Advocacy Update: FHFA Responds to MBA’s Recommendation; Rescinds Advisory Bulletin on UDAP Prohibitions
FHFA Responds to MBA’s Recommendation; Rescinds Advisory Bulletin on UDAP Prohibitions
Last Monday, Federal Housing Finance Agency (FHFA) Director Bill Pulte released an order that rescinds Advisory Bulletin 2024-06: “Regulated Entity Unfair or Deceptive Acts of Practices Compliance,” which required Fannie Mae and Freddie Mac (the GSEs) to certify compliance with Unfair or Deceptive Acts or Practices (UDAP) laws, including by conducting consumer compliance reviews of their seller-servicers.
• MBA has consistently advocated for this rescission since the Bulletin was posted in November 2024, meeting with FHFA staff during the previous Administration as well as communicating its concerns to Director Pulte.
What they’re saying: MBA’s President and CEO Bob Broeksmit, CMB, released a statement in support of the rescission, stating that “the November bulletin’s specific expectations for Fannie Mae and Freddie Mac (the GSEs) to conduct consumer protection oversight of their customers wrongly established the GSEs as compliance regulators, was duplicative of federal and state regulatory oversight of UDAPs, and would have negatively impacted consumers and lenders through higher costs.”
He added, “Common sense regulation and oversight is crucial to ensuring that the GSEs operate in a safe and sound manner that allows them to continue their pivotal role in providing affordable homeownership and rental housing opportunities for all Americans.”
Go deeper: In the order, Director Pulte stated that FHFA is not the primary administrator of UDAP prohibitions. Instead, the Federal Trade Commission has the authority to issue interpretive rules and policy statements pertaining to UDAP authority.
What’s next: MBA will continue to monitor this issue and will keep members updated.
For more information, please contact Justin Wiseman at (202) 557-2854.
FHA Revises Borrower Eligibility Requirements
On Wednesday, the Federal Housing Administration (FHA) issued Mortgagee Letter 2025-09 (ML), implementing significant changes to the residency requirements for applicants seeking FHA-insured mortgages.
• The update eliminates eligibility for non-permanent resident borrowers to apply for FHA-insured mortgages. Additionally, the ML revises and clarifies requirements for permanent resident borrowers in the FHA Single Family Housing Policy Handbook. The provisions of this ML may be implemented immediately but must be implemented for FHA case numbers assigned on or after May 25, 2025.
Go deeper: The ML follows a recent announcement by the Department of Agriculture Rural Housing Service (RHS), which rescinded its temporary authority allowing certain non-U.S. citizens, including DACA recipients, to apply for a guaranteed loan. However, the ML goes even further by prohibiting all non-permanent residents, including H-1B visa holders, from obtaining an FHA-insured mortgage.
Why it matters: MBA believes FHA’s bulletin is overreaching because it precludes legal residents such as long-term employment-based visa holders who have a high propensity to transition to green card holders and naturalized citizenship from obtaining mortgage financing. These households are important to local economies as skilled workers and taxpayers and have been eligible for mortgage financing for decades.
What’s next: MBA is gathering feedback from members to evaluate the full impact of this policy shift, including its effects on loan production and industry compliance. This topic will be discussed during next Wednesday’s Residential Loan Production Committee call.
For more information, please contact Darnell Peterson at (202) 557-2922.
FHFA Director Announces Changes to GSE-Supported SPCPs and the EHFPs
Also last week, FHFA Director Pulte announced changes to policy related to Special Purpose Credit Programs (SPCPs) and the Equitable Housing Finance Plans (EHFP). Via a post on his X account, Director Pulte issued a directive terminating the GSEs’ support of SPCPs, stating that the current level of support for these programs is inappropriate for regulated entities in conservatorship.
T• he directive provides pipeline protection for SPCP loans in process by allowing the GSEs to comply with any existing contractual obligations related to these programs.
Go deeper: In a another X post, Director Pulte issued a waiver that removes the GSEs’ obligations to comply with portions of the Fair Lending, Fair Housing, and Equitable Housing Finance Plans (EHFP) final rule.
• The final rule codified the requirements and processes for the EHFPs. The newly issued wavier removes the requirement for the GSEs to develop, adopt, publish, and report on those plans. The waiver states that this step supports FHFA’s review and consideration of best efforts to ensure the GSEs are meeting their public mission as outlined in their charters and in the Safety and Soundness Act.
Why it matters: MBA continues to support legally compliant SPCPs as useful tools to address persistent homeownership barriers. MBA also obtained clarification that lender-supported SPCPs (those without GSE financial support or variances) that meet standard underwriting criteria are still eligible for sale to the GSEs.
• Similarly, MBA believes properly executed initiatives in the EHFPs can provide useful public roadmaps for GSE efforts to promote affordable housing and create more sustainable homeownership opportunities. SPCPs and the EHFP are important tools that advanced the GSEs’ mission of supporting affordable housing opportunities for hardworking American families.
