Advocacy Update: MBA Calls on VA, Congress to Implement Permanent Partial Claim Program Following News on VASP Phase-out
MBA Calls on VA and Congress to Implement Permanent Partial Claim Program Following News on VASP Phase-Out
Thursday night, House Committee on Veterans’ Affairs Chairman Mike Bost (R-IL) and Subcommittee on Economic Opportunity Chairman Derrick Van Orden (R-WI) released a joint statement that confirmed rumors that the Department of Veterans Affairs (VA) plans to phase out the Veterans Affairs Servicing Purchase (VASP) program.
• While the VA has yet to publish any details on the wind down, a spokesperson for the agency told NPR in a statement that “Beginning May 1, 2025, VA’s Veterans Affairs Servicing Purchase Program, which was unilaterally created by the Biden Administration and lacks congressional authority, will stop accepting new enrollees. This change is necessary because VA is not set up or intended to be a mortgage loan restructuring service. This change will not impact VA’s loan guaranty services for Veterans. This action will not affect any of the program’s existing participants, nor will it impact any eligible Veterans who complete their VASP enrollment prior to May 1, 2025. Since the VASP program started May 31, 2024, VA has purchased 17,109 loans worth a total of $5.48 billion.”
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said that halting the VASP program will increase the number of veterans facing foreclosure unless the VA and Congress implement a permanent partial claim option as soon as possible. He also strongly rejected the false claim in Congressmen Bost’s and Van Orden’s press release that VASP was a “bailout for lenders,” and said that “mortgage servicers worked tirelessly, and often with conflicting guidance, to ensure that the program was able to work for the veterans they are proud to serve.”
Broeksmit added, “The work must start immediately to strengthen the VA’s loss mitigation toolkit, and that includes implementing a permanent partial claim option, a foreclosure avoidance tool that is widely used in every other government loan program. MBA is eager to continue to work with the VA and Congress to protect veterans and ensure that they can utilize the housing benefit they earned through their service.”
Go deeper: Last month, MBA played a central role at a House Veterans’ Affairs Committee (HVAC) Economic Opportunity Subcommittee hearing, with Elizabeth Balce, Executive Vice President of Servicing, Carrington Mortgage Services, testifying on behalf of the association.
• MBA’s testimony reinforced the importance of aligning VA’s loss mitigation tools with those offered to borrowers with mortgages backed by the Federal Housing Administration (FHA) and Fannie Mae and Freddie Mac (the GSEs). Balce also highlighted the need for a permanent partial claim option to prevent foreclosures and provide a more effective alternative to loan modifications. She also defended VASP as a necessary – though imperfect and temporary – tool to help veteran homeowners avoid foreclosure.
What’s next: MBA will continue to push the VA to release as much information as possible on the VASP phase-out and its potential impact on distressed veteran homeowners. MBA has also urged VA to re-assess its authority to implement a PC program and is working with key HVAC members and staff to provide input as partial claim legislation is further improved ahead of a subcommittee markup scheduled for next Wednesday.
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557- 2816, and/or Brendan Kelleher at (202) 557-2779.
Federal Regulators Intend to Rescind CRA Rules
Recently, the Federal Deposit Insurance Corporation (FDIC) issued a statement announcing the intent of the federal banking agencies (the FDIC, the Office of the Comptroller of the Currency, and the Federal Reserve Board) (the “Agencies) to rescind the October 2023 final rule on the Community Reinvestment Act (CRA) and reinstate the prior CRA framework.
Why it matters: While the October 2023 final rule included several MBA recommendations and requested clarifications, the rule was challenged by a group of banks as an “overreach” by the Agencies. According to the FDIC statement, the Agencies decided to rescind the rule because of the pending litigation, while continuing to work jointly on promoting a consistent regulatory approach on their implementation of current CRA rules.
Go deeper: While it is unclear whether the Agencies will issue a new proposal on modernizing the current CRA rules, the rescission could encourage more states to consider their own CRA rules for state-chartered institutions (and to extend them to IMBs and credit unions), resulting in a fragmentation of CRA standards. MBA continues to support a unified approach to CRA modernization, considering that current rules have not been updated in many years to reflect the many technology and business model changes that have occurred in the banking industry.
