXPIRING 2024 Paul Mondragon Bank of America, NA 4401 Central Ave., NE Albuquerque, NM 87108 Jay Jenkins CNB Bank PO Box 1359 Carlsbad, NM 88220 Jason Wyatt Western Commerce Bank 212 North Canal St. Carlsbad, NM 88220 TERMS EXPIRING 2025 Scott Czarniak First National 1870 7300 Jefferson St., NE Albuquerque, NM 87109 Aaron Emmert Pioneer Bank 3000 N. Main St. Roswell, NM 88201 Kamal Ali PNC Bank 2494 Louisiana Blvd., NE Albuquerque, NM 87110 TERMS EXPIRING 2026 Renanah Taylor Bank of Montreal 303 Roma St. NW, Suite 100 Albuquerque, NM 87102 J. Chesley Steel Southwest Capital Bank 1410 Central Ave., SW Albuquerque, NM 87104 Max Myers Century Bank 100 South Federal Pl. Santa Fe, NM 87501 2023-2024 NMBA Board of Directors 5
PRESIDENT’S MESSAGE MARK HORN President New Mexico Bankers Association Upon assuming the role of president of the association, my predecessors had shared their experiences of the annual statewide journey undertaken before each legislative session. Initially, their descriptions left me uncertain about what to expect from this tradition. However, having completed the journey, I can now affirm its value and wish to share my insights. The purpose of this annual expedition is to facilitate discussions between community bankers, state legislators and other stakeholders regarding impending legislation and regional affairs. More than a mere exchange of views, I discovered that these interactions served as a practical lesson in civics and community engagement. The journey commenced in Gallup, my hometown, located on the state’s western border, and extended to Carlsbad, situated along the Pecos River. In Carlsbad, the impact of the oil and gas industry was unmistakable, evidenced by bustling roadways and a surge in construction activities. Our next destination was Roswell, a city renowned for its extraterrestrial folklore. However, our focus was grounded in reality, discussing the town’s bid to host the Reno Air Races, an initiative that was met with remarkable enthusiasm and concerted effort. The final meeting in this leg took us to Clovis, where the juxtaposition of Cannon Air Force Base against the agricultural backdrop of Curry County presented a striking scene. The subsequent segment of the tour encompassed Farmington, Santa Fe and Albuquerque. In Farmington, discussions with local bankers revealed common challenges and aspirations, particularly concerning rural healthcare and economic development. Santa Fe, the state capital, greeted us with a cooler climate but warm hospitality. A notable aspect of our visit was understanding the significant role of the art industry in Santa Fe’s economy and its global influence. Our journey concluded in Albuquerque, a city distinguished by its diversity. Meetings with local bankers and legislators underscored how this diversity is mirrored in the city’s population. Throughout these visits, it became clear that while each community has unique economic drivers, challenges and success stories, they are united by their people. The residents of these areas embody the essence of what they represent. The dedication of our volunteer legislators in shaping growth-stimulating policies, coupled with the efforts of bankers in supporting local entrepreneurs, homeowners, farmers and students, was palpable. This tour rekindled my understanding of civics as the study of our rights and duties as citizens. Witnessing the grassroots efforts of bankers collaborating with legislators demonstrated a vivid example of civic engagement. In summary, this journey across New Mexico has not only enriched my perspective but also reinforced the value of community involvement in shaping a better future. This special place, inhabited by remarkable people, exemplifies the true spirit of civic responsibility and communal growth. WINTER TRAVELS 6
Throughout these visits, it became clear that while each community has unique economic drivers, challenges and success stories, they are united by their people. The Advisors’ Trust Company® Zia Trust, Inc. 505.881.3338 www.ziatrust.com 6301 Indian School Road, Suite 800, Albuquerque, NM 87110 It’s an honor to serve residents of The Land of Enchantment, and clients in 41 other states. We’ll Meet You. even out Here. Our team of Trust Officers and 3 local offices provide fiduciary services across the state. We work alongside your clients’ investment advisor Bisti Badlands, De-Na-Zin Wilderness Area, New Mexico 7
EXECUTIVE VICE PRESIDENT’S MESSAGE JOHN W. ANDERSON Executive Vice President New Mexico Bankers Association WHAT IS ESG? A BRIEF OVERVIEW
One of the more controversial and contentious legislative issues addressed by various state legislatures in 2023 concerned ESG-related legislation. But what actually is ESG? It stands for environmental, social and governmental. It is a concept used by investors in capital markets to measure the sustainability and ethical impact of an investment in a company. According to Kyle Peterdy, vice president at CFI, “ESG is a framework that helps stakeholders understand how an organization is managing risks and opportunities related to environmental, social and governance criteria. ESG takes the holistic view that sustainability extends beyond just environmental issues. While the term ESG is often used in the context of investing, stakeholders include not just the investment community but also customers, suppliers and employees, all of which are increasingly interested in how sustainable an organization’s operations are.” Environmental criteria examines how a business performs as a steward of the natural environment, focusing on: • Waste and pollution. • Resource depletion. • Greenhouse gas emission. • Deforestation. • Climate change. Social criteria looks at how the company treats people and concentrates on: • Employee relations and diversity. • Working conditions. • Local communities — seeks explicitly to fund projects or institutions that will serve poor and underserved communities globally. • Health and safety. • Conflict. Governance criteria examines how the company is governed and focuses on: • Tax strategy. • Executive