What’s next: MBA will continue to monitor all directives and orders issued by FHFA and will continue to engage with them and the GSEs to find solutions to meet affordable housing needs.
For more information, please contact Sasha Hewlett at (202) 557-2805.
MBA, Trades Encourage Adoption of FHA Loss Mitigation Guardrails
Last Monday, MBA, along with the Housing Policy Council and Gate House Strategies, submitted a joint trades letter that urges FHA to impose additional measures to limit serial forbearance and modification requests and establish sustainable borrower performance.
Why it matters: Specifically, the letter recommended that FHA adopt two measures for borrowers: a cap of one loss mitigation every 18 months and a required Trial Payment Plan for all permanent retention options. The groups believe these measures would strengthen the Mutual Mortgage Insurance Fund, reduce redefault rates, and preserve borrower equity for those whose hardships are too severe to recover from.
• Implementing additional safeguards and applying them to FHA’s COVID-19 Loss Mitigation Recovery Waterfall will enable FHA to assess the long-term effectiveness of its loss mitigation program before servicers prepare to implement FHA’s new waterfall in February 2026.
What’s next: MBA will monitor and communicate developments to members.
For more information, please contact Brendan Kelleher at (202) 577- 2779.
REGISTER: Town Hall with MBA Leadership: The New Administration’s First 100 Days
Thursday, April 3, at 3:00 p.m. ET, MBA President and CEO Bob Broeksmit, CMB, and MBA leaders engaged on policy issues, will host another town hall webinar on the latest developments in the single-family and commercial/multifamily arenas under the Trump administration and MBA’s ongoing work on them.
• Register here for MBA’s new series covering the first 100 days of the Trump administration. Attendees can send questions beforehand to First100Days@mba.org.
Why it matters: MBA continues to monitor ongoing developments at the federal agencies and is engaging with the Trump administration to promote agency activities and priorities that advance investment and growth in real estate markets. Hear the latest from the team on recent activities at FHFA, HUD, and other federal agencies.
What’s next: MBA remains actively engaged with the senior appointees and key staff in place at all agencies that impact the industry and continues to:
• Advocate for the continuation of programs and policies that benefit the real estate finance markets, borrowers, and the industry;
• Recommend sensible changes that lower the cost of lending, promote competition, and ensure continued support for single-family and commercial and multifamily investment; and
• Warn against potential actions that would lead to disruptions in the single-family and commercial/multifamily markets.
For more information, please contact Bill Killmer at (202) 557-2736 or Pete Mills at (202) 557-2878.
Attend MBA’s National Advocacy Conference on April 8-9; Over 500 Advocates Registered
Join us in Washington, D.C. to meet with key policymakers, connect with industry colleagues, and hear from policy experts on the topline issues impacting the industry. Advocacy topics will include housing tax policy, trigger leads, the potential for a Fannie/Freddie conservatorship release, legislation to increase housing supply, technology-related issues, the cost and availability of insurance, and more.
Currently scheduled speakers for the conference include HUD Secretary Scott Turner, House GOP Conference Chair Rep. Lisa McClain (R-MI), key Senate Banking Committee members Elizabeth Warren (D-MA) and Mark Warner (D-VA), key House Financial Services Committee members Mike Flood (R-NE), Ritchie Torres (D-NY), and Emmanuel Cleaver (D-MO), and National Journal’s managing editor of Hotline Kirk Bado.
An exclusive reception will be held on Tuesday, April 8, at the Renwick Gallery of the Smithsonian American Art Museum. Lend your voice to the discussion and bring your industry experience to the table.
Check out MBA’s group passes pricing.
Why it matters: Your participation at NAC ensures that lawmakers of the 119th Congress and the administration understand the real-world impacts of proposed legislation on your employees, your end users, and the communities you serve.
What’s next: MBA will use your participation during NAC25 to help amplify its advocacy on issues – both residential and commercial/multifamily – that directly impact our industry.
For more information, please contact Jamey Lynch, AMP, at (202) 557-2818.
HFSC Holds Hearings on CFPB Oversight and Capital Access
Last week, the House Financial Services Committee (HFSC) held two key hearings: a full Committee hearing on Tuesday titled, “Beyond Silicon Valley: Expanding Access to Capital Across America,” and a Wednesday Subcommittee hearing titled, “A New Era for the CFPB: Balancing Power and Reprioritizing Consumer Protections.”
Go deeper: Lawmakers at Tuesday’s hearing largely agreed on the need to modernize the definition of an accredited investor, citing structural changes in capital markets and a desire to expand access to wealth-building tools. Several Democrats also called for increased support for Community Development Financial Institutions (CDFIs) to improve investment in underserved communities.
Wednesday’s CFPB-focused hearing exposed sharp partisan divides. Republicans raised concerns about what they described as unchecked regulatory overreach under the Biden administration, pointing to the Bureau’s independent structure and its enforcement of rules such as Section 1071 on small business lending data collection.
