MBA State Relations Committee Update Federal Highlights
Advocacy News and Information from the Latest Issue of the MBA State Relations Committee Update
President Donald Trump Nominates Bill Pulte as FHFA Director: Last Thursday, President Donald Trump announced the nomination of Bill Pulte to serve as Director of the Federal Housing Finance Agency (FHFA). Pulte, grandson of real estate homebuilding magnate William Pulte, is a private equity executive – he founded Pulte Capital Partners LLC – and is a well-known philanthropist. In a press statement on Pulte’s nomination, MBA President and CEO Bob Broeksmit, CMB, said, “We look forward to working with him [Pulte] and the FHFA staff on policies and programs that boost housing supply and create affordable opportunities for our nation’s homebuyers and renters while protecting taxpayers and ensuring a robust secondary mortgage market and Federal Home Loan Bank system for single-family and multifamily lenders. He added, “The conservatorship of Fannie Mae and Freddie Mac was never intended to be permanent. MBA stands ready to work with the Administration and Congress to ensure that the transition to a post-conservatorship era for the GSEs is done the right way, including the critical step that Congress approves an explicit federal backstop for the GSEs’ mortgage-backed securities, to prevent severe market disruptions.” The Senate Banking, Housing, and Urban Affairs Committee is expected to schedule and hold a confirmation hearing for Pulte in the coming weeks. MBA will push for a speedy confirmation process and is committed to working with the incoming Trump administration, FHFA staff, and lawmakers on both sides of the aisle on all issues pertinent to the GSEs and real estate finance.
HUD Nominee Turner Testifies; MBA Leads Coalition Effort in Support Ahead of Hearing: Last Thursday, the Senate Banking, Housing, and Urban Affairs Committee held a hearing to consider the nomination of Scott Turner to be the incoming Trump administration’s Secretary of Housing and Urban Development (HUD). A summary of the hearing can be found here. Earlier this week, MBA led a broad housing and real estate coalition letter that highlighted its support for Turner and called for him to be confirmed by the Senate as soon as possible. Turner’s comments during the hearing centered on his support for encouraging localities to make home construction easier, including utilizing Opportunity Zones as a tax incentive for housing in distressed communities. If confirmed, Turner added that he would direct HUD to undertake regulatory reforms to boost both single and multifamily housing development. Senate Banking Committee Chair Tim Scott (R-SC) will schedule a vote for the panel on the Turner nomination in the coming weeks. MBA will continue to push for swift consideration of the Turner nomination – both in committee and on the Senate floor – so that the more comprehensive HUD team (e.g., FHA Commissioner, Ginnie Mae President, and senior staff) can be nominated, confirmed, and set in place as soon as possible.
Treasury Nominee Scott Bessent Testifies at Senate Finance Committee: Last Thursday, the Senate Finance Committee held a hearing to consider the nomination of Scott Bessent to be the Secretary of the Treasury. Republican Senators on the committee praised Bessent’s “American Dream” life story of rising from a working-class background to becoming a billionaire, his expertise with worldwide financial matters, and his answers to their questions. Democratic Senators mostly praised his constructive meetings with them prior to the hearing while expressing concerns about his views on a wide range of policy topics (including tax and energy). Finance Committee Chairman Mike Crapo (R-ID) noted Bessent’s demonstrated capabilities from his lengthy career in financial services, including his expertise on economic issues involving capital markets, energy, foreign policy, national security, and American competitiveness. Ranking Member Ron Wyden (D-OR) expressed his concerns regarding President-elect Donald Trump’s trade policies and who he believes benefitted the most from the 2017 Tax Cuts and Jobs Act (TCJA). A summary of the hearing can be found here. In Bessent’s opening remarks, he mentioned affordable housing, which Senator Maria Cantwell (D-WA) and Senator Elizabeth Warren (D-MA) agreed on as a needed priority. Bessent and Senator Marsha Blackburn (R-TN) discussed the vital need for the extension of the expiring TCJA Section 199A small business “pass-through” deduction provision. If confirmed, Bessent will play a pivotal role on many of MBA’s key issues, including tax policy, the GSEs’ potential release from conservatorship, capital rules, and affordable housing. Mr. Bessent and his transition team will have to answer a multitude of questions for the record (QFRs) submitted by Finance Committee Senators. MBA has collaborated with Senate staff on both sides of the aisle to ask that QFRs on issues such as the responsible release of the GSEs and various tax matters be proffered. Once Bessent submits his answers to the QFRs, Senate Finance Chair Crapo can schedule a vote for the panel on the Bessent nomination. Given the importance of the Secretary of Treasury, it is anticipated at the time of this writing that Bessent’s nomination will be among the first confirmation votes taken after President-elect Trump takes the Oath of Office on Monday, January 20. MBA will continue to push for the swift consideration of the Bessent nomination – both in committee and on the Senate floor – so the entire team at Treasury can be nominated, confirmed, and set in place as soon as feasible.