renumeration. • Donations and political lobbying. • Corruption and bribery. • Board diversity and structure. The Federal government has been active in the ESG space recently. The August 2022 passage of the Inflation Reduction Act infused significant investment into ESG-related initiatives, with a particular focus on clean energy. Earlier in 2023, the Department of Labor also passed a final rule permitting the use of ESG factors in corporate retirement plans. The SEC has worked through new ESG-related disclosure rules. The Commission finalized cybersecurity risk management disclosure rules, requiring companies to make timely disclosure of cybersecurity incidents and to offer more robust information about risk oversight and management. While the SEC has not yet finalized the significant climate disclosure rules proposed last March, they remain on the Commission’s agenda, and indications are that they will reach finalization. The SEC’s agenda also includes finalization of proposed rules requiring additional information from investment funds regarding their ESG investment practices, and changes to the “Names” Rule to ensure that ESG investing strategies are appropriately disclosed. Proposals for new rules relating to corporate board diversity and human capital management also remain on the SEC’s short-term agenda. Other agency activity includes the Federal Trade Commission’s current undertaking to update its “Green Guides” on the use of environmental claims. As noted by Leah Malone, an attorney with Simpson, Thacher & Bartlett LLP, “The backlash against ESG in the United States has been unmistakable in 2023. More than one-third of states have passed anti-ESG laws in 2023, most ESG-related shareholder proposals failed to garner majority support, new lawsuits have been filed challenging companies’ ESG-related activities and decisions, and some companies seem to be distancing themselves from the term ‘ESG’ itself.” 9
One of the more controversial and contentious legislative issues addressed by various state legislatures in 2023 concerned ESGrelated legislation. New state laws vary in their approach to limiting ESG considerations in decision-making. Most requirements focus on state pension plans or other investments, proxy voting and state contracts. Some laws, as in Montana, require that investment decisions only be made based on financial factors. Laws in Utah penalize companies deemed to boycott certain industries based on ESG factors. States with new laws include Alabama, Arkansas, Florida, Idaho, Indiana, Kansas, Kentucky, Montana, New Hampshire, North Carolina, North Dakota, Texas, Utah and West Virginia. Legislation in Kansas and Kentucky limits the use of ESG in public retirement system investments. An Indiana law prohibits the public retirement system from contracting with service providers that make ESG commitments. Idaho law prohibits banks and credit unions that hold state funds from boycotting certain industries, including fossil fuels and guns. The law denies a boycott as penalizing or limiting services in some sectors without a reasonable business purpose. Florida and Texas have been particularly involved with anti-ESG legislation. In Florida, public or state-controlled funds can no longer be invested based on environmental, social or governance factors. The law (HB 3) directs all Florida pension funds to prioritize returns without considering ESG factors in investment decisions. The law also prohibits Florida municipalities from selling bonds that are tied to ESG projects or impose restrictions tied to ESG ratings. The law creates new unsafe and unsound practice standards for financial institutions, prohibiting the denial or cancellation of services to current or prospective customers, or otherwise discriminating against customers, on the basis of any rating, scoring, analysis, tabulation or action that considers a social credit score based on (a) engagement in the lawful manufacture, distribution, sale, purchase or use of firearms or ammunition or (b) engagement in the exploration, production, utilization, transportation, sale or manufacture of fossil-based energy, timber, mining or agriculture. HB 3 requires financial institutions to attest their compliance with the new “unsafe and unsound practice” standards under penalty of perjury. A financial institution’s failure to comply with the bill’s “unsafe and unsound practice” standards or attestation requirement will constitute a violation of the relevant Florida statute and subject the financial institution to sanctions and penalties under Florida’s financial institutions codes. Under HB 3, a violation of an “unsafe and unsound practice” by a Florida-licensed financial institution will also constitute a violation of the Florida Deceptive and Unfair Trade Practices Act. In Texas in 2021, legislation was approved that prevented Texas from investing in environmental, social and governance financial products that boycott Texas energy companies. The law affected the state’s six pension funds, including the Employees Retirement System and the Teacher Retirement System of Texas, which, at the time, managed over $200 billion. Under the law, Texas’ public pension funds would be required to “sell, redeem, divest or withdraw all publicly traded securities of any financial company” that “boycotts energy companies.” The bill defines “boycotts energy companies” as “refusing to deal with, terminating business activities with, or otherwise taking any action that is, solely or primarily, intended to penalize, inflict economic harm on, or limit commercial relations with a company because the company: engages in the exploration, production, utilization, transportation, sale or manufacturing of fossil fuel-based energy and does not commit or pledge to meet environmental standards beyond applicable federal and state law; or does business with a company described above.” The law tasks the Texas Comptroller with keeping track of the financial institutions and companies that are banned from doing business in Texas. The 2021, the Texas Legislature also enacted a similar boycott bill on firearms. Multiple