Advocacy Update: Banking Regulators NPR on CBLR; HFSC Hearing Recaps on Housing, Bank Capital; MBA Letters on NFIP and RMBS Reforms; more
ROAD to Housing:
The bipartisan Senate package of roughly 40 aggregated housing proposals remained at an impasse yesterday as the White House and Senate leaders continue to encourage House Speaker Mike Johnson (R-LA) and House Financial Services Committee Chair French Hill (R-AR) to examine – and potentially accept – revised text that could be included in a final version of a “must-pass,” defense authorization bill before Congress adjourns later this month.
MBA will keep you posted as these discussions either wax or wane – particularly with respect to the ROAD package’s provisions regarding appraisal reforms, rural housing program improvements, and its section regarding FHA multifamily loan limits.
Federal Banking Regulators Issue NPR on the Community Bank Leverage Ratio
On Monday, the three federal banking regulators (the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation – the “Regulators”) jointly issued a notice of proposed rulemaking on the Community Bank Leverage Ratio (CBLR).
• The proposal would lower the CBLR framework for qualifying community banks and community bank holding companies from 9% to 8%, consistent with the threshold provided in the legislation that established the framework (section 201 of the Economic Growth, Regulatory Relief, and Consumer Protection Act).
• The proposal would also extend the length of time, from two to four quarters, that certain community banks can remain in the CBLR framework while not meeting all of the qualifying criteria for the framework.
Why it matters: MBA has long supported the CBLR framework as an important tool for providing meaningful regulatory relief for qualifying community banks by removing the requirement for calculating and reporting risk-based capital ratios for banks that opt in. To be eligible to opt in, a community bank must be at or above the established capital ratio (determined by calculating the ratio of tangible equity capital to average total consolidated assets).
Go deeper: At the time the CBLR was established in 2017, MBA strongly urged the regulators to set the ratio at no higher than 8% and to provide a longer timeframe for a bank that falls out of compliance to either get back in compliance or exit the framework. MBA’s renewed recommendation in its October 2025 comment letter called for the lower ratio.
• Shortly before Monday’s Federal Register publication, Acting House Financial Services Chairman Travis Hill praised the proposal, echoing MBA’s view that the proposed 8% ratio and extended grace period would encourage broader community bank participation in the CBLR framework and give banks sufficient time to regain compliance or transition to risk-based capital standards.
What’s next: MBA will submit comments on the proposed rulemaking are by the January 30, 2026, deadline.
For more information, please contact Fran Mordi at (202) 557-2860 or Monique Ellis at (202) 557-2856.
House Financial Services Committee Holds Hearing with Prudential Regulators; MBA, Trades Call for Bank Capital Reform
On Tuesday, the full House Financial Services Committee (HFSC) held a hearing titled, “Oversight of the Prudential Regulators.”
• The high-profile hearing foreshadowed strong potential for regulatory changes that could emerge from the Trump administration – with government witnesses (from the Fed, OCC, FDIC, and NCUA) emphasizing a shift towards risk-aligned capital frameworks, including a comprehensive review of mortgage capital treatment, securitization charges, and leverage ratios. These adjustments (as discussed) will aim to improve clarity and reduce unnecessary burdens while preserving safety and soundness—critical for liquidity in residential and multifamily markets.
• Find the full hearing summary here and watch the live hearing here.
Why it matters: Lawmakers pressed for modernization of tailoring thresholds and supervisory categories, noting that outdated asset triggers distort growth incentives for community and regional banks. Changes here could positively influence single-family warehouse lending costs and credit availability for multifamily projects. Regulators also addressed deposit insurance reform and stablecoin-related deposit flight risks, both of which affect funding stability for lenders and servicers. MBA signed and contributed to a joint statement with other leading financial trades that was entered into the official hearing record.
Go deeper: Importantly, Federal Reserve Vice Chair for Supervision Michelle W. Bowman in her testimony said, “Modernizing capital requirements to support market liquidity, affordable homeownership, and the safety and soundness of banking is an important goal of these changes. In particular, the capital treatment of mortgages and mortgage servicing assets under the U.S. standardized approach has resulted in banks reducing their participation in this important lending activity, potentially curtailing access to mortgage credit. We are considering approaches to more granularly differentiate the riskiness of mortgages with benefits extending to financial institutions of all sizes, not just the largest banks.”
What’s next: MBA will stay engaged as regulators recalibrate bank capital rules (including the Basel III Endgame proposal) that impact mortgage servicing rights, warehouse line risk weighting, capital allocation, and operational resilience across the banking spectrum.
