Layla Zulfa
The Mortgage Bankers Association (MBA) has issued a comprehensive policy roadmap, "Affordability in Action: A Policy Roadmap to Lower the Cost of Owning and Renting a Home," detailing a series of administrative and regulatory reforms designed to significantly reduce mortgage closing costs, broaden access to credit, and decrease the financial burden of building rental housing. This pivotal document, released at the MBA’s 2026 Annual Convention and Expo, outlines actionable steps that policymakers and regulators can implement in the immediate future, bypassing the need for extensive legislative overhauls.
The trade group’s extensive report identifies the current housing affordability challenges as a complex interplay of supply-and-demand imbalances, exacerbated by an accumulation of outdated regulations, redundant paperwork, and costly compliance requirements. These factors, the MBA argues, inflate costs without necessarily enhancing the stability or security of the housing finance system.
"MBA and its members are continuously working with policymakers to advance solutions that lower housing costs. This paper builds on that advocacy by laying out focused steps policymakers can take now," stated Bob Broeksmit, MBA president and CEO, in a prepared statement. "These recommendations would reduce unnecessary costs, expand access to responsible credit, support the development of more housing, and strengthen the housing finance system for the long term."
Owen Lee, MBA chairman and CEO of Success Mortgage Partners Inc., echoed these sentiments, emphasizing that the proposed measures directly address expenses that ultimately contribute to higher mortgage rates, inflated closing costs, and rising rental prices. "These are practical, achievable steps that can help make housing more affordable while maintaining responsible lending standards and supporting a stronger housing supply," Lee remarked.
The MBA’s policy roadmap is strategically structured around five core priorities: reducing mortgage closing costs, expanding access to responsible credit, lowering the financing costs associated with rental housing development, increasing the overall supply of affordable housing, and fortifying the resilience of the housing finance system.
Streamlining Credit Reporting and Loan-Level Adjustments
A significant area of focus within the MBA’s proposals involves the elimination of Fannie Mae’s and Freddie Mac’s requirement for lenders to obtain a tri-merge credit report for the majority of borrowers. The association contends that this mandate, coupled with limited competition in the credit reporting sector, has led to a staggering threefold to fourfold increase in tri-merge credit report costs over the past five years. This escalation directly impacts borrower expenses at closing.
To mitigate these costs, the MBA proposes permitting lenders to utilize a single credit report for borrowers possessing credit scores exceeding 700. The option to procure additional reports would remain for higher-risk loans, ensuring continued prudent lending practices. The association estimates that this adjustment could save hundreds of dollars in third-party fees for a substantial segment of borrowers who already demonstrate a low risk profile.
Furthermore, the MBA is advocating for a reduction and alignment of Loan-Level Price Adjustments (LLPAs) imposed by the government-sponsored enterprises (GSEs). These adjustments, levied on mortgages based on borrower credit profiles and loan characteristics, can significantly increase a borrower’s financial burden. The report illustrates that a modest quarter-point reduction in LLPAs on a $400,000 home purchase loan could translate to savings of $1,000 for a borrower at closing.
Reforming Mortgage Insurance and Modernizing Valuation Methods
The trade group is also urging a modest reduction in the annual mortgage insurance premiums (MIPs) charged by the Federal Housing Administration (FHA). To safeguard the financial integrity of the FHA insurance fund, the MBA suggests implementing underwriting adjustments for loans exhibiting multiple risk factors, such as low credit scores, high debt-to-income ratios, and limited cash reserves. A reduction of 20 basis points in FHA annual MIPs on a $400,000 loan could result in annual savings of nearly $800 for a borrower, according to the report.
Beyond credit reporting and insurance premiums, the MBA advocates for the expanded and responsible utilization of Automated Valuation Models (AVMs) and artificial intelligence-assisted underwriting. These technological advancements are seen as crucial for reducing manual processing costs and accelerating the loan origination timeline. The association also calls for the modernization of title insurance processes. Given that title insurance costs typically range from 0.5% to 1% of a home’s purchase price, the MBA proposes streamlined coverage options designed to eliminate duplicative processing without compromising essential protection against legitimate title risks. This could lead to substantial savings for homebuyers.
Revising Loan Originator Compensation and Modernizing Loan Terms
A key recommendation from the MBA involves the revision of loan originator compensation rules. The association argues that current regulations can hinder lenders’ ability to compete effectively on rates and fees, and may even discourage the offering of lower-cost products such as construction loans, down payment assistance programs, and assumable mortgages.
"Current compensation rules prevent lenders from reducing a loan officer’s compensation in order to offer a borrower a lower rate or reduced fees when a borrower brings a competing offer to the table," the report explains. "This makes it harder for lenders to compete on rate if they can’t lower their costs on the loan." By allowing for more flexibility in compensation structures, lenders could be better positioned to offer more competitive pricing to consumers.
The trade group also supports the implementation of streamlined refinancing processes for qualified borrowers with Fannie Mae and Freddie Mac-backed loans. Furthermore, they advocate for targeted amendments to the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) to reduce compliance burdens and mitigate delays in the closing process.
Enhancing Programs for Veterans and Rental Housing Development
For the nation’s veterans, the MBA is pushing for a more flexible framework for the Department of Veterans Affairs’ (VA) Interest Rate Reduction Refinance Loan (IRRRL) program. This includes the elimination of the 36-month recoupment requirement in certain circumstances. Additionally, the MBA recommends aligning underwriting standards for manufactured housing and veterans to broaden financing options for this segment of the market.
In the realm of rental housing, the MBA calls for enhancements to Fannie Mae and Freddie Mac’s multifamily lending programs. They also advocate for a reduction in administrative burdens associated with FHA multifamily and healthcare lending, while emphasizing the importance of maintaining access to private investment capital for these sectors.
Expanding Affordable Housing Supply and Strengthening Finance
To bolster the supply of affordable housing, the MBA proposes increasing financing availability for condominiums and construction projects. They also recommend modernizing the FHA’s 203(k) rehabilitation loan program and tailoring Davis-Bacon prevailing wage requirements to federal housing programs.
The association supports state and local tax incentives designed to encourage affordable housing construction. Conversely, they express opposition to rent-control mandates and extended eviction moratoriums, arguing that such policies can disincentivize investment and ultimately constrain the supply of rental units.
Addressing Bank Capital Requirements and Private Funding
The final set of recommendations from the MBA focuses on bank capital requirements and the revitalization of private sources of mortgage funding. The association suggests adjusting bank capital requirements for mortgage servicing assets and warehouse lending lines. These adjustments, they argue, would more accurately reflect the inherent risks, potentially freeing up capital for mortgage lending and fostering increased competition within the market.
Furthermore, the MBA aims to reignite the private-label mortgage-backed securities (MBS) market by advocating for changes to Securities and Exchange Commission (SEC) disclosure requirements. The MBA believes these modifications could expand mortgage funding sources and improve pricing, particularly for borrowers who do not fit within the conventional conforming loan market. This initiative is seen as a critical step in diversifying the mortgage finance landscape and ensuring broader access to capital for a wider range of borrowers.
