BAM Key Details:
- The Mortgage Bankers Association (MBA) released 20 policy recommendations aimed at lowering housing costs, expanding access to mortgages, and increasing housing supply.
- Proposed fee reductions could save borrowers $1,000 upfront on a $400,000 mortgage or nearly $800 annually in FHA mortgage insurance.
- None of the proposals are currently in effect, but MBA says federal agencies could implement them without new legislation from Congress.
A new 20-point housing affordability roadmap from the Mortgage Bankers Association (MBA) lays out changes federal regulators could put into place to make housing more affordable. The roadmap titled “Affordability in Action: A Policy Roadmap to Lower the Cost of Owning and Renting a Home,” includes everything from cutting mortgage fees and simplifying refinancing to opening more doors for first-time buyers.
Some of the potential savings outlined are substantial: $1,000 off closing costs on a $400,000 loan, or nearly $800 a year in FHA mortgage insurance alone.
Here’s what’s on the table, how the proposed changes could affect your clients, and what real estate agents should be paying attention to.
Lowering the Upfront and Monthly Cost of a Mortgage
The first group of recommendations goes after costs buyers see on their Loan Estimate and in their monthly payment.
Here’s what MBA wants to change:
#1. Credit reports
Lenders have to pull three credit reports for most borrowers, including people with strong credit.
MBA says the rule, and the lack of competition it creates, has pushed the cost of this “tri-merge” report up three- to four-fold over the past five years.
It wants lenders to be able to pull a single report for borrowers with scores above 700, which it says would save the majority of borrowers hundreds of dollars in third-party fees.
#2. Loan-level price adjustments (LLPAs)
These are fees Fannie Mae and Freddie Mac charge based on a borrower’s credit and loan details. MBA wants them lowered and aligned for owner-occupied home purchases.
#3. FHA mortgage insurance
MBA wants a modest cut to the annual mortgage insurance premium (MIP) on FHA loans. A 0.20% reduction on a $400,000 loan would save a borrower nearly $800 a year.
To protect the FHA fund, MBA suggests tighter underwriting on loans that stack three or more high-risk factors, such as a low credit score on top of a high debt-to-income ratio.
#4. Automated valuations and AI underwriting
Wider, responsible use of automated valuation models (software that estimates a home’s value) and AI-assisted underwriting would cut the manual work behind every loan file.
MBA says lenders could pass those savings on through lower fees or better rates.
#5. Title insurance
MBA calls title insurance one of the largest third-party closing costs buyers pay, with costs averaging between 0.5% and 1.0% of the purchase price.
It wants the mortgage and title industries to build streamlined coverage that cuts duplicate processing and overlapping lender and owner title risks.
MBA points to first-time buyers as a group this would help.
#6. Manufactured and VA housing
MBA says misalignment between FHA’s Title I and Title II manufactured housing programs limits how far they can grow. VA property standards that don’t match Fannie Mae’s and Freddie Mac’s can make sellers hesitant, which puts veteran buyers at a disadvantage.
MBA says aligning the standards would open up more affordable manufactured housing and remove friction that can price veterans out of homes for sale.
Owen Lee, 2027 MBA Chairman and CEO of Success Mortgage Partners, Inc., explained how these extra costs end up with consumers.
“The goal is straightforward: strip away unnecessary costs and complexity that ultimately show up in a higher mortgage rate, excessive closing costs, or a higher rent. These are practical, achievable steps that can help make housing more affordable while maintaining responsible lending standards and supporting a stronger housing supply.”
Opening the Door to Credit for More Qualified Borrowers
The second set of proposals aims to clear barriers that keep qualified borrowers from cheaper loans. MBA stresses that none of them lower lending standards. Its recommendations include:
#1. Loan officer pay rules
Under current rules, a lender can’t reduce a loan officer’s compensation to match a competing offer a borrower brings in, which makes it harder to compete on rate.
MBA says the same rules discourage lenders from offering affordable products like housing finance agency loans, construction loans, down payment assistance and assumption loans.
#2. Streamlined refinancing for Fannie Mae and Freddie Mac loans
Borrowers with strong payment histories have to go through full income verification and a new appraisal, among other steps, to refinance into a lower rate.
