CREF Policy Update: Federal Reserve Keeps Rates Unchanged; Basel III Recommendations

MBA Offers Numerous Recommendations to Federal Banking Agencies’ Basel III Re-proposal

MBA last week provided industry feedback (and joined other coalition letters) in response to the Banking Agencies’ Basel III Endgame re-proposal on bank capital requirements.

• The three-part proposal was released on March 19, 2026.  

Why it matters: MBA’s comment letter urges the Agencies to further tailor the Basel III capital framework to the realities of the U.S. financial system rather than adhering to international standards that do not fully reflect the structure and risk profile of U.S. markets. The letter highlights that the proposal, while improved from earlier versions, still overstates the risk of key mortgage-related assets and activities, potentially constraining credit availability and increasing costs for borrowers.

MBA’s recommended changes include:

• Commercial real estate (CRE): MBA recommends broader adoption of a more granular, risk-sensitive CRE framework and lowering the maximum risk weight for high-LTV CRE loans so secured real estate lending is not treated more harshly than unsecured corporate credit.
• Low Income Housing Tax Credit (LIHTC): MBA recommends the Agencies recognize the public nature and strong performance of LIHTC exposures – both debt and equity – and lower the risk weights to more appropriate levels.
• Warehouse lending: MBA urges regulators to preserve favorable capital treatment for short-term mortgage warehouse facilities, maintain existing commitment definitions, and align capital requirements more closely with the underlying mortgage collateral.
• Mortgage servicing assets (MSAs): MBA recommends reducing the proposed 250% risk weight to no more than 100%, citing MSAs’ strong historical performance and lower realized losses.
• Securitization: MBA urges revisions that would reduce unnecessary capital burdens on certain securitization exposures, including lowering the risk weight on senior GSE-backed securities while the enterprises remain under federal conservatorship.

Separately, MBA joined two joint-trades letters advocating for lower bank capital risk weights on Low-Income Housing Tax Credits (LIHTC) (here) and New Markets Tax Credits (NMTC) projects.

Go deeper: Overall, MBA believes the re-proposal reflects significant progress for MBA and its commercial real estate finance members after years of sustained advocacy for a better-calibrated capital framework after the very flawed initial proposal was released in July 2023.

• MBA’s push for changes has come in many forms, including numerous comment letters, regulatory meetings, speeches, and MBA President and CEO Bob Broeksmit’s, CMB, April 2026 testimony before the House Finance Services Committee and a September 2023 testimony before the House Financial Services Subcommittee on Financial Institutions and Monetary Policy.
• Earlier this year, MBA submitted a Statement for the Record supporting the re-proposal (and offering recommendations) ahead of a Senate Banking Committee hearing with the prudential bank regulators, led a broad joint trades letter with recommendations, and sent a letter urging the banking agencies to reduce risk weighting for warehouse lines.
• And in March, MBA’s Jamie Woodwell spoke before the Federal Reserve as part of their Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) review.
• Overall, MBA has long emphasized that banks play a critical role in commercial real estate markets, and that current capital rules limit their ability to fully participate in and support these markets.

What’s next: MBA appreciates the significant contributions of its members who participated in the Basel III Working Group, whose expertise and feedback informed this comment letter. MBA looks forward to continued engagement with the Agencies as they work to finalize the Basel III capital framework, likely later this year or in early 2027.

For more information, please contact John Lammle at (202) 557-2789.

Federal Reserve Keeps Rates Unchanged

The Federal Reserve held the federal funds rate at a target range of 3.50-3.75% on Wednesday.

Why it matters: The Committee noted that, “Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East. Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.”

What they are saying: “The overall tone is more hawkish than many had anticipated, and the immediate market reaction was an increase in rates. MBA’s forecast is for mortgage rates to average about 6.5% over the forecast horizon, given the resilience in the broader economy and job market, the likely stance of monetary policy given persistent inflation, and ongoing fiscal pressures, which will keep upward pressure on longer-term debt,” said Mike Fratantoni, MBA’s SVP and Chief Economist.

Read more of Fratantoni’s commentary here.

For more information, please contact Mike Fratantoni at (202) 557-2935.

MBA Participates in House Briefing on Lowering Housing Costs

Recently, Rachel Kelley, MBA’s vice president of Legislative Affairs, participated as a featured speaker in a congressional briefing alongside representatives from other housing trade groups. The bipartisan briefing was hosted by Representatives Young Kim (R-CA) and Johnny Olszewski (D-MD).

Why it matters: The panel of housing industry advocates discussed the nation’s ongoing housing affordability and supply challenges, highlighting how a combination of financing dynamics and regulatory barriers continue to impact cost factors and emphasizing that many of the most significant obstacles are found at the state and local level.

Go deeper: Kelley underscored the importance of modernizing federal tools — pointing to updates within evolving versions of the 21st Century ROAD to Housing Act, including the proposed true increase in FHA statutory multifamily loan limits, now tied to a more appropriate inflation adjustment index going forward.

What’s next: MBA continues to educate lawmakers and advocate for workable solutions for both our commercial/multifamily and residential members.

For more information, please contact Rachel Kelley at (202) 557-2816.

Upcoming MBA CREF Council and Committee Meetings

MBA’s CREF Councils and Committees are a key way to connect to everything MBA has to offer around policy, advocacy, market intelligence and research, education, and networking. Visit www.mba.org/yourCREF to find out more.   Councils and Committees are built around specific capital sources and serve as an opportunity for you to join other commercial real estate finance professionals to hear from experts, discuss opportunities and challenges, and connect with peers.

Upcoming virtual meetings include:

• Agency Council: July 9
• FHA Committee: July 14
• Servicer Council: July 16
• Commercial Council: July 21
• Life Company Council: August 12
• CRE Private Credit Council: September 23

For more information, click on the links above and/or contact Kelli Burke at (202) 557- 2742.

Upcoming MBA Education Webinars on Critical Industry Issues

MBA Education continues to deliver timely commercial/multifamily and single-family programming that covers the spectrum of challenges, opportunities, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:

• Fundamentals of Commercial Insurance Issues and Problems – July 15
• mPower: Grit, Grind, and Grace – A Leadership Journey for Women Who Refuse to Settle – July 15
• Decoding Blanket Property Insurance for Commercial and Multifamily Properties – September 10
• AI in Commercial Real Estate Finance: The AI-Powered Originator and Relationship Manager – October 5

MBA members can register for any of the above events and view recent webinar recordings by clicking here.  

For more information, please contact David Upbin at (202) 557-2931.