states, including Oregon, Connecticut, Illinois, Maryland and Maine, have enacted legislation allowing consideration of ESG factors in the investment decision-making process. These states also promote the implementation of sustainable investment policies, and Maine’s law is designed to divest from industries like fossil fuels. State pension funds in California, New Jersey, New York and Oregon follow similar policies. For example, New Jersey’s policy requires that fund managers engage in an ESG analysis of factors that present material business risks and opportunities, including carbon gas emissions, climate change, workforce diversity, human rights and fair wages. There is a widening division between states regarding ESG investing. Many states absolutely oppose ESG, citing the need to consider only what monetary gain may come out of the investment, whereas other states see ESG-like investments as an opportunity to promote societal and environmental goals in combination with future financial considerations. It seems an absolute certainty that the 2024 state legislative session will witness a widening of that divide. 10
ROB NICHOLS President and CEO American Bankers Association WASHINGTON UPDATE AGAINST A RISING TIDE OF REGULATION, BANKS MUST ROW TOGETHER 12
henever a new election cycle comes along, it’s not uncommon to hear pundits make mention of “red waves” or “blue waves,” denoting potential power swings in Congress. But as bankers contemplate the future of our country and the policy environment that will shape the future of our industry, there’s another wave that we need to talk about: a tsunami of complex regulation that is hitting the banking sector as we speak. To be sure, the tide turned quickly: last year’s turbulent spring ignited a rulemaking frenzy at the banking agencies. Suddenly, new proposals sprang up to increase bank capital levels, impose a new long-term debt requirement and make the resolution planning process more complex. Simultaneously, the CFPB imposed long-awaited small business reporting requirements under Section 1071 of the Dodd-Frank Act — which went far above and beyond what was outlined in the statute. The Federal Reserve issued a proposal to cap interchange fees under Regulation II, and the FDIC is now pursuing significant changes to its corporate governance guidelines. Against all that, the agencies finalized a long-awaited update to the Community Reinvestment Act framework — a staggeringly complex, 1,500-page final rule that creates significant new requirements that have the potential to fundamentally alter banks’ business strategies. Meanwhile, in Congress, banks are facing the resurgent threat of the socalled “Credit Card Competition Act,” which would apply Durbin Amendmentlike provisions to credit cards — the equivalent of lawmakers taking money from banks and putting it into the cash registers of mega-retailers. Taken together, these policies place a tremendous cost and compliance burden on banks of all sizes — at a time when they are already facing a tough operating environment due to a protracted period of high interest rates and ongoing geopolitical tensions. These policies will also have devastating effects on consumers. Banking is, after all, a business — and in order for banks to offer the full range of financial products and services to meet the needs of communities, they need to be profitable and have an operating environment that supports growth. The current regulatory landscape will do the opposite. Banks that are already considered well-capitalized by regulators’ own admission will be forced to hold even more capital in reserve — which means less capital will be available to lend to the local small business looking to expand or to the young family looking to buy their first home. Simultaneously, changes to the fee income streams upon which banks have long depended could spell the end of free or low-cost checking products and popular rewards programs that consumers value. What’s perhaps most concerning, however, is the fact that regulators don’t seem to understand the full impact of their actions. As we observed with the Reg II rulemaking and the so-called “Basel III endgame” proposal, regulators are failing to adequately assess the potential costs of the individual regulations on banks and consumers — let alone contemplate what the cumulative impact of all these rules would be. ABA is sounding the alarm. We need to make sure policymakers in Washington — from members of the administration to lawmakers in Congress to the regulators holding the rule-writing pens — understand that the regulatory burden has a real-world cost, not just for banks, but for consumers, small businesses and the American economy. If you’re reading this, I urge you to help us tell that story. Join our Bank Ambassador program to rekindle relationships with your congressional delegation and help educate policymakers about banking. Stay informed and send a letter about an issue that will affect your bank through ABA’s grassroots platform, SecureAmericanOpportunity.com. Make a plan to come to the nation’s capital in March for the ABA Washington Summit and tap a colleague or two to come along. The sobering reality for banks right now is that rougher seas are likely ahead — but our best hope is to row together. Email Rob at nichols@aba.com. To learn more about the Bank Ambassador program, email ABA’s Laura Lily at llily@aba.com. What’s perhaps most concerning, however, is the fact that regulators don’t seem to understand the full impact of their actions. W 13
