State Relations Committee Update: Policy Highlights

FHA Seeks Industry Feedback on Minimum Property Requirements Modernization: Last Thursday, the Federal Housing Administration (FHA) issued a Request for Information (RFI) seeking industry feedback on its Minimum Property Requirements (MPRs). MBA has long urged FHA to modernize its MPRs and better align its standards with the property condition rating frameworks used by Fannie Mae and Freddie Mac (the GSEs), reducing operational friction while maintaining appropriate safety and soundness protections. MBA and several other industry trades sent a letter last week urging FHA to address MPRs and other appraisal reforms. The RFI requests industry input on several topics, including how FHA’s MPRs compare to the property standards used by other governmental and non-governmental mortgage programs, which requirements may no longer be necessary to ensure borrower safety and property habitability, and how FHA could simplify and improve the consistency of MPR interpretation and application for lenders and appraisers. FHA’s MPR framework plays a significant role in determining property eligibility for FHA insured financing and can impact appraisal timelines, operational complexity and the willingness of sellers to consider offers from FHA buyers. Greater alignment between FHA and GSE property standards could help reduce appraisal-related delays, improve consistency across the market, and expand access to qualified appraisers. Comments on the RFI are due June 29, 2026. MBA will host a member call on Thursday, June 4, from 3:00–4:00 PM ET to discuss the RFI and gather feedback to help inform the response. 

HUD Provides Relief from Environmental Review on Multifamily Projects: Recently, the Department of Housing and Urban Development (HUD) removed the requirement for environmental assessments for projects over 200 dwelling units to be sent to the Field Environmental Clearance Officer (FECO) or Program Environmental Clearance Officer (PECO) for review and comment. The interim final rule was made as part of the Trump administration’s recent Executive Order on National Environmental Policy Act (NEPA) regulations and will streamline processing of larger projects. The rule is effective as of June 22, 2026. FHA multifamily loans require significant environmental reviews that add to the cost of development. MBA has long called for reforms and believes removing this and other burdens will result in more housing construction. MBA will continue to advocate for streamlining of FHA’s MAP and LEAN programs.

House Passes Amended Version of 21st Century ROAD to Housing Act: On Wednesday, May 20, MBA’s President and CEO Bob Broeksmit, CMB, released this statement after the House passed an amended version of the Senate-passed, 21st Century ROAD to Housing Act (H.R. 6644, as amended).The bill advanced with broad bipartisan support (396–13), marking a positive step forward for MBA and our members.  The package, which was introduced (as a counterpoint to a March-passed Senate companion bill) late last week by House Financial Services Committee Chairman French Hill (R-AR) and Ranking Member Maxine Waters (D-CA), was altered further with input provided by the White House prior to yesterday’s vote. This latest House proposal fixes prior concerns related to FHA multifamily loan limits and single-family disclosure requirements, preserves important USDA Rural Housing Service reforms, and codifies the GSEs’ reconsideration of value appraisal processes without increasing lender liability. Notably, the bill no longer includes a proposed expansion of an inefficient “first look” requirement for servicers. The bill also fixes industry concerns around a provision that would have required disposition within seven years of newly constructed “build-to-rent (BTR)” homes acquired by large institutional investors (LIIs) – as defined by the bill. Several members of Congress are committed to working with MBA (and the Treasury Department upon enactment) to clarify the bill’s treatment of existing “horizontal multifamily” units not fully exempted from the LII section’s coverage. MBA extends its deep appreciation to the Mortgage Action Alliance (MAA) and the thousands of grassroots advocates who responded to repeated Calls to Action — especially during MAA Action Week (May 11–15) — that helped educate House lawmakers and build support for a substantially refined House package. MBA’s legislative and political affairs team, reinforced by multiple letters sent independently and with housing partners, also led a sustained direct lobbying effort that ensured the final House bill was improved. In a letter from MBA Chief Lobbyist and SVP for Legislative and Political Affairs Bill Killmer and two joint trades letters (here and here) to the House ahead of the vote, MBA indicated its support for the overall proposal, providing specific commentary on key sections of the package and other pertinent measures. MBA remains engaged with House and Senate leaders and the Administration on this housing package and its key provisions. Senate Banking Committee leaders indicated mid-week that there is “more work to do” to respond to the overwhelming House vote. We will continue to monitor next steps planned in the Senate in pursuit of the best possible bill that can be sent to President Trump’s desk for his signature in the coming days and weeks. 