MBA wants a faster path for them, since a lower payment reduces the risk of default.
#3. Mortgage disclosure rules
MBA wants targeted reforms to the TILA/RESPA Integrated Disclosure (TRID) rules, the federal requirements behind the Loan Estimate and Closing Disclosure.
The changes would cover disclosure timing and cost tolerances, along with waiting and rescission periods. MBA says buyers would keep the information they need, with fewer delays and a simpler closing.
#4. VA streamline refinancing
MBA suggests that the VA finalize a more flexible version of its Interest Rate Reduction Refinance Loan (IRRRL) rules.
The proposal would drop the 36-month recoupment requirement, the window for earning back refinance costs, when a borrower moves from an adjustable rate to a fixed rate.
It would do the same when a borrower shortens the term to one that’s shorter than the remaining term and at least 10 years shorter than the original.
MBA supports guardrails against excessive refinancing and loan churning.
Rental Housing, New Supply, and the Long-Run Finance System
The last three areas move past individual loans to the bigger systems behind housing costs:
- Rental housing: three recommendations
- Affordable supply: five recommendations, including the rent control and eviction moratorium item
- Long-run finance system: two recommendations
On the rental side, MBA says every dollar of unnecessary cost in financing an apartment building gets built into the rent a tenant pays each month. Its rental recommendations include:
- Fannie Mae and Freddie Mac working with lenders to cut friction in multifamily lending, with lending caps and affordable housing goals that provide liquidity without crowding out private capital
- FHA continuing to cut processing delays and paperwork in its multifamily and healthcare lending programs
- Treasury and other agencies writing rules that encourage investment in rental housing from small, mid-size and large institutional investors
To expand the supply of affordable housing, MBA wants to:
- Simplify condo guidelines for first-time buyers
- Launch a pilot for early execution of single-close construction-to-permanent loans, which roll construction financing and the long-term mortgage into one loan
- Let FHA 203(k) renovation borrowers put unused contingency funds toward future mortgage payments as they move from construction to occupancy
- Narrow where Davis-Bacon prevailing wage rules apply in federal housing programs, since MBA says they can add significant construction costs to apartment projects
- Back state and local tax abatements and tax credits for affordable housing
The roadmap states MBA’s opposition to state and local rent control mandates and extended eviction moratoriums. MBA says these policies discourage investment in rental housing and can reduce the number of units available.
For the long run, MBA recommends two changes:
- Right-sizing bank capital rules for mortgage servicing assets and warehouse lending lines (the credit lines lenders use to fund loans before selling them), which MBA says are harsher than the risk calls for
- Amending Regulation AB II disclosure rules to revive the market for SEC-registered private-label mortgage securities, which are mortgage bonds sold without a government guarantee
MBA says both changes would bring more competition to mortgage lending, with better pricing for borrowers whose loans fall outside Fannie Mae and Freddie Mac limits.
MBA President and CEO Bob Broeksmit, CMB, tied the full roadmap to the group’s ongoing work with policymakers.
“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. 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.”
The Play for Real Estate Agents
None of these proposals are in effect. They’re MBA’s recommendations to federal agencies and regulators, and MBA designed them to work without new laws from Congress.
Several of them touch parts of a deal agents handle every day. Here’s how they line up with clients:
- Buyers: The fees MBA wants to cut appear on the Loan Estimate, and the roadmap’s estimates give agents real numbers to explain where closing costs come from
- FHA buyers: The MIP proposal would lower their annual mortgage insurance cost
- Sellers: MBA’s point about VA property standards making sellers hesitant could come up when a seller weighs an offer from a veteran
- First-time buyers: The condo guidelines and 203(k) changes are among the supply proposals aimed at them
- Clients with VA or Fannie Mae and Freddie Mac loans: They could benefit from the streamlined refinance proposals if regulators adopt them
MBA’s roadmap highlights CONVERGENCE, a community initiative the group launched in 2019 to expand affordable homeownership. The program works with local partners, and MBA lists real estate professionals among them alongside lenders and housing counselors.
As MBA takes these ideas to policymakers, knowing the details means you’ll be ready to explain any changes that reach the closing table.