THE MAKING OF THE FEDNOW SERVICE By Jay Kenney, SVP & Southwest Regional Manager, PCBB FROM VISION TO VELOCITY It was important for everyone to know that any payment would be settled, final and irrevocable — and that it would happen within seconds. We also needed to make sure that the laws of our country supported what we were trying to bring forth, that we had sufficient rules so everyone knew what was expected, and that everyone could play by the same rules, regardless of whether there were multiple operators. The work of the task force was extremely inclusive. Banks and credit unions of all sizes were able to be engaged, but it wasn’t just the financial institutions. Everyone was invited to the table, including core providers, fintechs and software developers who were looking to develop applications for this new great idea of a payment system. We also had some of the largest merchants at the table, as well as consumer advocacy groups, rulemaking bodies like the National Automated Clearinghouse Association (NACHA) and credit card associations. What did you learn while you were developing the FedNow Service? There were many other countries that jumped into instant payments before the U.S. did, as their economies are far less complex than ours. So as a self-professed payments geek, I’d always cringe a little bit when people would say, “Oh, the U.S. is so far behind.” I’m thinking, no, we were very thoughtful and methodical with our approach, and I think that was an important thing for us to do as a country. In addition, we heard, and maybe even thought to ourselves to a certain degree early on, that faster payments meant faster fraud. But quite frankly, we’re not seeing that. It could be because it’s not yet mainstream, but we’re not seeing the The Federal Reserve’s FedNow® Service, an instant payments rail that launched this past July, was a long time in the making. As you dive into the faster payments space, you probably have a few questions about how the FedNow Service was created. What were the criteria, who was in the room and — most importantly — are you behind if your team hasn’t gotten started yet? We sat down with Sheila Noll, PCBB’s Chief Operating Officer, who served on the FedNow Service’s Faster Payments Task Force, to give you an inside look at how the FedNow Service was launched. With over 30 years of banking leadership experience and expertise in the payments space, Sheila is a current or former member of many committees in the payments sector, including the ICBA Operations & Payments Committee, the Clearing House RTP® Advisory Committee and the Faster Payments Council Advisory Board. The following is an abbreviated version of our longer interview. Tell us about the work that went into building the FedNow Service payments rail. There were six major categories of criteria that the Faster Payments Task Force considered: ubiquity, efficiency, safety, soundness, security and speed. 14
faster fraud because there’s less time for fraud to be introduced into a payment. What advice do you have for community banks that have already started to implement a faster payment method? It’s just getting everyone from every part of the organization thinking about, “OK, what’s next? What else can we do to better serve our customers?” Continually seek additional use cases that will make sense because solutions will come to market that will support new use cases we have not even thought of yet. Just keep learning, keep talking to your partners, and there will be even more opportunities as time goes by. Certainly, talk to your customers about what friction and what problems can be solved with faster payments. What do you recommend for community banks that haven’t chosen a faster payment method? I would say take a big, deep breath — there’s plenty of time. We truly are still in the infancy as it relates to deploying a solution. However, if you are not yet spending time learning about faster payments, then you’re getting a little behind. If you have not started to build a Jay Kenney SVP & Southwest Regional Manager for PCBB pcbb.com | jkenney@pcbb.com payment strategy around this, it’s very critical that you start doing that sooner rather than later. Moreover, there’s value in keeping your contracts with core providers and fintechs short because things are going to change dramatically in the next two to three years, and you want to be able to adapt to those things. Whenever or however a community bank decides to participate in faster payments, there are many resources available. The Federal Reserve will launch a tech-centric developer resource for participating financial institutions to access documentation, such as the recently updated operating procedures, technical specifications, as well as code and message samples to assist with service implementation. There are also correspondent banks available to help, some of which were even involved in the FedNow Pilot Program. To read more and learn about how the task force worked through the development process and how the U.S. may solve the national directory and interoperability issue, as well as specific faster payment use cases that community banks should consider, check out the white paper under the industry insights section of our website. To continue this discussion or for more information, please contact Jay Kenney. Dedicated to serving the needs of community banks, PCBB’s comprehensive and robust set of solutions includes cash management services such as Settlement and Liquidity for the FedNow Service, international services, lending solutions and risk management advisory services. 15
AMERICA’S PERSISTENT HOUSING CRISIS By Mark Anderson, NMBA Legal and Legislative Assistant A constant subject in American economic and political media discourse is the question, “Why do many average Americans not seem to agree when economists, politicians and pundits insist that the American economy is strong and showing signs of serious growth and improvement?” There is a persistent chasm between the positive economic news that is presented in the media and the stress and anxiety that most Americans claim to feel on a daily basis. Particularly since the 2008 recession, it feels as if there is a constant tug of war between economic analysts — who often cite topline economic numbers such as GDP growth, unemployment rate and the success of the S&P 500 — and everyday American citizens — who are burdened by soaring housing costs, wages that fail to rise with inflation, enormous health care costs and overall inflation from the past few years. This tug of war exists because the two factions essentially experience and, ultimately, process two completely different realities. A decent analogy for the current predicament of the American economy would be trying to get one’s health in order while ignoring multiple serious underlying problems. It’s difficult to have working out or eating better have any positive effect if you have an overriding health condition so serious that it renders these other actions irrelevant. It’s difficult not to conclude that the American economy faces a similar existential crisis. The American economy is capable of explosive growth at the top, producing an astounding number of billionaires 16
