State Relations Committee Update: Policy Highlights

MBA Working for You: Final Tax and Reconciliation Act Contains Numerous Pro-Real Estate Tax Provisions: In what is a significant win for MBA members, on Friday, July 4, President Trump signed into law H.R. 1, the final Republican tax/reconciliation package passed in the Senate and the House earlier last week. The package includes numerous MBA-supported tax changes, increases the debt limit by $5 trillion, and contains spending cuts and energy, defense, and border security measures. MBA President and CEO Bob Broeksmit, CMB, in a press statement said, “MBA is pleased that the final tax package preserves or strengthens – and makes permanent – numerous pro-housing and pro-economic growth tax provisions that were identified by our Board-level Tax Task Force, led by 2025 Chair-Elect Christine Chandler and Vice Chair Owen Lee.” Through direct advocacy efforts with Republican lawmakers and their key staff, MBA secured numerous tax policy changes that preserve, and in several cases enhance, key elements of the 2017 Tax Cuts and Jobs Act, including: Makes permanent the 2017 individual rate structure and increased standard deduction; Maintains and makes permanent the 20% deduction in current law for Qualified Business Income under Section 199A – and expands the deduction limit’s “phase-in” range; Allows 100% bonus depreciation for certain qualifying properties and restores/makes permanent full expensing for new capital investments; Temporarily raises the current state and local tax (SALT) deduction cap to $40,000, with a $500,000 income cap that grows annually by 1% until it “snaps back” after five years; Permanently caps eligible mortgage acquisition debt interest deductibility (HELOCs eligible) at $750,000; Reinstates and makes permanent the deductibility of mortgage insurance premiums (subject to AGI limitations); Makes durable enhancements to the Low-Income Housing Tax Credit (LIHTC) program, e.g., providing a permanent 12 percent increase in 9% credit authority, while permanently lowering the bond financing test from 50 to 25 percent; Makes a renewing set of rounds of the Opportunity Zones (OZ) program permanent – with needed reporting/programmatic tweaks; Permanently reinstates EBITDA for the calculation of business interest deductibility; and, Significantly, does NOT alter the deferred tax treatment of MSRs, nor the tax code’s current “gain on sale” provision, Section 1031 Like Kind Exchange rules, carried interest provision, or capital gains rate. MBA is reviewing the legislation in greater detail and will provide a comprehensive summary of the tax provisions pertinent to real estate finance.

SCOTUS Holds That Districts Courts Are Not Bound by FCC Interpretations of the TCPA Under the Hobbs Act: On June 20, 2025, the Supreme Court delivered its 6-3 opinion in McLaughlin Chiropractic Associates, Inc. v. McKesson Corporation, addressing the scope of judicial review under the Hobbs Act (also known as the Administrative Orders Review Act). In this significant ruling, the Court held that district courts are not bound by Federal Communications Commission (FCC) interpretations of the Telephone Consumer Protection Act (TCPA) under the Hobbs Act. Instead, courts must interpret the TCPA themselves using standard statutory interpretation, while giving “appropriate respect” to the FCC’s interpretation. Essentially this means that federal courts, including district courts, are not bound to automatically accept an agency's interpretation of a statute, particularly during enforcement proceedings. This decision has the potential to upend years of TCPA precedent and create significant uncertainty as to the state of the law around the TCPA. Given that this ruling gives district courts more authority to interpret regulations, this could potentially lead to increased legal challenges. Courts will have the ability to go back to the drawing board on issues such as the definition of express written consent, how consent is obtained, what calls and texts are subject to the TCPA, and whether cell phones are subject to DNC protections. MBA will keep members informed about any updates and will continue to engage with the FCC on TCPA issues.  

