Advocacy Update: President Trump Issues Executive Order on National AI Regulation Standard; Federal Reserve Cuts Rates Again by 25 Basis Points
President Trump Issues Executive Order on National AI Regulation Standard
Last week, President Donald Trump signed an Executive Order (EO) that seeks to prevent a patchwork of state regulations and strengthen American competitiveness in the fast-growing market for artificial intelligence technology and applications.
• Among other items, the EO directs the U.S. Attorney General to establish an AI Litigation Task Force to challenge unconstitutional, preempted, or otherwise unlawful State AI laws that harm innovation; directs the Secretary of Commerce to publish an evaluation of State AI laws that conflict with national AI policy priorities; and calls for the development of a national AI legislative framework that would preempt conflicting State AI laws.
• Read the White House fact sheet.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “MBA welcomes President Trump’s executive order on AI and appreciates the Administration’s focus on establishing a clear, nationally consistent framework for emerging technologies. Technology does not stop at a state border. We believe strongly that a unified federal approach is necessary to avoid a confusing patchwork of state laws and regulations that would stifle innovation and raise compliance and borrower costs.”
Broeksmit added, “We will work with policymakers on a legislative framework that builds on this executive order to provide durable guardrails, protect consumers, strengthen the mortgage system, and support a competitive marketplace.
Why it matters: MBA supports greater regulatory clarity on how existing laws apply to AI, which would facilitate AI adoption by the mortgage industry, and opposes new laws restricting AI use that are largely duplicative of existing laws that already regulate the outcomes of AI decisioning, such as fair lending laws.
• Additionally, MBA’s Residential Board of Governors (RESBOG) continues its work – as one of its residential policy priorities for 2026 –to highlight positive uses of AI in mortgage lending and promote consistent, responsible, and limited state oversight.
What’s next: MBA will keep members informed on pertinent AI news and actions at the federal and state levels. Please see www.mba.org/stateai for more updates on AI policy.
For more information, please contact Gabriel Acosta at (202) 557-2811 or Rick Hill at (202) 557-2718.
Federal Reserve Cuts Rates Again by 25 Basis Points
On Wednesday, the Federal Reserve for the third time this year cut the federal funds rate, now to a target range of 3.50-3.75%.
Why it matters: The Committee emphasized that it, “…will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.”
In a press statement, MBA SVP and Chief Economist Mike Fratantoni said, “Inflation is well above the Fed’s target, but the job market appears to be softening, even as data to confirm that trend is still delayed due to the recent government shutdown. Thus, there is ammunition for both sides of the debate within the FOMC. The projections published from this meeting show the Committee does not see a clear path, with members indicating slightly faster growth, but similarly elevated inflation and a fed funds rate path that matches the September projections.”
Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
FSOC Publishes 2025 Annual Report
On Thursday, members of the Financial Stability Oversight Council (FSOC) convened and published the 2025 Annual Report detailing the Council’s activities, financial and regulatory developments, potential emerging threats, and more.
• Ahead of the meeting, Treasury Secretary Scott Bessent announced an overhaul to the structure of the panel and how it plans to monitor emerging threats, shifting to an approach aimed at removing red tape and focusing on spurring economic growth.
Why it matters: This year’s report highlights how increasingly complex and costly bank regulations have produced unintended consequences — shrinking banks’ share of lending activity (including mortgages) and discouraging low-risk activities like Treasury market intermediation. These dynamics reinforce concerns MBA has raised for years: that punitive or duplicative regulatory requirements distort markets, limit depositories’ participation in mortgage lending and servicing, and ultimately increase costs for borrowers.
• The report discusses the important role IMBs play in the mortgage market, as well as the risks resulting from their monoline business model and lack of access to federal liquidity facilities. It does not, however, call for any new oversight or risk monitoring. Instead, it approvingly notes that several states have adopted the Conference of State Bank Supervisors’ (CSBS) nonbank capital framework, which MBA helped shape by aligning it with existing GSE standards.
What’s next: MBA has long supported strong but appropriately calibrated national capital and liquidity standards, and will continue to engage with FSOC agencies, Ginnie Mae, and state regulators to advance effective solutions that protect market stability without creating the very distortions the report itself identifies.
For more information, please contact Pete Mills at (202) 557-2878.
CFPB Issues Final Rule on Regulation Z Annual Threshold Adjustments
Last week, the Consumer Financial Protection Bureau (CFPB) issued a final rule updating the dollar amounts for provisions related to the Truth in Lending Act (TILA) and its implementing regulations, Regulation Z.
Home Ownership and Equity Protection Act of 1994 (HOEPA)
• For HOEPA loans, the adjusted total loan amount threshold for high-cost mortgages in 2026 will be $27,592.
