Advocacy Update: VA Releases Updated Loss Mitigation and Partial Claim Policies

VA Releases Updated Loss Mitigation and Partial Claim Policies

Last Monday, the Department of Veteran Affairs (VA) announced its loss mitigation waterfall and partial claim policy under its new authority to implement a partial claims program as enacted by the “VA Home Loan Program Reform Act” (and amended by “Continuing Appropriations, Agriculture, Legislative Branch, Military Construction and Veterans Affairs, and Extensions Act, 2026”). MBA played a major role in securing passage of this legislation to provide veterans with more effective foreclosure prevention options.

• Servicers can implement the new loss mitigation waterfall and partial claim policies as soon as June 15, 2026, but no later than Nov. 28, 2026.

What they’re saying: In a press statement, MBA’s Broeksmit said, “We are pleased to see that veteran homeowners will have access to a key loss mitigation option available to other borrowers with government-backed mortgages, that can allow veterans to remain in their homes without increasing their monthly payments.”

Some highlights from the policies include:

• Servicers have the explicit authority to offer informal forbearance or repayment plans.
• Borrowers will need to successfully complete a three-month trial payment plan to obtain a modification or a partial claim. Borrowers who fail three trial payment plans (TPPs) will no longer be eligible for options that require a TPP during the current default episode. Borrowers will only be offered one modification or partial claim per 24-month period.
• The updated loss mitigation waterfall removes any payment increase from the waterfall before a borrower has exhausted all other options.
• Only one partial claim will be offered over the life of the loan, inclusive of COVID partial claims and COVID-era refund modifications.
• VA will use a servicer advance model for administering its partial claims program, rather than the partial claim becoming a subordinate lien. VA also made helpful updates to the partial claim attestation required for a borrower to receive a partial claim.

Why it matters: MBA and its members have long advocated for the VA to have partial claims authority to provide veterans with the same loss mitigation options as other borrowers. The ability to offer a partial claim is a particularly important option for allowing borrowers to keep payments stable in a higher-interest-rate environment. This was also the first time VA used a drafting table process for developing policy – something MBA has urged for years. The updates VA made for the final policies addressed many of the top concerns MBA flagged for VA using the drafting table.

What’s next: MBA will work with members and VA to address remaining questions about the new policy and bring greater clarity where ambiguities remain.

For more information, please contact Kait Hildner at (202) 557-2933.

MBA Submits Coalition Letter to FCC on Foreign Call Centers

On Tuesday, MBA and other trades sent a joint letter in response to the Federal Communications Commission’s (FCC) proposal that would impose certain requirements on the customer call centers of telecommunications companies that are located abroad. The proposal also asks whether the FCC should expand these restrictions to other industries.

Specifically, the proposal would impose several requirements on foreign call centers, including:

• English proficiency standards for agents;
• Caps on the percentage of calls handled overseas;
• Mandatory disclosures that a caller is overseas;
• A right for consumers to transfer to a U.S.-based representative; and,
• Restrictions on handling sensitive customer data abroad.

Go deeper: The letter explains that these rules improperly target legitimate customer-service operations rather than the criminals responsible for spoofing and scam calls. The letter expresses support of the FCC’s efforts to combat illegal robocalls, spoofing, and fraud, particularly recent proposals strengthening “know your customer” and STIR/SHAKEN authentication requirements for telecommunications providers. However, the organizations  oppose the FCC’s separate proposal that would impose operational restrictions on foreign-based customer service call centers used by legitimate businesses.

• The letter argues these proposed restrictions would not meaningfully reduce fraud or illegal spoofing, and would instead burden lawful customer-service operations, exceed the FCC’s statutory authority under the TCPA and Communications Act, and potentially violate the Supreme Court’s “major questions” doctrine.

Why it matters: Banks, credit unions, and mortgage companies are already heavily regulated under laws such as the GLBA, BSA, and the Dodd- Frank Act. These existing frameworks already impose robust customer-service, privacy, fraud-response, and data-security obligations enforced by federal banking regulators and the CFPB. Therefore, additional FCC operational mandates are unnecessary.

What’s next: MBA will continue to monitor this rulemaking and provide any relevant updates. 

For more information, please contact Alisha Sears at (202) 577-2930. 