Supreme Court Limits the Ability of District Courts to Issue Nationwide Injunctions: Friday, June 27, the U.S. Supreme Court held that District Courts have limited authority to issue nationwide preliminary injunctions. The circumstances of the case revolved around a challenge to an Executive Order limiting birthright citizenship, though the Court did not address the merits of the case. The Court held that the Judiciary Act of 1797 does not grant district courts the power to issue nationwide preliminary injunctions against acts from the Executive Branch. The Court believes that class-action lawsuits are the correct vehicle for obtaining relief for parties that are not named in the suit but still suffer harm from the government action. The Court did not address whether the Administrative Procedure Act authorizes federal courts to vacate federal agency action. For the time being, district courts still have the authority to issue nationwide preliminary injunctions against federal agency actions. This decision means that only those individuals or organizations party to a lawsuit will benefit from an injunction against government action. Lawsuits brought forth by trade associations or membership organizations may now become more central to efforts to secure broader injunctive relief, especially in regulatory cases. This decision could lead to increased litigation, particularly class action lawsuits and may lead to a patchwork of enforcement of government policies, with different rules applying in different parts of the country.  MBA will keep members informed about any updates and whether the decision will affect its litigation efforts going forward.  

HUD Proposes Reconsideration of Energy Standards: Last Thursday, the Department of Housing and Urban Development (HUD) published a request for comments in the determination of impact of its 2021 updated energy building standards. The original Final Determination found that adoption of the energy codes would have no negative impact on the affordability and availability of  housing. MBA argued that there would be a significant impact on the cost and feasibility of housing in many parts of the country. Earlier this year, MBA urged the new HUD administration to rescind the energy code requirements in response to an Executive Order on lowering housing costs. In response, the Administration delayed the implementation of the rule while it reviewed its impacts. Reviewing the impact is the first step in a process that, in MBA’s view, should result in a full rescission of the rule. MBA will share its concerns about the cost impacts of the Rule within the 30 days after its published in the Federal Register.

HUD Proposes Lower MIP for Multifamily Loans: On Tuesday, June 24, the Department of Housing and Urban Development (HUD) published two rules to eliminate the Green Mortgage Insurance Premium (MIP) program. The first rule proposes the elimination of the Green MIP program for multifamily properties and also lowers the premiums to 25 basis points for ALL multifamily programs. The second notice eliminates the Green MIP for 232 mortgages without unduly harming those in process. The proposal would provide a 60-day grace period for those in the queue or who have not yet filed an application with Green MIP. 232s that do not meet the qualifications or do not file in the next 60 days will be subject to existing premium rates. Lowering the MIP for HUD multifamily programs is a significant victory and something MBA and its members have been recommending for years. MBA's President and CEO Bob Broeksmit, CMB released a statement saying, “MBA has long advocated for sensible changes that can make HUD’s multifamily lending programs more effective, with a goal of lowering rental housing costs by boosting supply. We commend HUD Secretary Scott Turner and his team for being responsive to our recommendations on this issue. Leveling upfront and annual mortgage insurance premiums will help increase rental housing production and improve affordability for renters across the country.” The Multifamily notice is proposed with a 30-day comment period. The healthcare notice goes into effect in approximately 60 days. MBA’s comments will strongly support the MIP reductions for multifamily and will ask for consideration of similar reductions for healthcare properties.

Fed Chair Powell Provides Semiannual Monetary Policy Testimony to the Congress: In late June, Federal Reserve Chair Jerome Powell appeared before both the House Financial Services and Senate Banking Committees to deliver the Fed’s semi-annual Monetary Policy Report. Committee members on both sides of the aisle pressed Chair Powell on the economic impact of new tariffs, the cost and availability of insurance, the Fed’s interest rate posture, and threats to central bank independence. A summary of the Senate and House hearings, respectively, can be found here and here. Housing affordability and bank regulations continue to be top of mind for legislators, with bipartisan concern expressed at the hearings over the “lock-in effect” of high mortgage rates and persistent housing supply constraints. Chair Powell was encouraged to move forward on adjusting the supplementary leverage ratio (SLR) and a new Basel III re-proposal. He also clarified the withdrawal of the 2023 Community Reinvestment Act proposal. The old rules, which were never changed, remain in effect and no further changes are expected. MBA will continue to advocate for housing-sensitive monetary policy and will urge policymakers to address regulatory barriers constraining housing production.