What’s next: The recission process will require an official publication of a notice to rescind, which would give stakeholders an opportunity to submit comments. MBA will work with its CRA working group to provide comments when the notice is published.
For more information, please contact Megan Booth at (202) 557-2740 or Fran Mordi at (202) 557- 2860.
MBA Responds to CFPB Proposed Regulation V Rule
On Wednesday, MBA submitted a letter in response to the recent Consumer Financial Protection Bureau (CFPB) proposed rule amending Regulation V – which implements the Fair Credit Reporting Act (FCRA). The proposed rule would significantly expand the definition of a consumer reporting agency to include most data brokers and arguably, mortgage lenders in some cases. The rule would also expand the definition of a consumer report to include credit header data. Lastly, the rule would place new restrictions on the permissible purposes for using a consumer report.
• MBA’s summary of the proposed rule is available here.
Go deeper: In the letter, MBA argued that the CFPB should rescind the proposed rule in its entirety and reexamine whether the agency has sufficient statutory authority under FCRA to promulgate such a far-reaching proposal. Should the CFPB move forward with this rulemaking, they should recognize that the mortgage industry’s use of consumer data is already regulated with respect to privacy, data security, and data sharing.
What’s next: MBA will continue to monitor this rulemaking and provide updates to members as necessary.
For more information, please contact Justin Wiseman at (202) 557-2854 or Gabriel Acosta at (202) 557- 2811.
FHA Issues EPD Waiver for Borrowers Impacted by Wildfires
On Tuesday, FHA issued a limited waiver of its Early Payment Default (EPD) review requirements for FHA-insured mortgages in areas affected by the recent California Wildfires. This waiver applies to mortgages in the Presidentially Declared Major Disaster Area (PDMDA) for California Wildfires, specifically for loans with a closing date before Jan. 7, 2025, and that become EPDs between Feb. 1, 2025, and July 31, 2025.
Go deeper: The waiver is designed to exempt mortgagees from conducting certain quality control reviews on EPDs in these areas, as the defaults are likely tied to unforeseen disaster-related circumstances, such as job loss or property damage. Mortgagees must still provide FHA Loss Mitigation options and comply with other FHA servicing requirements.
Why it matters: The waiver recognizes that defaults following the wildfire disaster are likely due to unexpected challenges faced by borrowers, such as job loss, property damage, or being forced to relocate. It also helps ease the administrative workload for servicers and ensures that borrowers are not unfairly penalized during this difficult time.
What’s next: MBA will continue to monitor FHA’s servicing policy updates and report them through the Loan Administration Committee.
For more information, please contact Brendan Kelleher at (202) 557-2779.
MBA Supports SECURE Notarization Act to Expand Access to Remote Online Notarization
Last Monday, MBA joined a broad coalition of industry stakeholders in sending a letter to House Energy and Commerce Committee leaders expressing strong support for H.R. 1777, the Securing and Enabling Commerce Using Remote and Electronic (SECURE) Notarization Act.
Why it matters: H.R. 1777 would authorize nationwide use of Remote Online Notarization (RON), enabling consumers and businesses to execute critical documents using secure, two-way audiovisual technology. The bill removes barriers to completing essential transactions—such as mortgage closings, powers of attorney, and healthcare directives—particularly in cases where in-person notarization is impractical.
Go deeper: RON is already authorized in 44 states, and H.R. 1777 would establish federal minimum standards while preserving state flexibility. A substantially similar bill passed the full U.S. House with unanimous consent during the 118th Congress – and continues to have strong bipartisan support again this year. RON enhances access, security, and convenience for consumers, particularly during public health emergencies and for military servicemembers and remote workers.
What’s next: MBA (and the other stakeholders) are urging Congress to act swiftly to pass H.R. 1777 in the Energy and Commerce Committee (and on the House floor) and unlock the full benefits of digital notarization across the country. MBA will continue to work with bipartisan champions in both chambers of Congress to advance this common-sense modernization effort.
For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.
Senators Re-introduce Bipartisan Rural Housing Reform Legislation
On Thursday, Senators Tina Smith (D-MN) and Mike Rounds (R-SD) reintroduced S.1260, the Rural Housing Service Reform Act, a bill designed to improve the Department of Agriculture’s Rural Housing Service loan programs. The full text of the bill can be accessed here.