Prudential Regulators Appear Before Key House Panel

Last week, the House Committee on Financial Services (HFSC) held a regularly-scheduled oversight hearing with the heads of the nation’s top prudential financial regulators, namely Federal Reserve Vice Chair for Supervision Michelle Bowman, Federal Deposit Insurance Corporation (FDIC) Chairman Travis Hill, National Credit Union Administration (NCUA) Chairman Kyle Hauptman, and Comptroller of the Currency (OCC) Jonathan Gould.

As expected, the hearing covered a broad range of topics – including bank capital and regulatory supervision/modernization – on specific issues such as the revised Basel III “Endgame” (B3E) proposal, regulatory tailoring for community and mid-sized banks, mortgage credit access, digital assets, “debanking,” private credit systemic risk, AI and fraud risks, and the Bank Secrecy Act (BSA)/anti-money laundering (AML) compliance.

Mortgage lending and servicing were central elements of several exchanges between the regulators and key panel members, particularly with respect to the revised B3E capital proposal.

• Members from both sides of the political aisle agreed with the regulators that prior bank capital rules had unfairly penalized bank mortgage lending and servicing lenders and servicers and that the revised proposal directionally seeks to correct this by recalibrating risk weights and removing the mortgage servicing asset (MSA) cap. A summary of the hearing can be found here.

Go deeper: Vice Chair Michelle Bowman stated in a key exchange with HFSC Chairman French Hill (R-AR) that the Basel proposal has “more appropriately calibrated risk weightings for mortgage and mortgage origination and mortgage servicing activities so that banks will be incentivized to or not disincentivized to, to return to the mortgage market to serve their customers.”

Why it matters: The revised B3E proposal provides an opportunity to  improve the capital treatment of mortgage lending and servicing, potentially encouraging banks to return to the mortgage market and improving housing affordability.  MBA has advocated for years to reduce the punitive capital treatment of mortgage servicing rights and to lower the risk weighting on warehouse lines of credit. Together, these changes would enhance MSR values (and servicing release premiums) for all market participants and improve liquidity for IMBs that rely on banks for warehouse facilities.

What’s next: MBA will continue to finalize its formal response and comments regarding the Basel III re-proposal (comments are due June 18), while simultaneously continuing to engage with regulators (and the Congress) to ensure the final rule supports all mortgage servicers – regardless of regulatory platform – to the greatest degree possible.

For more information, please contact Rachel Kelley  at (202) 557-2816,  Madisyn Rhone at (202) 557-2741, or Fran Mordi at (202) 557 -2860.

MBA Joins Industry Letter Supporting Appraisal Modernization

Last Friday, MBA joined a coalition of housing trade associations in a letter to FHFA supporting appraisal provisions in President Trump’s Executive Order on “Promoting Access to Mortgage Credit”.

Go deeper: The letter urges further modernization of the GSE appraisal process, recommending expanding the use of hybrid and alternative valuation methods, increasing appraisal waiver eligibility by raising the current value acceptance cap from $1 million to $2 million for eligible low-risk properties, and providing appraisers with limited access to GSE collateral data and tools to improve valuation quality, consistency, and efficiency.

• The letter is a follow-up to recent industry recommendations submitted to FHA and VA and reflects a broader effort to modernize and align valuation policies across the housing finance system through a consistent, risk-based approach.

Why it matters: These recommendations would help reduce costs and delays for borrowers, improve efficiency for lenders and appraisers, and better align valuation requirements with the transaction’s risk profile. Expanded appraisal flexibilities and improved access to collateral data would lower costs and support a more streamlined mortgage process while maintaining strong risk management standards.

What’s next: MBA will continue working with FHFA, the GSEs, and the government housing agencies to advance appraisal modernization policies that leverage technology, improve efficiency, and enhance access to mortgage credit.

For more information, please contact Darnell Peterson at (202) 557-2922.

Key House Panel Re-examines Data Privacy Proposal

On Wednesday, a House Energy & Commerce Committee subcomittee held a hearing titled, “Examining Legislation to Establish a Federal Comprehensive Privacy and Data Security Law.”

The hearing primarily focused on the SECURE Data Act, proposed legislation that could significantly change how mortgage lenders, servicers, and other housing finance companies comply with data privacy requirements.