• The adjusted points-and-fees dollar trigger for high-cost mortgages in 2026 will be $1,380.
Qualified Mortgages
• For qualified mortgages (QMs), the thresholds for the spread between the annual percentage rate (APR) and the average prime offer rate (APOR) in 2026 will be:
– 2.25 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $137,958;
– 3.5 or more percentage points for a first-lien covered transaction with a loan amount greater than or equal to $82,775 but less than $137,958;
– 6.5 or more percentage points for a first-lien covered transaction with a loan amount less than $82,775;
– 6.5 or more percentage points for a first-lien covered transaction secured by a manufactured home with a loan amount less than $137,958;
– 3.5 or more percentage points for a subordinate-lien covered transaction with a loan amount greater than or equal to $82,775;
– or 6.5 or more percentage points for a subordinate-lien covered transaction with a loan amount less than $82,775.
• For all categories of QMs, the thresholds for total points and fees in 2026 will be:
– 3% of the total loan amount for a loan greater than or equal to $137,958;
– $4,139 for a loan amount greater than or equal to $82,775 but less than $137,958;
– 5% of the total loan amount for a loan greater than or equal to $27,592 but less than $82,775;
– $1,380 for a loan amount greater than or equal to $17,245 but less than $27,592;
– and 8% of the total loan amount for a loan amount less than $17,245.
Why it matters: The final rule revises the amounts under HOEPA and the Dodd-Frank Act based on changes to the Consumer Price Index. The CFPB calculates the dollar amounts for provisions in Regulation Z annually.
• Importantly, MBA has been engaged with the CFPB, encouraging the Bureau to ensure that the mortgage market continues to receive APOR updates if the CFPB is shuttered based on the Administration’s view that it cannot request operating funds from the Federal Reserve when the Fed is not profitable. MBA has urged the CFPB to find ways to maintain regular publication of APOR, or to develop a simplified formula for lenders to self-calculate and to reinforce TILA liability protections for bona fide errors.
What’s next: The final rule goes into effect on Jan. 1, 2026. MBA will keep members updated on pertinent news coming from the Bureau, including related to APOR.
For more information, please contact Justin Wiseman (202) 557-2854 or Gabriel Acosta (202) 557-2811.
FHA Announces 2026 National Forward and HECM Loan Limits
Last week, the Federal Housing Administration (FHA) announced updated 2026 loan limits for its Single-Family Title II forward and Home Equity Conversion Mortgages (HECM) programs. Limits for single-unit homes rose to $541,287 in non-high-cost areas, $1,249,125 in high-cost areas, $1,873,625 in special exception areas, and $1,249,125 for HECMs across all areas.
Why it matters: FHA updates its annual loan limits using a formula prescribed by the National Housing Act (NHA). The formula considers county or Metropolitan Statistical Area (MSA) home sale data to set limits for different cost categories. The NHA ties FHA’s floor and ceiling loan limits to the national conforming loan limit set by FHFA, with adjustments for high-cost and special exception areas, such as Alaska and Hawaii, to reflect local median prices and construction costs.
What’s next: MBA will continue to engage with FHA on this and other critically important housing policy issues.
For more information, contact John McMullen, AMP, at (202) 557-2706 and Anthony Siller, AMP, at (202)-557-2944.
HFSC Subcommittee Holds Bank Capital Framework Hearing
On Thursday, the HFSC’s Subcommittee on Financial Institutions and Monetary Policy held a hearing titled, “Right-Sizing the U.S. Bank Capital Framework: A Return to Tailoring, Economic Growth, and Competitiveness.” MBA submitted a statement for the record, outlining the industry’s concerns with key mortgage-related impacts of the prior Basel III “Endgame” proposal and a broader holistic bank capital review – particularly with respect to the risk weighting of assets such as Mortgage Servicing Rights and warehouse lines of credit.
• Read a summary of the hearing here.
Why it matters: Lawmakers raised bipartisan concerns about the potential impact of the 2023 proposed Basel III rule on bank lending, housing finance, and economic growth.
• Several witnesses, including Margaret Tahyar (Davis Polk), Amanda Eversole (Financial Services Forum), Andrew Olmem (Mayer Brown, former White House NEC Deputy Director), and Mike Flood (Chamber of Commerce) emphasized that the prior Basel proposal would have reduced credit availability.
• Witness Simon Johnson (MIT) and Ranking Member Bill Foster (D-IL) raised concerns about AI as a new systemic risk, reinforcing the debate over appropriate capital buffers.