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557-2816, and/or Fran Mordi at (202) 557-2860.
House Financial Services Committee Holds Hearing on Housing
On Wednesday, HFSC held a full committee hearing titled, “Building Capacity: Reducing Government Roadblocks to Housing Supply,” where panel members examined the barriers impacting housing supply and development, financing, and other issues such as zoning, compliance costs, bank capital standards, and insurance premiums.
• Find the full summary here and watch the full hearing here.
Why it matters: HFSC Chairman French Hill (R-AR) announced his intention to create a housing and banking legislative package at his panel’s expected two-day markup on December 16 and 17. Hill stated the package will prioritize cutting red tape, encouraging innovation and investment, and streamlining regulatory processes in an effort to create a more predictable environment for builders, lenders, buyers and renters. The committee “noticed” 41 bills at part of Wednesday’s hearing, including proposals regarding rural housing program improvements (among many others).
What’s next: MBA will continue to monitor discussions in both the House and Senate as negotiations continue on the ROAD to Housing proposal and/or any newly-evolving House housing package (per Chairman Hill’s comments).
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557-2816, Bill Killmer at (202) 557-2736 or George Rogers at (202) 557-2797.
FHA Publishes Draft Policy Updates on Rehabilitation Financing and CWCOT Procedures
On Wednesday, the Federal Housing Administration (FHA) posted two draft Mortgagee Letters (MLs) to the Office of Single-Family Housing Drafting Table, addressing key issues previously raised by MBA members related to the Limited FHA 203(k) Rehabilitation Mortgage Insurance Program and the Claims Without Conveyance of Title (CWCOT) process.
• Limited 203(k) Rehabilitation Mortgage Insurance Program: FHA proposes increasing the maximum number of allowable draws under the Limited 203(k) program and clarifying draw disbursement procedures for both Limited and Standard 203(k) programs.
• Use of Independent Third-Party Providers in Connection with CWCOT: The draft ML expands the use of Independent Third-Party Providers to those affiliated specifically with the Mortgage Holder.
What’s next: MBA will prepare responses to both draft MLs, with the Residential Loan Production Committee leading on the 203(k) proposal and the Loan Administration Committee leading on the CWCOT guidance. Comments are due January 19, 2026.
For more information, please contact Kaitlin Hildner at (202) 557-2933 on servicing matters and Darnell Peterson at (202) 557-2922 on loan production issues.
MBA Joins Joint Trades Letter Urging Long-Term NFIP Reforms
On Tuesday, MBA and a coalition of 14 major trade organizations representing insurance and financial institutions urged congressional leaders in a letter to execute a long-term reauthorization of the National Flood Insurance Program (NFIP).
Why it matters: “As stakeholders representing real estate, insurance, lending, and state and local governments, we urge Congress to act decisively to ensure stability and certainty for the millions of Americans who rely on this vital program to protect their families and properties from flooding—the nation’s most common and costliest natural disaster,” the organizations wrote in the letter.
Go deeper: The federally funded insurance program has had 34 short-term reauthorizations since 2017, with no large-scale change, even as lawmakers have repeatedly called for comprehensive improvements to the program. Additionally, the recent government shutdown allowed the NFIP to lapse for more than a month, the longest period the program has ceased writing and renewing policies in almost a decade. The program is up again for reauthorization by January 30, 2026.
What’s next: MBA will continue to work with these coalition partners (and others) to advocate for a longer-term reauthorization of the NFIP that adds certainty to the application of the program – and extends well beyond the current fiscal year.
For more information, please contact Madisyn Rhone at (202) 557-2741, Rachel Kelley at (202) 557-2816, Bill Killmer at (202) 557-2736 or George Rogers at (202) 557-2797.
MBA Responds to SEC Concept Release on RMBS
Last week, MBA submitted comments in response to the Securities and Exchange Commission (SEC) Concept Release on Residential Mortgage-Backed Securities (RMBS) Disclosures and Enhancements to Asset-Backed Securities (ABS) Registration. The Concept Release aims to gather information regarding the lack of SEC-registered RMBS in the current private label securities market.
• The stalled recovery of this market suggests that there are foundational challenges that must be addressed including the disclosure requirements adopted in the 2014 ABS amendments (Reg AB II).
Why it matters: MBA members believe that Reg AB II’s disclosure requirements are a significant contributor to the lack of SEC-registered issuances. The increasingly active 144A market indicates that market participants have become comfortable with these issuances, their associated processes, and the accompanying disclosures. However, many investors cannot participate in the 144A market because they are limited to acquiring only SEC-registered securities.
