Advocacy Update: Partial Government Shutdown Begins
Partial Government Shutdown Begins
A partial government shutdown began at midnight Saturday, sparking some lapses in funding for select parts of the federal government, including the Department of Housing and Urban Development. The Senate passed a spending package late Friday consisting of five regular appropriations bills and a two-week stopgap measure for the Department of Homeland Security; the House will need to take that package up in the coming days.
A funding lapse lasting a few days–depending on the House’s next moves early this week–would slightly inconvenience single-family and multifamily mortgage market activities with HUD (including FHA and Ginnie Mae). A much longer shutdown would likely necessitate a furlough of HUD employees and significant curtailment of certain operations (similar to last year’s prolonged government shutdown).
MBA is engaged with House and Senate leaders on both sides of the aisle. For more information, please contact George Rogers at (202) 557-2797, Jeremy Green at (202) 557-2849, Rachel Kelley at (202) 557-2816 and Madisyn Rhone at (202) 557-2741.
President Trump Nominates Kevin Warsh to be Federal Reserve Chairman
Last week, President Donald Trump announced his intention to nominate Kevin Warsh, a former Federal Reserve governor with deep investment banking experience, to serve as Chairman of the Federal Reserve. Warsh previously served on the Fed’s Board of Governors from 2006-2011 and has remained an influential voice on monetary policy and financial markets.
Current Fed Chair Jerome Powell’s term expires on May 15, 2026.
What they’re saying: In a press statement, Broeksmit said, “MBA congratulates Kevin Warsh on his nomination to serve as Chairman of the Federal Reserve. His prior service on the Federal Reserve Board, where he developed a reputation as a prudent, thoughtful voice on monetary policy, paired with his private sector experience, will be invaluable as he leads the Federal Reserve in what has become an increasingly challenging and complicated mission.”
Why it matters: The Federal Reserve Chair plays a central role in shaping interest rate policy, financial regulation, and bank capital standards—decisions that directly affect mortgage availability, housing affordability, and credit conditions across single-family and commercial/multifamily real estate markets. Leadership at the Fed will influence how banks allocate capital, participate in mortgage lending, and support commercial real estate financing during a period of economic uncertainty.
What’s next: Warsh’s nomination will head to the Senate Banking Committee for confirmation hearings, where lawmakers are expected to scrutinize his views on inflation, bank regulation, and the Fed’s independence. If advanced by the committee, the nomination would then move to the full Senate for a confirmation vote.
For more information, please contact George Rogers at (202) 557-2797 and Jeremy Green at (202) 557-2849.
FHA Updates Requirements for Bidding at Foreclosure Sale for CWCOT
On Thursday, FHA released a mortgagee letter (ML) announcing updated requirements for bidding Commissioner’s Adjusted Fair Market Value (CAFMV) at foreclosure sales for Claims Without Conveyance of Title (CWCOT) when CAFMV exceeds total debt (TD).
• The policy reaffirms that servicers must bid CAFMV at foreclosures sales and post-foreclosure sales to participate in the CWCOT program. However, mortgagees now have the option to bid below CAFMV and elect to convey the property to HUD and file a conveyance claim or retain the property.
Why it matters: In July 2025, FHA issued a reminder (FHA Info 2025-36) that mortgagees must submit a foreclosure sale bid of CAFMV or the state-mandated foreclosure price to participate in the CWCOT program. At that time, the CWCOT program was mandatory for all mortgagees that did not fall under the small servicer exception. The new policy provides more optionality for servicers that do not want to incur the costs of sending representatives to every foreclosure sale as a buyer with the funds to cover any portion of the bid exceeding TD in the event the Mortgagee is the highest bidder.
Go deeper: MBA opposed the July policy change, which conflicted with long-standing instructions and HUD guidance advising lenders to bid TD when CAFMV exceeded TD. Bidding in this manner created significant operational and liquidity challenges for servicers.
• MBA sent a letter urging HUD to clarify that when the CAFMV is greater than total debt, the CAFMV should be adjusted to equal total debt. As an alternative, MBA proposed that HUD could make CWCOT optional, at least in instances where CAFMV exceeded TD. Thursday’s ML generally follows the latter recommendation.
What’s next: MBA will continue to monitor members’ questions and concerns as they implement the policy.