and world-renowned corporations, but its fundamentals — such as wages, housing costs, education, healthcare and transportation costs — have been abandoned, leaving countless regular Americans increasingly fraught and anxious economically. To use another analogy, America’s economy is like a basketball player who can throw down spectacular dunks but struggles to shoot and dribble competently. Housing costs may be the greatest source of instability in our economy, as housing is perhaps the most fundamental aspect of maintaining a functioning, thriving society. On that note, in October 2023, U.S. existing home sales dropped to the lowest level in more than 13 years. According to Robert Frick, corporate economist at Navy Federal Credit Union, there are some obvious factors causing the drop in home sales. “The combination of high prices, high mortgage rates and millions of homeowners unwilling to move, given they’ve locked in low rates, has frozen the market.” According to a Reuters article from November 21 of last year, “The rate on the popular 30-year fixed-rate mortgage averaged 7.31% in the final week of September, before peaking at 7.79% in late October, the highest level since November 2000, according to data from mortgage finance agency Freddie Mac.” The housing market has been most dramatically affected by the U.S. Federal Reserve’s relentless monetary policy tightening. Minutes from a late October Federal Reserve meeting indicate that multiple participants expressed concern about a flattening housing sector caused by further increases in mortgage rates from already high levels, so, at the highest levels of the Fed, there’s clearly awareness of the cascading effects of the monetary policy it’s pursuing. Furthermore, the housing crisis has been exacerbated since the COVID pandemic began in 2020, further tightening an already constricted housing market. As the Reuters article further details, “There were 1.15 million previously owned homes on the market last month, down 5.7% from a year ago. Most homeowners have mortgage rates under 5%, making many reluctant to sell. Before the pandemic, there were nearly 2 million homes for sale.” The lack of supply of previously owned homes is boosting demand for new homes. Additionally, there is a severe shortage of homes in the $100,000 to $250,000 price range. The sky-high mortgage rates combined with the lack of affordable supply have created a burgeoning housing crisis. As the Reuters article also explains, “Builders have been breaking more ground on new housing projects, but they are being constrained by the higher borrowing costs. With supply still tight, multiple offers were the norm in some areas, keeping house prices on an upward trend on a year-over-year basis. The median existing housing price rose 3.4% from a year earlier to $391,800, the highest for any October. About 28% of the homes sold last month (October 2023) above listing price.” Another telling statistic listed in the article is that first-time buyers comprised only 28% of sales in October, significantly short of the 40% that realtors say indicates a robust housing market. 17
In recent weeks, there have been articles claiming that the housing market is set for a huge rebound, but again, articles like these don’t live in the realm of what most Americans actually experience on the ground. As a recent article in CNBC details, “The average rate on the 30-year fixed has been on a wild ride since the start of the COVID pandemic. It hit more than a dozen record lows in 2020 and 2021, below 3%, causing a historic run on homebuying and a sharp rise in prices, only to then more than double in 2022. Rates hit a more than 20-year high in October 2023, hovering around 8% before falling back below 7% in December. Rates, however, are still twice what they were three years ago.” The optimism cited in the article is solely due to mortgage rates coming down from an already record high but still hovering at a colossal 7%. High mortgage rates combined with high median home prices still create a completely inaccessible housing market for most Americans. The optimism cited in the CNBC article is the type of fantasia meant to blunt how truly unmanageable the housing market in this country is for many people. Part of why the Fed’s recent monetary policy has created such an unwieldy housing market is their moves to tame inflation largely went after the wrong actors. Numerous studies have been done in the past year indicating that the principal cause of soaring inflation in 2021 and 2022 was corporate profiteering, companies choosing to raise prices exponentially simply because they could. Now, there were certainly other factors involved, but the continual raising of interest rates mostly served to make the housing market completely inaccessible while doing absolutely nothing about rampant corporate profiteering. As a result, we now have prices that are still extremely high in most sectors due to the inflation of previous years and a housing market that has gotten completely out of hand due to the Fed’s recent monetary policy. It’s not a sustainable formula for the average family. Housing becoming inaccessible to vast swaths of Americans has cascading effects. As a result, rent becomes far higher in most areas, as there is much more demand to rent in an extremely tight housing market. When rent and housing go up exponentially, then homelessness often goes up as well. On that note, a December report by the Department of Housing and Urban Development (HUD) found that more than 650,000 