Advocacy Update: Federal Banking Agencies’ Basel III Re-proposal Contains Numerous MBA Recommendations
Federal Banking Agencies’ Basel III Re-proposal Contains Numerous MBA Recommendations
On Thursday, the Federal Reserve, Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) released the long-anticipated Basel III Endgame re-proposal on bank capital requirements. The three-part proposal (Endgame; G-SIB surcharge; and standardized proposal for regional banks) has a 90-day comment period with a deadline of June 18, 2026.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “Capital rules are notoriously complex, but based on our initial review, the re-proposal incorporates several priorities long advocated by MBA, including more risk-sensitive capital requirements using loan-to-value ratios and recognition of credit enhancements such as private mortgage insurance. It also takes important steps to reduce the punitive treatment of mortgage servicing rights and commercial real estate loans.”
Go deeper: The re-proposal reflects significant progress for MBA and its single-family and commercial real estate finance members after years of sustained advocacy for a better-calibrated capital framework for mortgage assets after the very flawed initial proposal was released in July 2023.
• MBA’s push for changes came in many forms over the past 2.5 years, including numerous comment letters, regulatory meetings, speeches, and Broeksmit’s September 2023 testimony in front of the House Financial Services Subcommittee on Financial Institutions and Monetary Policy.
• Ahead of the re-proposal, MBA recently submitted a Statement for the Record supporting the re-proposal (and offering recommendations) ahead of a Senate Banking Committee hearing with the prudential bank regulators, led a broad joint trades letter with recommendations, and sent a letter urging the banking agencies to reduce risk weighting for warehouse lines.
• Overall, MBA has long emphasized that banks play a critical role in mortgage lending and servicing – both directly and through financing IMBs – as well as in the commercial real estate market, and that current capital rules limit their ability to fully participate in and support these markets.
Why it matters: The updated proposal includes several MBA-recommended changes (and seeks comments/recommendations on others) that, if fully adopted, should create a more balanced framework that would increase bank demand for mortgages, support a deeper more liquid market for MSRs, and create greater stability of warehouse financing for IMBs.
Specifically, the proposal:
• Reduces the punitive capital treatment of mortgage servicing rights by eliminating the cap on mortgage servicing assets (MSAs) in Tier 1 capital and seeking comment on the appropriate risk weight;
• Adopts more granular, LTV-based risk weights for loans held in portfolio;
• Preserves recognition of private mortgage insurance as a credit enhancement; and,
• Takes steps to reduce the punitive capital treatment of commercial real estate loans on banks’ balance sheets.
What’s next: At first glance, MBA is very pleased that the rule proposes policy changes or seeks comment on most of MBA’s recommendations. MBA will share a more comprehensive summary in the near future, looks forward to working with its members to formulate a response ahead of the June 18, 2026, deadline, and stands ready to work with the banking agencies on a finalized Basel III capital framework.
• Register here for the upcoming MBA webinar on March 27 titled, “Basel III Endgame Re-proposal Update.”
For more information and to participate in the Working Group that will meet to comment on this proposal, please contact Pete Mills at (202) 557-2878, Fran Mordi at (202) 577-2860, and John Lammle at (202) 557-2789.
More on President Trump’s Executive Orders on Mortgages, Housing Construction
Last Friday, President Donald Trump signed two executive orders (here and here) that aim to remove regulatory barriers to housing construction and promote lower costs and increased access to mortgage credit.
• Fact sheets: President Donald J. Trump Promotes Access to Mortgage Credit; President Donald J. Trump Removes Regulatory Barriers to Affordable Home Construction
Read MBA’s highlighted portions of note in the mortgage EO here.
What they’re saying: In a press statement, MBA’s Broeksmit said, “America’s housing finance system is the best in the world because it’s competitive. We support efforts to increase bank participation in mortgage lending and servicing, and the goal should be to revise overly burdensome rules for lenders of all sizes and business models. This includes credit unions that support their members and independent mortgage banks (IMBs), who serve most FHA, VA, and Rural Housing borrowers, making homeownership possible for first-time buyers, low- and moderate-income families, veterans, and those living in rural communities.”
Broeksmit added, “MBA strongly supports efforts to reform appraisals, ease construction regulations, and encourage homebuilding to help address the structural challenges driving up housing costs.”
Go deeper: The proposals in the EOs will require regulatory action (i.e., proposed rulemakings) before any changes take effect. While they are framed as promoting competition and lowering mortgage costs, several key provisions are more narrowly targeted. Reforms tied to QM/ATR, TILA, TRID, and RESPA are limited to community banks and “smaller banks” (under $100 billion in assets), excluding a large share of the market.
• MBA believes this significantly limits the benefits of the EO. In fact, IMBs, credit unions, and large banks collectively make up more than 80% of the single-family mortgage market – meaning the EO’s core reforms would reach only a small portion of lenders and borrowers.