2025 Tax Cuts and Jobs Act Debate Formally Begins: Last Tuesday, the House Ways and Means Committee held its first hearing of the 119th Congress, focusing on the potential for extending the key provisions of the 2017 Tax Cuts and Jobs Act (TCJA). Lawmakers debated the permanency of key provisions, including the 199A pass-through deduction for small businesses and the Low-Income Housing Tax Credit (LIHTC). Republicans emphasized the need for certainty to support economic growth, while Democrats raised concerns about the TCJA’s fiscal impact and distribution of benefits. The 199A deduction, the LIHTC, and other expiring TCJA provisions (and other key real estate-related provisions that may be in play) remain pivotal for small business competitiveness and real estate supply and investment. Both parties agreed on the need for re-examining the tax code but differed on how to offset the costs of potential tax policy changes (and the TCJA extension). For more details on the hearing, read the full summary here. MBA will continue to advocate for the industry's tax priorities that promote housing affordability and economic stability.
FHA Finalizes Loss Mitigation Proposal: Last Thursday, FHA announced its permanent loss mitigation guidance for mortgage servicers quickly after receiving stakeholder input before the holidays. FHA’s guidance updates the loss mitigation available to borrowers at risk of foreclosure - a top MBA policy priority. FHA’s announcement implements the lessons learned from the COVID-19 pandemic before its temporary guidance was set to expire in April 2025. Now, with yesterday’s announcement and based on MBA’s feedback, FHA’s COVID-19 Recovery Options will remain available to borrowers through February 1, 2026, which also gives servicers a significant runway to adjust their operations. FHA’s announcement arrives at a critical time to particularly assist borrowers impacted by natural disasters, such as the flooding in the Southeast last fall and this month’s California wildfires.In addition to the extended implementation timeline, FHA’s announcement implements the feedback MBA and industry stakeholders provided in our comments to FHA’s original draft. For example: Loss mitigation options remain streamlined; Trial Payment Plans are required to ensure affordability; and The Equity Saver Sale was not finalized; stakeholders can continue to comment through March 17, 2025. In a press statement, MBA’s Broeksmit said, “MBA appreciates FHA’s efforts to update its loss mitigation waterfall to preserve COVID-19 flexibilities and give mortgage servicers a variety of effective tools to help distressed homeowners – regardless of their financial hardship – stay in their homes. We will work with the incoming leadership at FHA on policy changes that make mortgage servicing more efficient for consumers and servicers alike.” MBA will continue to review FHA’s guidance, which is effective on February 2, 2026.