• Multiple GOP members called for structural reforms and a rollback of certain regulatory mandates. Democrats, meanwhile, strongly defended the CFPB’s mission, emphasizing its role in consumer protection and oversight of nonbank financial institutions. Several warned that the Trump administration’s early actions—including enforcement slowdowns and staffing cuts—could undermine the Bureau’s effectiveness moving forward.
• Find the full HFSC hearing summary here, and the full Subcommittee hearing summary here.
Why it matters: Both hearings previewed potential legislative activity—particularly efforts to reshape the CFPB’s structure, authority, and oversight mechanisms. Several bills noticed during the hearings are expected to be taken up in a full Committee markup as early as next week. MBA supports the concept of changing the CFPB to a bipartisan board or commission structure and subjecting the agency to the appropriations process.
What’s next: MBA will remain fully engaged with lawmakers on both sides of the aisle. As discussions around CFPB reform and capital access continue to evolve, MBA will provide updates and weigh in with the industry’s perspective.
For more information, please contact Madisyn Rhone at (202) 557- 2741 or Rachel Kelley at (202) 557- 2816.
CFPB Seeks to Vacate Recent IMB Redlining Settlement
On Wednesday, the CFPB announced that it is seeking to vacate and set aside a $105,000 judgment against Townstone Financial, a Chicago mortgage broker accused of redlining.
“CFPB abused its power, used radical ‘equity’ arguments to tag Townstone as racist with zero evidence, and spent years persecuting and extorting them…The more we uncover at CFPB, the more we see how this agency was weaponized against targeted Americans,” said CFPB Acting Director Russ Vought.
Why it matters: The CFPB moved to vacate the settlement, stating that Townstone was “targeted” for protected free speech and for perceived racial disparities because of a failure to meet a “de-facto mortgage quota” in a majority-minority area. Additionally, the CFPB found there was a lack of evidence of any potential customers reporting Townstone to them.
• Importantly, the Court’s decision last year did not address many of the arguments raised by Townstone Financial or by MBA in its amicus brief.
• MBA argued that the anti-discouragement provision of Regulation B is invalid because it is inconsistent with the plain text of ECOA. MBA also suggested two limiting principles if the Court found that the anti-discouragement provision was in fact valid. First, the Bureau should be required to prove that a lender affirmatively discouraged an applicant on a prohibited basis. Second, the Bureau should be required to prove that a discouraging statement caused identifiable applicants to be discouraged from applying. The CFPB did neither in the Townstone case.
What’s next: MBA will monitor and provide any relevant updates on this case as well as other CFPB activities.
For more information, please contact Justin Wiseman at (202) 557-2854.
Virginia Governor Youngkin Vetoes Artificial Intelligence Legislation; Bill Would Have Provided a Safe Harbor for IMBs and other Member Companies
Last Monday, Virginia Governor Glenn Youngkin vetoed HB 2094, which would have required risk assessments, disclosures, and an appeals process for the use of artificial intelligence (AI). In his veto statement, Governor Youngkin described HB 2094 as a burdensome and rigid AI framework.
While the Governor expressed his support for responsible AI governance, he recognized that there are “many laws currently in place that protect consumers and place responsibilities on companies relating to discriminatory practices, privacy, data use, libel, and more.”
Go deeper: HB 2094 is very similar to Colorado’s enacted AI law, SB 24-205, and included exemptions supported by MBA for key industry technology that has been approved, authorized, cleared, or developed by federal agencies or the GSEs – like credit scoring models and automated underwriting systems.
• Additionally, unlike Colorado, Virginia’s proposed bill included independent mortgage banks and savings associations along with banks and credit unions in their exemption for those entities in compliance with similar standards found in other state or federal law or regulation.
Why it matters: Though many state policymakers are considering legislation or regulation, Colorado remains the only state to enact risk assessment standards and disclosures specific to artificial intelligence. However, it is important to note that Colorado’s framework is untested, as its attorney general has not yet proposed regulations to help businesses understand their obligations under this law.
What’s next: MBA will continue to work with its state partners to counter any claims that the industry’s use of technology is unregulated and to ensure proper exemptions for MBA members are included in any bill or rule being considered.
For more information, please visit the MBA resource center mba.org/stateai or contact William Kooper (202) 557-2737 or Liz Facemire (202) 557-2870.
Upcoming MBA Education Webinars on Critical Industry Issues
MBA Education continues to deliver timely single-family programming that covers the spectrum of challenges, obstacles and solutions pertaining to our industry. Below, please see a list of upcoming and recent webinars – all complimentary to MBA members:
• Drilling into Mortgage Accounting – April 9
• AI Voice Agents and Use Cases for Mortgage Lending – April 10
• Loan Level Accounting – April 16
• Social Media Compliance: Identifying Potential RESPA Violations in Digital Advertising – April 22
• Building Efficiencies into the Mortgage Lending Workflow – April 23
• Creating an Operationally Resilient Company – April 24
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.