For more information, please contact Kaitlin Hildner at (202) 557-2933.
Federal Reserve Maintains Federal Funds Rate
In response to current economic conditions, the Federal Reserve decided to maintain the federal funds rate to a target range of 3.50-3.75% on Wednesday.
What they are saying: “While not a unanimous vote, there does seem to be a clear and consistent majority in favor of a pause in this rate-cutting cycle, a pause that likely continues unless or until the job market weakens further,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “With inflation remaining elevated, the FOMC majority does not seem in any rush to make further rate moves.”
• Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935
MBA Responds to OCC Proposed Rule on Escrow Accounts
On Thursday, MBA joined a joint trades letter responding to a proposed rule affecting escrow accounts. The proposed rule would codify the longstanding authority of national banks and federal savings associations to establish and manage real estate lending escrow accounts, including the discretion to set the accounts’ terms – such as whether to pay interest or charge fees – based on their business judgment.
• MBA supported the rule and thanked the OCC for reaffirming that escrow account management is a core component of national banks’ federally authorized real estate lending powers.
Go deeper: The proposed rule would recognize that national banks retain the discretion under the National Bank Act of 1863 to set the terms and conditions of escrow accounts. Codifying this power limits states’ attempts to pass laws that require banks to pay interest on escrow accounts.
• MBA has previously filed Amicus Briefs arguing that the National Bank Act of 1863 preempts state laws that restrict banks’ authority to set escrow account terms. Most recently, in the Kivett case, MBA filed an Amicus Brief asserting that state interest on escrow laws are preempted under the Dodd-Frank Act preemption framework. These efforts demonstrate MBA’s commitment to supporting consistent legal frameworks governing lending where possible.
What’s next: MBA will keep members informed about any comments.
For more information, please contact Justin Wiseman at (202) 557-2854, Alisha Sears at (202) 557-2390, or Kaitlin Hildner at (202) 557-2933.
UAD 3.6 Is Now Live
On Monday, Fannie Mae and Freddie Mac announced that the Uniform Appraisal Dataset (UAD) 3.6 and Forms Redesign are available for wide use as of January 29, 2026. All lenders now have the option to submit appraisals using UAD appraisal reports through the Uniform Collateral Data Portal® (UCDP®).
Why this matters: While lenders are not required to submit appraisals through the new process today, beginning November 2, 2026, all appraisal reports for loans sold to Freddie Mac or Fannie Mae must be submitted using UAD 3.6.
What’s next: FHA has announced that it will follow suit in the adoption of the UAD.3.6 beginning in early spring of this year.
For more information, please contact Darnell Peterson at (202) 557-2922 or Rick Hill at (202) 557-2718.
MBA Submits Comments on Proposed Revisions to the Community Bank Leverage Ratio
On Wednesday, MBA submitted comments on the notice of proposed rulemaking (the NPR) issued jointly by the 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”) on revisions to the Community Bank Leverage Ratio (CBLR). The NPR proposes:
• Lowering the CBLR framework for qualifying community banks from 9% to 8%, consistent with the threshold provided in the legislation that established the CBLR framework; and
• Increasing the length of time from two quarters to four quarters that a bank that temporarily falls out of CBLR compliance can continue to remain within the framework while working to restore compliance.
Why it matters: The CBLR framework is an important tool for providing meaningful regulatory relief for qualifying community banks by providing a simplified method for calculating 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: MBA supports the proposals in the NPR, noting that an 8% ratio and extended grace period would expand regulatory relief by encouraging broader adoption of the CBLR framework.
• MBA also urged Regulators to eliminate the unjustified 25% cap on MSAs that can be included in common equity tier 1 (CET1) capital for CBLR banks because the cap raises the capital costs and discourages community banks from retaining servicing assets created from their mortgage banking activities.
What’s next: MBA worked with member community banks to develop its comments as well as on their respective submissions on the NPR. MBA will continue to work with the Regulators as they continue to develop these CBLR and other bank capital rules.
For more information, please contact Fran Mordi at (202) 557-2860 or Monique Ellis at (202) 557-2856.
State Regulators Seek Industry Volunteers to Serve on Nonbank Industry Advisory Council
Earlier last week, the Conference of State Bank Supervisors (CSBS) announced that its asking for industry professionals to volunteer to serve on the NMLS Nonbank Industry Advisory Council (NIAC).