FHA Finalizes Policy Regarding Inclusion of Boarder Rental Income: Last Monday, FHA announced the publication of Mortgagee Letter (ML) 2025-04, Revisions to Policies for Rental Income from Boarders of the Subject Property. The provisions announced in this ML create greater flexibility for borrowers to use the income received from individuals who rent space in their home — referred to as boarders in Single-Family Housing Policy Handbook 4000.1 (Handbook 4000.1) — to qualify for an FHA-insured refinance or purchase-money mortgage. This new flexibility includes a revision to the required underwriting standards for documenting and calculating this type of income. MBA submitted comments supporting this policy update in December. MBA also made additional policy recommendations necessary to mitigate lender risk and address clarifying questions around borrower reserve requirements, gaps in boarder income history, and applicability to loan various types. The policy was ultimately finalized without changes. FHA recognizes that rental income from individuals renting space in borrowers’ homes can be a viable source of income that increases housing affordability and allows borrowers to better manage housing costs. To support implementation, FHA will host a stakeholder briefing on Monday, January 29, from 2:00 PM to 3:00 PM ET. This session is open to underwriters, loan officers, processors, appraisers, quality control professionals, and other industry experts. Register here to attend and pre-submit your questions by January 22 to [email protected] with the subject line: Borrowers Using Income from Individuals Renting Space Inside the Borrower’s Home. The provisions of this ML may be implemented immediately; compliance is mandatory for FHA case numbers assigned on or after March 14, 2025. The updates will also be incorporated into a future edition of Handbook 4000.1.
119th Congress Sworn In; Trump Cabinet Senate Confirmation Hearings on Tap: The U.S. House of Representatives and Senate convened January 3 to formally kick off the 119th Congress, with Republicans holding narrow majorities in both Chambers. Speaker of the House Mike Johnson (R-LA) was reelected by a razor-thin margin, and Senator John Thune officially took the helm as Senate Majority Leader following his win in the Senate GOP leadership race in November. A Trump administration and Republican control of both chambers of Congress could lead to sweeping attempts at changes to regulatory and legislative policy in 2025 and beyond, from a major tax policy debate, to increased interest in and exit from conservatorship by the housing GSEs (Fannie Mae and Freddie Mac), and new leadership at the Department of Housing and Urban Development (HUD), the Consumer Financial Protection Bureau (CFPB), Federal Housing Finance Agency (FHFA), and Treasury, among other key regulatory agencies. MBA will continue to monitor and update members on any important organizing developments – in both the House and Senate – and on both sides of the political aisle. The rosters of several key committees that have jurisdiction over the single-family and commercial/ multifamily issues of most relevance to our members have been finalized. See House and Senate Committee rosters. With 12 new Senators and 66 freshmen lawmakers in the House, MBA’s National Advocacy Conference (NAC) is members’ best upcoming opportunity to ensure their voices are heard when they meet with policymakers and elected officials in Washington, D.C., to discuss key industry policy priorities. Register early and save.
FHA Adopts Uniform Residential Loan Application for Title I Programs: On Thursday, January 9, the Federal Housing Administration (FHA) published Title I Letter (TIL) TIL-489, announcing the adoption of the Uniform Residential Loan Application (URLA) for Title I Loan Programs. The letter replaces forms HUD-56001 for Title I Property Improvement and HUD-56001-MH for Title I Manufactured Home loans with the industry-standard URLA (Fannie Mae Form 1003/Freddie Mac Form 65). It also introduces the new HUD Addendum for Title I Loans (form HUD-92900-TI). MBA submitted comments last month supporting the updates. MBA also made several additional recommendations designed to attract greater lender participation by creating more consistency between Title I and the more common Title II loans, teeing these matters up for the new HUD Administration in 2025. These changes aim to simplify processes, reduce costs, and expand financing options for manufactured homes and vacant lots. While these provisions can be implemented immediately, they are mandatory for case numbers issued on or after May 8, 2025. These updates will be incorporated into a future revision of the Single-Family Housing Policy Handbook 4000.1. MBA will work with the Trump administration to identify further Title I loan program improvements.