MBA-led Coalition Urges CFPB to Advance Targeted, Mortgage Relief: MBA led a coalition of trade groups in a letter sent this week to the Consumer Financial Protection Bureau (CFPB) that urges the Bureau to prioritize targeted regulatory reforms in order to implement President Trump’s March 2026 Executive Order (EO), “Promoting Access to Mortgage Credit.” The letter, in addition to completing pending rulemakings (such as Regulation X servicing), recommends that the Bureau should modernize Loan Originator Compensation rules, reform TRID tolerances, cures, and timing requirements, and update HMDA reporting thresholds to reduce the costs of homeownership and expand access to credit. The letter reflects broad industry consensus on specific and targeted regulatory reforms necessary to expeditiously carry out the EO and modernize overly burdensome rules implemented under the Dodd-Frank Act that increased costs for lenders and consumers without commensurate benefit. Importantly, the letter reflects unified agreement across the mortgage banking, bank and credit union trades urging CFPB to take a broad-based approach that ensures regulatory relief and cost savings are extended to all market participants and borrowers. The recommendations also closely align with MBA’s April 2026 letter in response to the Bureau’s Strategic Plans for 2026-2030. MBA will continue engaging with the Bureau as it begins the regulatory process to implement the EO. 

MBA, Trades Push FHA on Appraisal Modernization: On Thursday, May 14, MBA and other trades submitted a joint letter to the Department of Housing and Urban Development (HUD) supporting the modernization of the FHA appraisal process to align it with President Trump’s March 2026 Executive Order, “Promoting Access to Mortgage Credit.” The letter calls for FHA to align its valuation framework with that of the GSEs, including replacing FHA’s unique Minimum Property Requirements with standardized property condition ratings and separating Direct Endorsement credit underwriting and appraisal underwriting experience requirements. The letter also urges FHA to remove its outdated requirement for post-closing field reviews and adopt a desk review process, which would reduce costs for lenders and further align FHA with the GSEs. These recommendations are intended to improve efficiency, reduce friction in the homebuying process, and enhance low and moderate-income borrowers' access to the FHA program. MBA will continue to engage with the FHA to address its minimum property and underwriting requirements. MBA and the joint trades are also collaborating on appraisal policy recommendations for VA and FHFA.   

HUD Seeks Feedback on Proposed Borrower Eligibility Requirements: In mid-May, HUD released a draft Mortgagee Letter (ML) proposing updates to FHA borrower eligibility requirements related to delinquent federal debt and child support obligations. HUD is seeking feedback on the proposal to revise FHA’s policies concerning Treasury’s Do Not Pay system and clarify how lenders must evaluate delinquent child support obligations during underwriting. The proposed changes, according to FHA, are intended to streamline borrower eligibility standards, improve consistency in underwriting practices, and align FHA requirements more closely with current federal debt collection policies. MBA is reviewing the proposal and will hold a call on Wednesday, May 27, to collect feedback. Please reach out to Darnell Peterson for the call information. Comments are due June 18, 2026.             

House Passes Disabled Vets Package; Housing-Related Offsets Utilized: On Thursday, May 21, the House passed the Sharri Briley and Eric Edmundson Veterans Benefits Expansion Act (H.R. 6047) by a vote of 235 to 179. The bill would significantly increase benefits for catastrophically service-connected disabled veterans with traumatic brain injuries (and their survivors) and expand the eligibility requirements for National Guard and Reservists – including the opportunity to utilize the VA home loan program benefit. The legislation is strongly supported by a wide range of veteran service organizations (VSOs) and other stakeholders. As prescribed under current House rules and the Statutory Pay-As-You-Go (PAYGO) Act of 2010, the costs associated with expanding these benefits are fully offset, including changes that: increase the Interest Rate Reduction Refinance Loan (IRRRL) refinancing fee from 0.5% to 1.42%; increase the VA home loan funding fee for borrowers (including non-veterans) who are assuming a current VA home loan from .5% to 1.0%; extend current home loan funding fees through the current budget window; and, expand VA home loan eligibility to National Guard and Reservists from 90 days to 14 days of active-duty service with a 1% fee added. While indicating our members’ support for the intent and worthy nature of the bill’s expansion of benefits for severely disabled veterans and their families, MBA indicated its strong opposition to the proposed housing-related offsets scheduled to be used to pay for the legislation in a February letter prior to the bill’s eventual markup by the full House Veterans’ Affairs Committee (MBA recirculated that letter prior to the full House floor vote yesterday). At the time of this writing, the timing for any pending Senate action on H.R. 6047 is unclear. MBA will remain in close contact with the key engaged staff on both the majority and minority sides of the respective House and Senate Veterans’ Affairs Committees regarding any scheduling-related next steps, or potential for changes to the offsets in the proposal.  