Go deeper: In addition, a bipartisan group of House lawmakers cited concerns about mortgage lending and housing credit access, including Subcommittee Chair Andy Barr (R-KY), who warned that mis-calibrated capital requirements would raise mortgage costs and discourage bank participation in residential lending.
• Rep. Mike Flood (R-NE) highlighted the pullback of banks from home mortgage lending, pointing to Basel-related capital burdens as a key driver keeping depositories from re-entering the mortgage origination and servicing market.
• Rep. Brad Sherman (D-CA) criticized the prior Basel III framework for failing to account for private mortgage insurance, thereby penalizing homebuyers.
• And Subcommittee Vice Chair Barry Loudermilk (R-GA) noted that capital and compliance burdens have [effectively] driven community banks out of the mortgage business entirely.
What’s next: Subcommittee members expressed interest in continued oversight and potential legislative responses as key staff at the Federal Reserve, OCC, and FDIC finalize an initial draft of a reworked bank capital proposal. MBA will remain engaged with both regulators and Congress to ensure capital rules more accurately reflect our mortgage-related priorities.
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557-2816, Fran Mordi at (202) 557-2860 or John Lammle at (202) 557-2789.
HFSC Holds Hearing on AI
Last Wednesday, the full House Financial Services Committee held a hearing titled, “From Principles to Policy: Enabling 21st Century AI Innovation in Financial Services.” The hearing spotlighted how AI is reshaping housing and financial services and the regulatory frameworks that will govern its use.
• Find a full summary of the hearing here, and watch the full hearing here.
Why it matters: Committee members on both sides of the aisle debated whether to preempt state AI laws with a single national standard. A harmonized framework could reduce compliance complexity for firms operating across multiple states, while a patchwork of state rules could drive up costs and slow innovation. See first item above on last night’s AI EO that addresses this issue.
Go deeper: Members raised concerns about AI perpetuating discrimination in underwriting and tenant screening. Witnesses highlighted AI’s ability to streamline processes like zoning, permitting, fraud detection, and credit evaluation—tools that could lower costs and improve access to housing finance.
What’s next: MBA will continue working with members to prepare for potential new guardrails and fair lending requirements that could affect mortgage origination and servicing. Regulators are also expected to increase scrutiny of underwriting and pricing algorithms, with a focus on preventing AI-driven bias — measures that could influence how MBA members deploy automated tools across origination and servicing.
For more information, please contact Madisyn Rhone at (202) 557-2741 or Rachel Kelley at (202) 557-2816.
MBA Wins Support from State Regulator Group on Grace Period for New Mortgage Call Report
Recently, the American Association of Residential Mortgage Regulators (AARMR) issued a statement supporting MBA’s request for additional implementation time for the Version 7 Mortgage Call Report (V7MCR). In response to MBA’s August 2025 letter, AARMR urged its state regulator members to offer a grace period for filings beginning in the first quarter of 2026.
Go deeper: MBA has strongly advocated for this regulatory flexibility, noting that the compressed implementation timeline for V7MCR is unreasonable for the industry. The report’s technical specifications (XML file) were released on Oct. 31, yet firms must begin collecting data by January 1, 2026—right in the middle of the NMLS annual licensing renewal season, the busiest compliance period of the year for state-licensed companies.
Why it matters: Although AARMR is not itself a regulator, its recommendation to its regulator members for leniency signals a broad recognition of the industry’s challenges. The announcement is particularly notable given that CSBS recently declined to recommend the same flexibility—despite having done so during the 2023 transition from MCR Version 5 to 6 under nearly identical conditions.
• AARMR’s statement also underscored that while CSBS manages the NMLS, the state mortgage regulators hold the actual authority to grant relief. AARMR praised the industry’s past cooperation and reaffirmed that “successful adoption requires partnership.”
What’s next: MBA has updated its outreach campaign—developed in partnership with state associations—to encourage members to ask their state regulators to provide a grace period for V7MCR first-quarter filings. Member companies should review available materials on the V7MCR resource page and participate in CSBS office hours to address any implementation questions.
For more information, please 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:
• New Rules for Recruiting in Mortgage and Banking – Dec. 16
• The High-Performance Manager: Proven Systems to Lead, Recruit, & Coach Winning Sales Teams – Jan. 20
• Decoding Customer Satisfaction and Loyalty: Key Insights from J.D. Power’s Latest Mortgage Studies – Jan. 21
• 1099 vs. W-2: Avoiding Costly Compliance Mistakes – Jan. 22
• Mortgage Accounting Webinar Series: Loan Accounting, Part I: Drilling into Mortgage Accounting – April 22
• Mortgage Accounting Webinar Series: Loan Accounting, Part II: Loan Level Accounting – April 29
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.