MBA Meets with FHFA on UDAP Advisory Bulletin: MBA recently met with staff from FHFA’s Division of Public Interest Examination (DPIE) to discuss our significant concerns regarding its advisory bulletin on the GSE UDAP compliance and its implications for seller/servicers. At the end of November 2024, FHFA issued Advisory Bulletin 2024-06: “Regulated Entity Unfair or Deceptive Acts of Practices Compliance,” requiring the GSEs to certify compliance with Unfair or Deceptive Acts or Practices (UDAP) laws in the future. FHFA’s Advisory Bulletin provides a framework for addressing UDAP under Section 5 of the FTC Act, particularly in the context of the activities of the GSEs and the Federal Home Loan Banks (FHLBanks). The discussion focused on the Bulletin’s creation of a GSE duty to supervise sellers and third-party vendors for consumer law violations, potential liability concerns for seller/servicers, and the linkage between UDAP and fair lending laws. The guidance addresses potential direct and vicarious liability, highlighting that the regulated entities are responsible for UDAP violations by employees, agents, or third parties if they knew or should have known about the conduct. The bulletin also details how the enterprises and FHLBs can identify and mitigate risks associated with unfair acts and urges the regulated entities to establish clear policies and procedures. MBA is deeply concerned because the bulletin reads as an attempt to set up the GSEs as consumer finance compliance regulators of their seller/servicers in a fashion that exceeds their current role and is duplicative of federal and state oversight regulatory of UDAPs. It also could carry significant repurchase risk given the GSEs’ “compliance with laws” representation. MBA concluded the discussion by making clear that this is the beginning of a conversation with follow-up to come. FHFA is receptive to holding larger stakeholder calls to communicate their intentions in applying the bulletin, and MBA continue to follow up with the new FHFA leadership in the coming weeks.
FHA Publishes Servicing Defect Taxonomy, First Edition: On Tuesday, January 7, FHA, after much anticipation and deliberation, published Mortgagee Letter (ML) 2025-01, Federal Housing Administration Defect Taxonomy Updates for Servicing Loan Reviews. This ML updates Appendix 8.0 – FHA Defect Taxonomy in the Single-Family Housing Policy Handbook 4000.1 to incorporate defect areas focused on Title II servicing loan reviews and revises part of the Defect Taxonomy to apply to both underwriting and servicing. Currently, FHA’s Defect Taxonomy only includes guidance applicable to Title II underwriting loan reviews. MBA has commented on the previous version of the Defect Taxonomy. A Defect Taxonomy is used by FHA to identify and address loan-level defects or noncompliance with FHA’s Single-Family Housing policies and determines corresponding remedies. MBA appreciates FHA’s efforts – through two rounds of the Drafting Table – to craft a taxonomy that provides greater clarity and predictability to loan level reviews. While some of these updates may fall short of our August 2024 recommendations, including a request to create objective standards to identify material defects, MBA recognizes that servicing is a complicated process with evolving risks to the borrower and FHA over a 30-year loan life cycle. MBA looks forward to continuing the iterative process to improve the taxonomy for program participants. FHA’s new policy is effective for loan reviews initiated on or after January 15, 2025.
MORPAC and MAA Appoint New Leadership: On Wednesday, January 8, MBA’s Political Action Committee (MORPAC) and the Mortgage Action Alliance (MAA) appointed new leadership for the 2025-2026 election cycle. Nanci Weissgold, Partner and Co-Chair of the Alston and Bird law firm's Financial Services Group was appointed Chair of MORPAC, and Bill Nelson, Executive Vice President, Secondary and Mortgage Operations of Standard Mortgage Corporation, was appointed MAA Chair. Both individuals exemplify industry leadership and display commitment to expanding the reach of MBA’s political advocacy efforts. These volunteer-based chairs of MBA’s Advocacy programs, including MORPAC and MAA, sit on MBA’s Board of Directors and serve as a liaison between membership and politics. The goal for these positions is to grow industry engagement on Capitol Hill and in state capitals across the country ensuring the successful pursuit of our industry’s legislative priorities. MBA staff will work with the MORPAC and MAA Steering Committee chairs and at-large membership to meet/exceed advocacy goals, all while maintaining MBA’s political “seat at the table.”