FHA Issues Policy Updates to Streamline Single Family Program Requirements: Friday, June 27, the Federal Housing Administration (FHA) released a series of Mortgagee Letters (MLs) aimed at streamlining requirements and reducing regulatory burdens across its Single Family programs. The updates include the rescission of policies related to the Supplemental Consumer Information Form (SCIF), full-time employment for Direct Endorsement (DE) underwriters, certain appraisal protocols, Federal Flood Risk Management Standards (FFRMS) for new construction, and pre-endorsement inspections in disaster areas. All changes are effective immediately and will be incorporated into the FHA Single Family Housing Policy Handbook 4000.1. Friday, June 27, Mortgagee Letters: Mortgagee Letter 2025-15: FHA rescinded the requirement for the SCIF, citing its limited benefit to borrowers and increased burden on lenders, in alignment with the President’s Executive Orders to reduce regulatory barriers and promote equity in housing. Mortgagee Letter 2025-16: FHA rescinded the requirement that DE underwriters must be employed full-time by a single FHA-approved mortgagee. This change allows for part-time employment while maintaining the condition that underwriters must still be permanent employees of one mortgagee and not contractors. Mortgagee Letter 2025-17: FHA rescinded the FFRMS requirement for new construction eligibility in Special Flood Hazard Areas (SFHAs), originally adopted in Mortgagee Letter 2024-20. The previous elevation standard, which required building two feet above the Base Flood Elevation, is replaced with the prior, less restrictive requirements during the waiver period. Mortgagee Letter 2025-18: FHA revised its appraisal policies by removing several requirements it identified as outdated or duplicative. Changes include the elimination of the requirement to report remaining economic life, adjustments to photo documentation standards, and the removal of certain reporting requirements for market conditions and comparable sales in changing markets. Mortgagee Letter 2025-19: FHA rescinded its previous requirement for mandatory pre-endorsement damage inspections by FHA Roster Appraisers for properties in Presidentially-Declared Major Disaster Areas (PDMDAs). The new policy grants mortgagees greater discretion to determine if inspections or repairs are necessary based on their risk management procedures. MBA will continue to review the newly released MLs for their impact on the industry and will provide feedback, where necessary, through the Government Loan Production Subcommittee.

FHFA Director Issues Order Directing GSEs to Prepare Proposals to Consider Cryptocurrency as Reserve Assets for GSE Loans: On Wednesday, June 25, FHFA Director Bill Pulte issued an order (via X) that directs Fannie Mae and Freddie Mac (the GSEs) to prepare proposals for considering cryptocurrency as an asset for reserves in their respective single-family mortgage loan risk assessments. Notably, the order states that the GSEs proposals should not require cryptocurrency to be converted to U.S. Dollars and only cryptocurrency assets that can be evidenced and stored on a U.S.-regulated centralized exchange should be considered. The GSEs are also encouraged to do their own risk assessments and include additional risk mitigants including adjustments for market volatility. MBA welcomes what should be a collective industry effort to modernize the mortgage underwriting process. Cryptocurrency as a reserve asset is one option, and there other impactful approaches to rethinking the underwriting of mortgage risk that should be included in the effort. The order states that each GSE must submit their proposals to their respective Board of Directors and receive approval prior to submitting the proposals to FHFA for review. No specific timeline was stated, but the order states that it is "effective immediately and should be implemented as soon as reasonably practical". MBA plans to remain engaged with FHFA and the GSEs on this and other important matters.

FHA Seeks Industry Feedback on Buy Now Pay Later Underwriting: On Tuesday, June 24, FHA issued a Request for Information (RFI) to gather input on the growing use of Buy Now, Pay Later (BNPL) products and their potential impact on housing affordability, borrower financial health, and mortgage underwriting. FHA is inviting industry stakeholders to provide feedback on how BNPL activity influences debt-to-income ratios, borrower eligibility for FHA-insured loans, and overall housing stability. With BNPL usage on the rise, FHA is increasingly concerned that these short-term, often unreported debts may distort prospective borrowers’ financial profiles and complicate the mortgage underwriting process. Comments are due by August 25, 2025. MBA’s Government Loan Production Subcommittee already has a BNPL working group in place. The group is actively developing a proposal ahead of the RFI’s release and is scheduled to meet on Monday, June 30, to discuss MBA’s response.