people nationally were living in shelters or outside in tents or cars. To put it in perspective, that is a shocking 12% increase from the year before. To homeless advocates, it’s sadly an expected outcome. “We simply don’t have enough homes that people can afford,” says Jeff Olivet, executive director of the U.S. Interagency Council on Homelessness. “When you combine rapidly rising rent, that it just costs more per month for people to get into a place and keep a place, you get this vicious game of musical chairs.” As a December NPR article about the HUD report details, “Homelessness has been rising since 2017 in large part because of the country’s massive shortage of affordable housing. There was a pause during the pandemic, and Biden administration officials say that’s because of sweeping federal aid that kept people from getting evicted. But, last year, in a triple whammy, that aid started running out. Inflation spiked to its highest level in a generation, and median rent hit a record high. Research has found that where rents rise, so does homelessness. This year’s big jump was driven by people who lost housing for the first time, which Biden administration officials say reflects the sharp rise in rent. The largest increase was among families, and the count also found a significant rise among Hispanics. Nearly 40% of the unhoused are Black or African-American, and a quarter are seniors. The annual count does not include the many people who couch surf with friends or family and who may be at high risk of ending up on the street.” In addition, many lower-income renters are paying more than half their income on rent, which is generally considered a serious indicator that someone could potentially fall into homelessness. Housing and homelessness are tests of a society’s priorities. Housing is fundamental to the security of families, and without it, it leads to myriad problems and children being exposed to incredible instability. Homelessness and housing insecurity rips at the fabric of a society and exposes its horribly skewed priorities. There’s absolutely no reason to have the level of homelessness we do in America. It’s a series of discreet policy choices that have been made over decades that have led to this point. One of the core reasons that media discourse about the unemployment rate and the S&P rings so hollow to so many Americans is that the fundamentals of their existence feel so unstable. And the number one sector contributing to insecurity is housing. When something as fundamental to one’s existence as a roof over your head feels unstable, it’s hard to feel confident in anything else. We haven’t prioritized the economic basics and our economic foundation in America, and as a result, everything feels wildly unstable. It’s a choice of our government to have everything feel that way, not some law of nature. It’s always important to remember that. 18
The New Mexico Mortgage Finance Authority (MFA) is a selfsupporting quasi-governmental entity that provides financing and housing programs for low- to middle-income New Mexicans. Using funding from housing bonds, tax credits and other federal and state agencies, MFA provides resources to build affordable rental communities, rehabilitate aging homes, supply down payment assistance and affordable mortgages, offer emergency shelter, and administer rental assistance and subsidies. MFA offers over 40 housing programs, including down payment assistance, weatherization and rehabilitation programs. In the pursuit of homeownership, Tai Wilson and her family achieved their dream last year with the help of MFA and one of its participating lenders, Nikki SandovalBelt of Cornerstone Home Lending in Farmington. MFA’s first-time homebuyer programs played a pivotal role in enabling Wilson and her family, as well as many others, to own their own home. “You have no idea how thankful I am for the MFA program,” said Wilson. “I’m super thankful, and I cannot believe I’m here in my own home with my kids. I’m super excited to work for something that’s going to be mine in the long run and hopefully my kids’ when they grow up.” In fiscal year 2023, MFA provided $388,294,000 in combined first mortgage and down payment assistance in the amount of 3,352 loans to 1,845 New Mexico families, which includes $12,301,805 for down payment assistance in the form of 1,807 loans and grants. Beginning in mid-January 2024, MFA introduced a third mortgage down payment assistance program designed to provide additional down payment funds to first-time homebuyers qualified to use MFA’s existing FirstHome program. Previous homeowners who have not owned and occupied a home as their primary residence in the past three years may also be eligible for the program. NEW MEXICO MORTGAGE FINANCE AUTHORITY’S PROGRAMS ASSIST WITH HOMEOWNERSHIP, WEATHERIZATION AND REHABILITATION By Kristie Garcia, New Mexico Mortgage Finance Authority
Homebuyer assistance is just one example of what MFA offers to New Mexicans across the housing continuum. Another program that targets existing homeowners is the NM Energy$mart Weatherization Assistance Program, which provides assistance to low-income households in reducing their energy consumption, lowering costs and improving their health and safety by implementing various energy-efficient measures in their homes. MFA administers the program through community-based nonprofit organizations offering statewide services. The NM Energy$mart Weatherization Assistance Program is funded by the U.S. Department of Energy (DOE), Low-Income Home Energy Assistance Program, New Mexico Gas Company, PNM, New Mexico Housing Trust Fund and El Paso Electric. The term “weatherization” is linked to DOE’s Weatherization Assistance Program, which was established by Congress in 1976, while “Energy$mart” is specific to New Mexico’s program. MFA has administered the Energy$mart weatherization program in the state since 1997. At its November meeting, the MFA Board of Directors approved $3.5 million in funding from the New Mexico Housing Trust Fund to support solar systems for homes that are receiving NM Energy$mart