Why it matters: The NIAC is a new collaborative and iterative forum for industry members, related organizations, and individuals to use their expertise to consider, discuss, and advise CSBS and its members on topics that are relevant to the NMLS (including the State Examination System, or SES) and the state system of nonbank supervision. The NIAC does not have any decision-making authority, and it’s focus will also include money services, debt collection, and consumer finance issues in addition to mortgage.
Dig deeper: The NAIC will include 30 representatives from the industry and according to the NAIC, charter volunteers should be senior members of their organizations and able to engage in conversations at a strategic level but with sufficient detail to understand the practical implications of the topics discussed.
• What’s next: To serve on the NIAC, a member should have significant experience in areas relevant to the state system of supervision such as compliance, examinations, licensing, financial oversight, consumer protection, regulatory affairs, public policy, technology and training.
The short form to complete to express interest is here, and must be submitted by Friday, February 27, at 5 p.m. EST.
For more information, contact William Kooper at (202) 557-2737 or Liz Facemire at (202) 557-2870.
MBA and NYMBA Meet with NY Regulator on Implementation of IMB CRA Rules
On Tuesday, the New York MBA (NYMBA) and MBA discussed several issues related to the final regulations to implement New York 2021 Community Reinvestment Act (CRA) law for independent mortgage banks (IMBs).
• The rules were announced in the New York State Register (see page 15), and the adopted regulations were posted to the New York Department if Financial Services (NYDFS) website.
Why it matters: In response to a series of industry questions, NYDFS staff noted that they are in the process of adding staff in order to start exams, which they anticipate beginning next year. Their plan is to publicly state which companies will be examined once a year in January, and to send “first day” notices three to four months before commencing an exam, but no later than 90 days in advance.
Dig deeper: MBA was able to confirm that HMDA data will be relied on for the rule’s lending test, but staff were much less specific about what would constitute suitable activities under the rule’s service test and suggested that lenders review old public CRA exams for NY state chartered banks. Staff also encouraged lenders to be creative in reaching traditionally underserved borrowers and communities.
• When asked about language in the rule that suggested the Department could leverage CRA exams conducted by other states, they clarified that NYDFS will only use other states’ exams to inform but not replace their CRA exams.
• MBA and NYMBA also strongly urged CRA staff to consider New York’s longest in the nation licensing timelines as a significant impediment to licensed companies being able to onboard new staff to reach additional underserved markets within the states.
What next: MBA and the NYMBA will continue the dialogue with NYDFS and brief members on any developments. MBA Education will also be holding a webinar in the near future about state CRA Compliance for IMBs.
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.
Thursday’s MAA Quarterly Webinar Recap
The Mortgage Action Alliance (MAA) hosted its quarterly webinar yesterday afternoon, where MBA’s Legislative and Political Affairs team briefed attendees on the top policy priorities heading into the 2026 mid‑term elections.
• Speakers also shared real‑time updates on the Q1 legislative sprint and the year‑end congressional closeout, including the increased risk of a partial government shutdown. To mark America’s 250‑year milestone, the program featured lighthearted trivia polls that kept attendees engaged throughout the session. The webinar also highlighted MBA’s National Advocacy Conference (NAC), taking place April 14–15, emphasizing how state advocates can elevate their voices on Capitol Hill and strengthen the industry’s collective impact through national‑level engagement.
Why it matters: With the midterms approaching, the industry may see policy shifts tied to potential changes in congressional power. MAA encourages all members to leverage its full suite of advocacy tools to stay informed, engaged, and prepared to make their voices heard.
What’s next: Register for #MBANAC26. Keep the momentum going by saving the date for part III of MBA’s State and Federal Advocacy Webinar & Fly-In Series, hosted by the Massachusetts Mortgage Bankers Association, taking place on Friday, Feb. 27, at 2:00 PM ET. This session will spotlight the Northeast region and is open to MAA and MBA members nationwide.
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:
• Marketing Mastery for Loan Originators: Building a Consistent, High-Quality Pipeline – Feb. 9
• Renovation Lending Today: Market Trends, Best Practices & 203(k) Insights – Feb. 12
• How Secondary Marketing Powers Mortgage Lending – April 1
• State of the Market: Tech Trends Shaping the Future of Mortgage Lending – May 14
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.