Go deeper: The market for SEC-registered RMBS has not recovered since the financial crisis. Reviving this market – a longstanding MBA priority –would increase the diversity of housing finance capital sources, making the system more resilient and promoting greater liquidity, while also lowering costs and improving choices for borrowers.
• This issue is also particularly important as we are at a pivotal point regarding the future of Fannie Mae and Freddie Mac. MBA has consistently stated that housing finance reform should be approached holistically, with consideration given to the impact that changes to the GSEs could have on various parts of the housing market, including the PLS market.
What’s next: MBA welcomes the opportunity to work with regulators and other market participants to discuss potential revisions to Reg AB II.
For more information, please contact Sasha Hewlett at (202) 557-2805.
North Carolina Bankruptcy Court Makes MBA-Recommended Changes to Proposed Rules
In a statement last week, the Local Rules Committee of the United States Bankruptcy Court for the Middle District of North Carolina (MDNC) released its final rules that, while not totally embracing all of MBA’s requests, did rollback problematic elements from the original proposal.
• The MDNC Local Bankruptcy Rules are region-specific procedural requirements supplementing the Federal Rules of Bankruptcy Procedure, governing all bankruptcy proceedings within that district. MBA noted that the MDNC proposal conflicts with federal mortgage servicing laws and rules, was not operationally feasible, and would create considerable confusion and legal risk for servicers. MBA also highlighted that the rules themselves are internally inconsistent.
Dig deeper: MBA suggested that giving online access and monthly statements to debtors should not violate the automatic stay, the bankruptcy confirmation order, or the discharge injunction. If the court keeps any online access rules, MBA said the MDNC should not impose penalties or punishment on servicers’ for their online access services. The final language removes all references to online access.
What’s next: MBA members should note that the revised MDNC rules are effective January 1, 2026.
For more information, please contact Justin Wiseman (202) 557-2854 or Gabriel Acosta (202) 557-2811.
Be a Part of MBA’s Home Equity Lending Study
MBA’s Home Equity Lending Study is now open for registration and will collect benchmarking data – volume, utilization rates, operational metrics, and growth expectations – related to lending and servicing open-ended Home Equity Lines of Credit (HELOCs) and closed-end Home Equity Loans for full-year 2025.
2025 study analysis: “With close to $35 trillion of homeowner equity in residential real estate and many homeowners locked into low-rate first mortgages, HELOCs and home equity loans have become the product of choice for many homeowners,” said Marina Walsh, CMB, MBA’s Vice President of Industry Analysis. “Lenders in our study expect year-over-year growth of almost 10 percent for HELOC debt and 7 percent for home equity loan debt in 2025.”
Whats’s next: Take advantage of this momentum and participate in MBA’s 2026 Home Equity Lending Study.
For more information, please email homeequity@mba.org or email Jonathan Penniman at (202) 557- 2943.
Renew Your MAA Membership for 2026
Home of MAA’s grassroots advocates like you, MBA secured signature legislative wins in 2025, including trigger leads reform, Veterans Affairs (VA) loss mitigation option enhancements, and major tax legislation that preserved and enhanced pro real estate finance provisions. In 2026, the need for continued, robust industry support is crucial as MBA addresses the future of the housing GSEs, the need for fairer credit score pricing, and much more.
As the year comes to a close, please take 30 seconds to join or renew your annual MAA membership.
MAA members receive many benefits, including:
• timely calls to action at all government levels;
• real-time news alerts impacting our industry;
• quarterly newsletters packed with policy updates; and,
• an invitation to MAA’s quarterly webinar series
Why it matters: MAA is a FREE network that unites all industry advocates and allows them to have an active role in shaping legislation and regulations. You are the experts, and your voice is needed to share the vital work we do. We are LOUDER together!
What’s next: Attend the National Advocacy Conference (NAC), MBA’s largest in-person advocacy event on April 14-15, designed to let MBA members share their policy concerns face-to-face with elected officials and make a collective impact on behalf of our industry. Register NOW!
For more information, please contact maa@mba.org or Margie Ehrhardt at (202) 557-2708.
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:
• Ten Things Your Company Must Do in 2026 – Dec. 9
• New Rules for Recruiting in Mortgage and Banking – Dec. 16
• 5 Key MISMO Initiatives Impacting Today’s Lenders – Feb. 17
• 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.