NMLS Releases Proposal for Comment on Testing and Education Fee Increases: Last Tuesday, the Nationwide Multistate Licensing System (NMLS), the State Regulatory Registry, and the Conference of State Bank Supervisors (CSBS) released its third phase of proposed fee increases. This last phase is a proposal to increase testing and education fees for licensing requirements under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act). The proposal increases credit banking fees from $1.50 to $1.55 per hour, effective January 1, 2027, and SAFE Mortgage Loan Originator (MLO) test enrollment increases from $110 to $120, effective March 1, 2027. The testing and education program fees proposed increases are intended to account for growth in operational and technology costs. This proposal marks the third phase of NMLS fee increases, which were originally outlined by NMLS in 2024. In 2025, system processing fees for state licensure and federal registration increased, and in 2026, B2B Access subscription fees increased. While the testing fee increase will only impact new state-licensed MLOs (or those needing to retake the MLO test), the credit banking fee increases will apply to all MLOs. Comments on the proposed changes are due to CSBS on July 10, 2026, and should be directed to [email protected]. MBA will coordinate with its members on any concerns on this proposed fee increase and respond accordingly.

New York City Mayor Releases Housing Plan: Last Tuesday, New York City Mayor Zohran Mamdani unveiled "Block by Block," a sweeping $22 billion housing plan aimed at tackling the city's affordability crisis. The 10-year agenda promises to build and preserve hundreds of thousands of new affordable and rent-stabilized homes alongside large investments in public housing and new tenant protections. The plan’s key elements include: A $22 billion investment over five years to create and preserve 400,000 total units over a decade, with half of new units targeted for extremely low- and very low-income residents; $5.6 billion for the NYC Housing Authority to conduct repairs and enhance inspections for deteriorating buildings; and, a $40/hour wage standard for subsidized projects and a streamlined Housing Connect lottery process aiming to cut application times in half. Landlords and housing industry groups have been critical and are arguing the plan will stifle private investment, increase construction costs, and ultimately shrink New York City's housing supply. For example, the Partnership for New York City and the Real Estate Board of New York warned that imposing a $40/hour wage mandate for subsidized projects—even for non-union workers—will drastically inflate development and financing costs and make new projects financially unfeasible. These groups were joined by landlords in objecting to the Mayor's promise to "transfer ownership" of chronically neglected private buildings to tenants, land trusts, or nonprofits as an aggressive infringement on private property rights that will chill capital investment. Business leaders note that threatening property confiscation changes NYC’s risk profile and will compel underwriting firms to reevaluate or pull back on investment. MBA and the New York MBA will continue to review the proposal and work with other industry partners to engage, as appropriate.

Enacted New York State Budget Includes Key Changes to Environmental Review Laws to Speed Housing Development: Last Wednesday, the New York Legislature approved a final 2026-2027 state budget nearly two months after the constitutionally mandated April 1 deadline. The budget included much of Governor Kathy Hochul’s “Let Them Build” agenda to address the state’s affordable housing crisis, including major reforms to the 50-year-old State Environmental Quality Review Act (SEQRA). SEQRA requires developers to file detailed plans showing how a project could affect the surrounding environment. Under the budget changes enacted this week, most new housing projects will be exempt from that review process, though they will still need to comply with other environmental laws and regulations. The Governor, developers, and the real estate finance community have argued that SEQRA is overly bureaucratic and often duplicates local requirements. The changes are intended to help environmentally sound housing projects move forward more quickly. In New York City, the SEQRA exemptions will apply to proposed housing in medium- and high-density areas of up to 500 units, and to projects in the rest of the city of up to 250 units. Outside New York City, the exemptions will apply to qualifying housing projects of up to 300 units in urbanized areas, 100 units in non-urban areas, and 20 units in areas without zoning. To qualify, housing must be built on previously disturbed land and connected to water and sewer systems upon occupancy. MBA and the New York MBA will continue reviewing the budget bills and will brief members on additional real estate finance provisions as they are identified.

MBA-Opposed COPA Bill Reintroduced by NYC Council: The New York City Council has revived the controversial Community Opportunity to Purchase Act (COPA - Int# 0905-2026), a proposal that would give qualified nonprofits and some mission-driven buyers a first shot at purchasing certain multifamily buildings before they are sold. The issue has a long history in the Council, with years of debate over whether the policy would help preserve affordable housing or create new friction in the city’s real estate market. This latest version follows last year’s Council action on COPA, which was vetoed by former Mayor Eric Adams. Compared with last year’s version, the current draft appears more targeted in some respects, with narrower coverage and expanded exemptions, but it preserves the same basic structure giving qualified nonprofits the first opportunity to purchase certain covered buildings. MBA and the New York MBA wrote to the Council and the Mayor late last year to point out that the proposed policy adds complexity, delay, and uncertainty to private transactions. The City Council will likely hold hearings on the bill next and consider amendments, before any final vote. MBA will again strongly oppose the bill together with the NY MBA and other partners. MBA will again strongly oppose the bill together with the NY MBA and other partners.

Next MBA State Legislative Database Training: Wednesday, June 24 at 3:00 PM (ET): Please email Ainsley Zimmer at [email protected] to receive the calendar invitation to the database training. MBA members can access the state legislative tracking database here with MBA credentials.