Why it matters: MBA’s Bill Killmer, Senior Vice President of Legislative & Political Affairs, issued an endorsement of the bill stating, “This important bill contains specific provisions to better align RHS loans with other mortgage products, including assumable loans and financing accessory dwelling units. The legislation also updates USDA’s IT systems to help lenders serve homebuyers in rural communities.”
What’s next: The legislation was referred to the Senate Banking Committee, which may hold a markup of housing-related bills in the coming months.
For more information, please contact Ethan Saxon at (202) 557-2913 or George Rogers at (202) 557-2797.
MBA-Supported Trust Legislation Passes Maryland Senate; House Action Expected Before Adjournment
Late Thursday, the Maryland Senate overwhelmingly approved MBA-supported HB-1516, and the House of Delegates is expected to pass its companion bill, SB-1026 , in the next hours ahead of the Legislature’s scheduled adjournment on Monday.
• Once enacted, the bills will address the Maryland Office of Financial Regulation’s (OFR) January 10, 2025, guidance and emergency regulations stemming from the Estate of Brown v. Ward court ruling. The legislation has been supported by OFR, which extended the enforcement deadline for trust licensing to July 6, 2025, following efforts by an MBA-led coalition in pushing for this legislation.
Why it matters: The OFR’s initial policy interpretation significantly expanded the court’s opinion to include mortgage trusts, raising urgent concerns for secondary mortgage market participants. The proposed legislation would create necessary licensing exemptions in state law. MBA Mortgage Action Alliance (MAA) members in Maryland have been actively urging their representatives to expedite the consideration and enactment of this legislation. Additionally, an industry coalition submitted a letter to OFR in January, strongly encouraging the rescission of its guidance and regulations.
What’s next: Negotiations in recent weeks regarding the scope of the licensing exemptions are now reflected in the companion bills being reconsidered by each chamber. MBA and the Maryland Mortgage Bankers and Brokers Association (MMBBA) have been working with member companies and industry association partners to advocate for a swift completion of these discussions and final approval before the end of the 2025 legislative session – currently scheduled for Monday, April 7. Once enacted, MBA will push for the rescission of the OFR’s guidance and regulations.
For more information, please contact William Kooper at (202) 557-2737 or Justin Wiseman (202) 557-2854.
MBA Leads Industry Coalition in Responding to Proposed NY IMB CRA Regulation
This week, an MBA-led coalition submitted a comment letter to the New York Department of Financial Services (DFS) in response to its proposed rules to implement the state’s Community Reinvestment Act (CRA) for independent mortgage banks (IMBs). MBA was joined by the New York MBA (NYMBA) and several local groups in the state in its comments, which began with a reminder to the Department of the positive record of IMB lending nationally, and in the state, to low- and moderate-income communities.
Go deeper: The letter went on to stress that the proposed rule should not set inappropriate limits on CRA consideration of purchased loans and should not conflate CRA exams with fair lending exams. The letter expressed support for the use of Home Mortgage Disclosure Act (HMDA) data in lender evaluations, the conduct of IMB CRA exams as part of the regular DFS exam cycle to minimize lender costs, and the proposed small lender exemption of fewer than 200 loans per year. MBA also asked that the implementation period be extended to one year from six months of publication of the final rule.
Why it matters: MBA remains firmly opposed to the application of CRA mandates to IMBs, and the letter explained that view. IMBs have different business models, do not have deposits to “reinvest,” do not have access to direct government support, already lead the market in sustainable lending in low- to moderate-income (LMI) communities, and are subject to robust oversight and supervision in every state in which they operate, as well as from the federal regulators.
What’s next: MBA and its partners will seek a meeting with DFS to discuss these comments and DFS’ direction.
For more information, please visit MBA’s State CRA resource center or contact William Kooper at (202) 557-2737 or Liz Facemire at (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
• Administrative Law Changes, The CFPB, and the Impact on Mortgage Finance – April 16
• Social Media Compliance: Identifying Potential RESPA Violations in Digital Advertising – April 22
• Building Efficiencies into the Mortgage Lending Workflow – April 23
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.