• At the same time, other provisions in the EO are broader and would apply across the market. These include replacing TRID timing rules with a materiality-based standard, providing flexibility on QM points and fees for small loans, streamlining refinance rules, modernizing rescission requirements, and updating appraisal standards to expand alternative valuation models and reduce burdens on low-risk transactions.
Why it matters: The EOs aim to make the mortgage process cheaper and more efficient, increase homebuilding, and reduce regulatory burdens. However, MBA believes it is imperative that these benefits apply to all lenders, including IMBs, credit unions, and banks of all sizes.
• In any subsequent rulemakings, MBA will work to ensure this is the case so that the EO’s stated goals of increasing competition, lowering costs, and improving liquidity apply equally to all market participants.
What’s next: MBA is eager to work with the White House, federal housing agencies, and industry stakeholders throughout the regulatory reform process to ensure these enhancements are effective, practical, and implemented in a way that benefits consumers, lenders of all business models, and the broader housing market.
For more information, please contact Pete Mills at (202) 557-2878.
GSEs Update Condo Insurance and Project Eligibility Requirements
On Wednesday, Fannie Mae and Freddie Mac (the GSEs) announced coordinated updates with the Federal Housing Finance Agency (FHFA) to condominium project standards, property insurance requirements, and servicing policies to ease insurance cost pressures and strengthen project financial stability.
• Many of these changes align with recommendations MBA submitted in October 2024 to improve condo loan eligibility and reduce cost burdens on lenders, homeowners’ associations (HOAs), and borrowers.
Key changes in the insurance guidelines include:
• Simplified servicer obligations to document appropriate insurance coverage, and acceptance of actual cash value (ACV) for roofs (for both single family and condo projects),
• Inflation guard requirement eliminated for condos, and
• Improved/clearer deductible policies for condo projects and individual unit owners.
The GSEs also introduced new project review and eligibility standards, including:
• Waiver of reviews for 5-10 unit projects,
• Elimination of the 50% cap on investor-owned units,
• Elimination of the Limited Review process, and
• An increase in required replacement reserves from 10% to 15% of annual assessments.
What they’re saying: In a press statement, MBA President and CEO Bob Broeksmit, CMB, said: “MBA has long advocated for targeted changes to address overly rigid requirements that have constrained market liquidity, limited access to condo homeownership, and put unnecessary pressure on housing affordability. These updates represent meaningful progress and reflect thoughtful consideration of the concerns raised consistently by our members.”
Why it matters: Many of these updates are expected to reduce insurance-related burdens, expand project eligibility, and improve oversight of property-level risk. MBA is evaluating whether the project standards need further refinements and extended effective dates to preserve broader eligibility for GSE financing.
What’s next: MBA will continue to work with the GSEs to improve their condominium project approval and insurance guidelines, expand condo financing opportunities, and strengthen market stability and access to sustainable homeownership
For more information, please contact John McMullen, AMP, at (202) 557-2706.
Federal Reserve Keeps Rates Unchanged
The Federal Reserve held the federal funds rate at a target range of 3.50-3.75% on Wednesday.
Why it matters: The Committee noted that, “Uncertainty about the economic outlook remains elevated. The implications of developments in the Middle East for the U.S. economy are uncertain. The Committee is attentive to the risks to both sides of its dual mandate.”
What they are saying: “Ongoing turmoil in the Middle East has significantly increased uncertainty regarding the current and future state of the economy. The spike in oil prices has the potential to both accelerate inflation and weaken economic growth. Amid this uncertainty, the FOMC decided to hold rates steady at its March meeting and reiterated that they are attuned to risks on both sides of their dual mandate to keep the job market strong and prices stable. said Mike Fratantoni, MBA’s SVP and Chief Economist. “The FOMC projections released after this meeting showed that the median member expects higher inflation in 2026. It also showed that little changed with respect to the economic growth outlook, which had been published in December.
Read more of Fratantoni’s commentary here.
For more information, please contact Mike Fratantoni at (202) 557-2935.
CFPB Announces Strategic Plan for FY 2026-2030
Last Friday, the Consumer Financial Protection Bureau (CFPB or the Bureau) announced its Strategic Plan for FY 2026-2030.
At a high level, the Strategic Plan includes three goals. The CFPB will:
• concentrate its resources on identifying and addressing pressing threats to consumers to ensure that Americans have fair access to markets, products, and services and can participate in a strong economy;
• reduce regulatory overreach by streamlining existing regulations and reducing unjustified burdens; and,
• work on improving the performance and management of the Bureau internally.
Go deeper: The Strategic Plan includes several notable components, including the following:
• The CFPB will also work to ensure that unlawful “debanking” is not used as a tool to inhibit constitutionally or statutorily protected beliefs, affiliations, or political views.
• Minimize duplicative supervision or supervision outside of the CFPB’s authority, including supervision under novel legal theories that attempt to expand the CFPB’s jurisdiction.
• Shift the focus of supervisory activity to depository institutions, as opposed to non-depository institutions.