Weatherization Assistance Program services. This first round of funding for solar will be used by the multifamily service provider, as well as the singlefamily home service provider in the Las Cruces area. Homeowners who have been on the service provider’s waiting list for weatherization services will be prioritized. The solar program will be expanded to the rest of the state as funding becomes available. The MFA Board of Directors also approved funding of approximately $4.96 million during its October meeting, supporting services in Tribal Territories as part of the NM Energy$mart Weatherization Assistance Program. Central New Mexico Housing Corporation will serve the Pueblo Territory, all tribes and pueblos except for the Navajo Nation, while Red Feather Development Group will serve the Navajo Nation Territory. At a celebration of energy efficiency, a home that benefited from the NM Energy$mart Program was highlighted at the New Mexico Weatherization Day event in Mescalero in October 2023. One of MFA’s dedicated service providers, the Southwestern Regional Housing and Community Development Corporation, performed energy-efficient upgrades to the showcased home. This transformative project includes the addition of water heater and pipe insulation, energyefficient LED lighting, air sealing for drafts, lowflow showerheads, carbon monoxide detectors, smoke detectors, venting correction, an electrical upgrade and mechanical ventilation. The home also received energy-efficient windows, a door and a refrigerator. The old propane-fueled furnace was replaced with a highly efficient heat pump that uses a less expensive fuel source. In addition to weatherization, MFA offers homeowner rehabilitation services. The HOME Rehabilitation Program provides repairs to bring the home up to code or accessibility modifications for homeowners who lack the resources to do so. Services include: • Hazard reduction measures, such as the installation of ramps or rails in bathrooms for elderly or disabled individuals who are at risk of falling. • Accessibility modifications for individuals with disabilities that include the installation of handrails and ramps or widening doors. • Repair or replacement of major housing systems such as furnaces, ducting or water heaters. • General and essential property improvements that are non-luxury in nature, including roof replacement and mobile home replacement. • Measures needed to bring a home up to code or into compliance. • Energy-saving measures that help improve the efficiency of the heating and cooling of the home and reduce utility costs. • Utility connections. 20
In the pursuit of homeownership, Tai Wilson and her family achieved their dream in 2023 with the help of the New Mexico MFA and one of its participating lenders, Nikki Sandoval-Belt of Cornerstone Home Lending in Farmington. MFA’s first-time homebuyer programs played a pivotal role in enabling Wilson and her family, as well as many others, to own their own home. (Photo courtesy New Mexico Mortgage Finance Authority) Attendees at the 2023 Weatherization Day event on October 30 visited a home in Mescalero, New Mexico, that benefited from the New Mexico Mortgage Finance Authority’s NM Energy$mart Weatherization Program. Southwestern Regional Housing and Community Development Corporation completed several weatherization projects at the home. (Photo courtesy New Mexico Mortgage Finance Authority) Thousands of New Mexicans’ dreams of owning a home have become a reality thanks to the New Mexico MFA’s homeownership programs. Opal StifflerWillhight, pictured with her daughter, Emilyn, became a homeowner in 2022 with assistance from MFA. (Photo courtesy Opal Stiffler-Willhight) A list of the most current home rehabilitation service providers is available on the MFA website at housingnm.org. Because it has historically been challenging to identify a home rehabilitation service provider in certain counties, MFA’s Board of Directors granted approval to provide services directly through the MFA Home Improvement Program (HIP) to serve communities in which there is currently no other active service provider. From February 1-28, 2024, MFA will accept applications from qualified individuals in certain counties whose homes need rehabilitation. Information about the program is available at housingnm.org. The HIP program allows for repair, reconstruction and rehabilitation of homes occupied by eligible incomequalified homeowners. These improvements include — but are not limited to — making energy-saving conservation improvements, eliminating health and safety hazards, enhancing accessibility for disabled or elderly persons, structural alterations and reconstruction, repair or replacement of major housing systems, adding or replacing roofing, reconditioning plumbing, installing or replacing a septic system and mobile home replacement. To preserve and improve existing affordable housing and catalyze redevelopment, MFA provided $116,219,000 to weatherize, rehabilitate, preserve or redevelop 1,577 homes in fiscal year 2023. “At MFA, we continue to do everything we can so New Mexicans will have safe, affordable housing opportunities,” said Isidoro Hernandez, MFA executive director/ CEO. “We are always willing to explore new, innovative programs to expand our reach and serve even more New Mexicans each year.” Overall, MFA’s fiscal year 2023 impact included: • $585,797,000 in total funding administered. • 18,963 households served. • 3,707 homes produced, financed or preserved. Down payment and closing cost assistance, weatherization and rehabilitation are just a few of the many programs MFA has to offer. For a complete list of MFA programs made available to provide safe, affordable housing to New Mexicans, visit housingnm.org. 21