• The bill would replace the current patchwork of more than 20 state privacy laws with a single national standard, an approach that many businesses support because it would simplify compliance, reduce regulatory complexity, and provide greater certainty for companies operating across multiple states.
• Find the hearing summary here, and watch it here.

Why it matters: This issue is important, given the industry’s extensive handling of sensitive consumer financial data. A uniform federal framework could reduce operational complexity, lower compliance costs, and enable companies to operate more efficiently across state lines.

Go deeper: The bill’s broad federal preemption and limited enforcement mechanisms have sparked significant partisan disagreement, raising questions about whether a national standard would weaken stronger state protections or create new legal risk

What’s next: MBA will continue working closely with lawmakers and relevant committee staff as the legislation moves through the House Energy & Commerce Committee. Simultaneously, MBA and coalition partners will also continue to engage with the House Financial Services Committee, which, importantly, holds jurisdiction over any proposed revisions that could impact Gramm-Leach-Bliley Act (GLBA) pre-emption.

For more information, please contact Rachel Kelley at (202) 557-2816 or Madisyn Rhone at (202) 557-2741.

MBA Launches Senior Mortgage Solutions Network

MBA is introducing a new Senior Mortgage Solutions Network (SMSN), expanding its broad range of industry segment networks for members. The SMSN will serve as a forum to discuss emerging trends and business challenges related to reverse mortgage lending and other senior-focused mortgage products.

• The inaugural co-chairs–who will serve a two-year term–are Longbridge Financial CEO Christopher Mayer, Ph.D., also professor emeritus at Columbia University, and Guild Mortgage Managing Director of Reverse Jim Cory.

Why it matters: This new network will focus on the industry’s need to provide better housing finance solutions for the fast-growing population of older adults in the United States. Relevant products include, but are not limited to, Home Equity Conversion Mortgages, proprietary reverse mortgages and other home equity and senior-focused solutions.

Go deeper: Each product faces a distinct set of business challenges, and the group will focus on identifying the key policy, regulatory and operational issues shaping their businesses and the broader age-based mortgage market. The SMSN will also help ensure that key issues impacting senior-focused mortgage lending are represented in MBA’s advocacy efforts, education, member engagement activities and other programming.

What’s next: The network will meet quarterly (and most of the time virtually), with an in-person meeting at least once a year at an MBA conference. A kickoff call is scheduled for July 8 at 2-3 p.m. Register for the kickoff call here. Any employee of an MBA residential member company or a select or premier-level associate member company may register and join the SMSN.

For more information, please contact Anthony Siller at (202) 557-2944.

Industry-Supported Tennessee Law on Proprietary Reverse Mortgage Products Goes Live

Recently-enacted Tennessee legislation (SB 2190) to permit proprietary reverse mortgage products in the state was signed by Governor Bill Lee last week. The new law, which was strongly supported by the Tennessee Mortgage Bankers Association, is a welcomed change to expand offerings beyond Home Equity Conversion Mortgages offered by the Federal Housing Administration (FHA).

• The law also makes improvements to counseling requirements and expands the definition of who may serve as a counselor to include approved consumer education entities, not only those approved by the Department of Housing and Urban Development (HUD).

Why it matters: Tennessee was one of a handful of states that prohibited proprietary reverse mortgage products. Removing the prohibition increases opportunities for MBA members to find the best fit to achieve older consumers’ financial goals. The success of Tennessee MBA is another terrific example of the power of coordinated industry advocacy to accomplish results that effect member companies’ bottom lines.

What is next: MBA will continue to support its reverse mortgage members and state partner associations in the remaining restricted states.

For more information, or to get involved, please contact Liz Facemire at (202) 557-2870 or Anthony Siller at (202) 557-2944.

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:

• Unlocking Opportunity: Innovative Solutions for Affordable Housing in Overlooked Markets – June 9
• New and Evolving Loss Mitigation Options – June 10
• M&A State of Play in Mortgage Lending – June 11
• What Happens After a Reverse Mortgage Closes? – June 26
• Rethinking Income Strategies for Self-Employed Borrowers – July 8
• Analyzing the 2025 Mortgage Market: A Deep Dive into New HMDA Data – July 22

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.