• Provide oversight and enforcement of federal fair lending laws without engaging in or facilitating unconstitutional racial classification or discrimination.
• Engage in rulemaking, where appropriate, to address unwarranted regulatory burdens.
What’s next: Comments are due by April 17. MBA is currently reviewing the Strategic Plan along with the recent Trump administration housing EO’s on how best to engage with the CFPB to advance MBA’s priorities.
For more information, please contact Justin Wiseman at (202) 557- 2854
MBA Urges VA to Revise Fee Documentation Requirements
Last Wednesday, MBA sent a letter to the Department of Veterans Affairs (VA) raising concerns about challenges lenders are facing with borrower-specific fee itemization and invoice requirements under VA Circular 26-24-19.
• In particular, lenders are running into issues documenting common third-party services, such as credit reports, which are typically billed in bulk rather than at the individual loan level.
Why it matters: The borrower/loan level invoicing requirement does not always align with how these services are billed in practice and has led to post-closing findings and refunds, even when the fees themselves are appropriate. This issue has been exacerbated by inconsistent application of these requirements across loan reviews.
• Some VA reviewers are asking for standalone invoices for each fee, while others are accepting alternative forms of documentation. Over time, this can put pressure on pricing, limit lender participation, and affect affordability for Veteran borrowers.
What’s next: MBA has called on the VA to provide clearer, more consistent direction and to take into account how these services are actually billed in today’s market. That includes allowing reasonable alternative documentation when borrower-level invoices are not available. MBA will continue working with VA on this issue and encourages members to share examples to help inform ongoing discussions.
For more information, please contact Darnell Peterson at (202) 557-2922.
Key House Committee Holds Hearing on GLBA Data Privacy Legislation
On Tuesday, the full House Financial Services Committee held a hearing titled, “Updating America’s Financial Privacy Framework for the 21st Century,” where it considered major updates to Title V of the Gramm‑Leach‑Bliley Act (GLBA).
• Members from both parties expressed strong interest in establishing a single, national financial data privacy standard to replace the growing patchwork of state privacy laws. Witnesses and lawmakers discussed how inconsistent state requirements drive up compliance costs, divert resources from lending and servicing operations, and create uncertainty for regulated financial institutions.
• Watch the hearing here and find a full hearing summary here.
Why it matters: The hearing also examined potential expansions of consumer data rights — such as access, deletion, and data minimization — and how those rights could be integrated into Title V of the GLBA statute without disrupting core functions like fraud prevention, servicing, secondary market execution, anti-money laundering compliance, and record‑retention obligations.
Go deeper: In addition, lawmakers focused on emerging issues that are increasingly important to mortgage market participants, including the transition from “screen scraping” to secure application programming interfaces (APIs) under open banking, the role of AI and automated decision‑making in financial services, and whether a private right of action should be included in any new federal privacy law.
• Taken together, the discussion signals that Congress may pursue bipartisan, structural changes to federal financial privacy law that could potentially affect mortgage origination, servicing, fintech partnerships, and data‑sharing practices — making this hearing an important indicator of possible policy changes ahead.
What’s next: MBA will respond with commentary to the House Financial Services Committee’s working draft text and also work with members of the House Energy & Commerce Committee (which also holds jurisdiction on data privacy and security issues).
For more information, please contact Rachel Kelley at (202) 557-2816.
Get Ready for NAC: Join Our Prep Webinars
MBA’s National Advocacy Conference is just around the corner, and now is the perfect time to secure your spot. Once you’re registered for the conference, take advantage of our two preparatory webinars designed to help you arrive informed, confident, and ready to advocate effectively on Capitol Hill.
• First-Time Attendee Webinar Wednesday, April 1 | 3:00–4:00 PM (ET) Get a clear overview of what to expect at NAC—from the event schedule to foundational lobbying best practices—and bring your questions for our team of experts.
• Issues Briefing Webinar Thursday, April 2 | 3:00–4:00 PM (ET) Hear the latest updates on key residential and commercial/multifamily policy priorities so you can deliver a strong, informed message during your Hill meetings.
Why it matters: Your voice carries weight. NAC is your opportunity to speak directly with lawmakers about the issues shaping the real estate finance industry. These webinars ensure you’re fully prepared to make the most of those conversations—armed with the latest policy insights and the confidence to advocate effectively.
What’s next: After attending the prep webinars, you’ll receive final event details, meeting schedules, and on‑site guidance to help you navigate NAC with ease. We’ll make sure you’re ready for a productive and impactful experience in Washington.
For more information, visit nac@mba.org or please contact Jamey Lynch at (202) 557-2818 or Erin Reilly at (202) 557-2751.
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:
• Basel III Endgame Re-Proposal Update – March 27
• Fraud Detection and Prevention in Non-Agency Lending – March 3
• How Secondary Marketing Powers Mortgage Lending – April 1
• Data & System Privacy in an AI World – April 2
• Social Media Compliance, Risk Mitigation and Best Practices – April 9
• 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.