IN MEMORIAM Highly Successful New Mexico Businessman Mack Chase Passes Away at 92 Successful New Mexico businessman Mack Chase passed away on October 2, 2023, in Artesia, NM, at the age of 92. Chase made his mark in the oil and gas industry and other endeavors, including Chase Farms, Chase Pecans, Caza Ranches and others. Mack was born April 29, 1931, the fourth of eight children to Edgar and Marie Chase. He was raised in Artesia, NM, and married the love of his life, Marilyn, in 1953 after returning from being an A&E mechanic in the U.S. Army. He worked with his elder brother, George, in the oil field for many years before branching out on his own, creating Mack Energy. Mack received numerous awards throughout his life, including the Artesia Chamber of Commerce Lifetime Achievement Award, the Permian Basin Top Hand Award, Oil & Gas Hall of Fame Inductee and a New Mexico Public Education Lifetime Achievement Award. Mack’s impact and generosity in Artesia will be felt for years from his support of many programs and projects, including Artesia Public Schools, Bulldog Bowl, Mack Chase Athletic Complex, Artesia Public Library and many more. Mack made Artesia a better place to live with his generosity in giving and making an impact on people’s lives. In 2006, Mack and Marilyn started the Chase Foundation with the primary goal of giving AHS students the opportunity to attend a college or university of their choice. Through today, this program has funded scholarships of 2,000 students with over 900 Artesia students with a college degree. Mack’s legacy in his scholarship program has changed a generation with these graduates becoming our future leaders. Mack loved to hunt, fish and spend time with his siblings, children, grandchildren and close friends. Mack loved his children and grandchildren dearly and would give wisdom to each at any opportunity or simply as a joke to make everyone laugh. Mack was always the prankster and wanted to put a smile on everyone’s face. 22
BANK NEWS chairman in his nearly 40 years in the Legislature. “I hope I represented the people in my district well, and that’s all my job was about. Anything I did, I hopefully was very helpful to my Senate district and the schools in my district,” Ingle said. Both Republican and Democrat Senate colleagues said Ingle has been a mentor with a wealth of institutional knowledge. “Stuart was probably the last of the great statesmen in the New Mexico Legislature,” said William Payne, a retired senator who served as minority whip while Ingle was minority leader. Ingle took Senator Pete Campos, D-Las Vegas, under his wing when Campos was a freshman senator almost 32 years ago. Ingle taught him about budgeting, policy setting and building consensus among people with different points of view, Campos said. “Senator Ingle has been a very fair, pragmatic and visionary senator throughout his career,” Campos said. “He has worked efficiently and effectively. He’s worked in a very pragmatic, reasonable and fair way across the aisle, and most importantly, with legislators from both houses and every governor that has come to serve the state of New Mexico.” While Ingle was effective at moving stalled legislation forward and cutting through the complexity of a myriad of issues, Campos said he may be remembered most for communicating every step of the way with both sides of the aisle. Senator Mark Moores, the current Senate Minority’s caucus chair, summed Ingle up well. “You could never pull the wool over Stuart’s eyes,” said Moores. Governor Michelle Lujan Grisham has appointed Greg Nibert from Roswell to replace Ingle. Nibert has previously served in the New Mexico House of Representatives. UNM Names Next Dean of Anderson School of Management The University of New Mexico has named a top business school leader from Bentley University as the next dean of the Anderson School of Management. Alina Chircu will take over her new position on April 8. She currently works as a professor in the Computer Information Systems Department at Bentley University in Waltham, Massachusetts. During her time at the institution, she also served as interim dean of business. She, at one point, managed all aspects of the business school, which has more than 150 full-time faculty members in nine academic departments. She was a member of the university president’s cabinet and was involved in high-level decisions and strategy sessions in that role. As an associate dean at Bentley, Chircu stabilized an enrollment decline and increased revenue by 12%, according to a UNM news release. Chircu’s teaching and research interests include business process and value chain management, design thinking, digital transformation and other topics. She has a Ph.D. in business administration from the Carlson School of Management at the University of Minnesota and bachelor’s and master’s degrees in computer systems modeling and simulation from the University of Bucharest in Romania. “The Anderson School of Management and its exceptional staff and students have a long history of working collaboratively with alumni and the larger business community in New Mexico,” she said. “I look forward to continuing and amplifying these efforts and helping Anderson play a lead role in education, entrepreneurship and economic development not only in New Mexico by also regionally and nationally.” Former NMBA President Ken Clayton Serving as Vice-Chair of ABA Government Relations Committee Ken Clayton, CEO and President of Western Bank Artesia and former NMBA President, is serving as vice-chair of the ABA Government Relations Committee and will serve as the committee chair in 2024. Elizabeth Earls, New Mexico Bank and Trust, represents New Mexico as a member of the ABA Emerging Leaders Council. New Mexico State Senator and Friend to NMBA Stuart Ingle Retires Senator Stuart Ingle, who was New Mexico’s senior state senator, resigned his seat effective immediately on October 24, 2023. Ingle represented Chaves, Curry, De Baca, Lea and Roosevelt counties in District 27 and has served as a state senator since 1985. Ingle said he is resigning to spend more time with his family and that it is time for him to move on with the rest of his life. “I’ve been fortunate enough to be elected for 10 terms, and that’s probably enough,” Ingle said. Ingle has spent much of his time in the Senate in leadership positions, serving as minority leader, whip and caucus 23
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