House Financial Services Committee Examines Biden-era CFPB: On Thursday, June 26, the House Financial Services Subcommittee on Oversight and Investigations held a hearing titled, "From Watchdog to Attack Dog: Examining the CFPB’s Chopra-era Assault on Disfavored Industries." The hearing centered on Republican allegations that the Consumer Financial Protection Bureau (CFPB) under former Director Rohit Chopra overreached its authority and unfairly targeted specific business segments. Democratic lawmakers were critical of the current Trump Administration’s efforts to curtail CFPB’s regulatory oversight and mission. Testimony featured a small business owner detailing severe impacts from CFPB investigations, alongside legal experts and advocates debating the agency's conduct and efficacy under different leaderships. A summary of the hearing can be found here. Under the current Administration, the CPFB (under the acting supervision of the Office of Management and Budget) is working through staff reductions, potential funding cuts, and waiting for a new Director-designate to be named. MBA will continue to monitor the CFPB’s regulatory activities – and any legislative proposals relevant to the agency.

HVAC Democrats Host Roundtable on Strengthening the VA Home Loan Program: On Thursday, June 26, seven Democratic Members of the House Veterans’ Affairs Committee (HVAC) convened a roundtable titled, “Housing More Veterans Using the VA Loan Guaranty Program.” The discussion focused on improving awareness, access, and effectiveness of the VA loan program, with particular attention on loss mitigation, program transparency, and operational capacity. MBA’s Vice President for Legislative Affairs, Madisyn Rhone (liaison to House Democrats) delivered remarks emphasizing the urgent need for a more permanent partial claims loss mitigation solution while reinforcing MBA’s support for swift Senate passage of H.R. 1815. Participants included representatives from the Housing Policy Council, Center for Responsible Lending, National Coalition for Homeless Veterans, the VFW, the Paralyzed Veterans of America, and other consumer and veterans advocacy groups. The roundtable provided an opportunity for MBA to press for immediate action on a partial claims solution that will directly impact more than 200,000 VA borrowers currently delinquent or in foreclosure. Rhone highlighted that without scalable, effective loss mitigation tools, veterans are falling behind due to high interest rates and because the VA’s servicing infrastructure lags behind its government housing program peers. She also reiterated MBA’s calls for enhanced transparency around funding fees and additional resources to modernize VA operations. MBA will continue its advocacy for Senate adoption of the House-passed partial claims legislation, while working with all engaged stakeholders to ensure long-term success of the VA Home Loan Program.

California Enacts Industry-opposed Legislation to Regulate Subordinate Mortgages: On Monday, despite tireless advocacy efforts by California MBA and MBA to oppose a budget trailer bill related to housing, California Governor Newsom signed the legislation (AB 130, see pages 34-36, start of section is highlighted). The new law includes new requirements for servicers of subordinate mortgages, defined in the bill, and took effect immediately. The language of the new provisions was struck from a prior Senate bill as a result of California MBA engagement, but was then quickly added to this budget trailer bill. The bill was passed in just a few hours and enacted without receiving appropriate debate. The new law establishes “unlawful practices” for subordinate mortgage servicers, such as failing to provide: written communication in at least three years, periodic statements, a notice of servicing transfer, and more. This year, multiple states introduced legislation aimed at protecting consumers from undischarged or dormant mortgages (so-called “zombie” mortgages with no activity or communication from the servicer for extended periods of time). MBA and its state partners were successful in significantly amending or stopping the majority of these efforts by striking or amending poorly drafted language that would have damaging impacts on mainstream mortgage servicers. Meanwhile, Connecticut legislators signed SB 1336 after amending the bill, providing reasonable standards for when a mortgage may still be enforced. This same policy issue drove efforts to license passive trusts this year in Maryland, which was resolved through enactment of SB 1026 / HB 1516. MBA expects this policy issue to continue growing in the states during 2026. MBA will continue to support California MBA's efforts - and those in other states - going forward on this issue, which may include legal challenges.

Consideration of California CRA Legislation Delayed; Industry Opposition Continues: Last Wednesday, the California Senate Banking and Financial Institutions Committee did not consider legislation (AB 801) to impose a state-level Community Reinvestment Act (CRA) framework on independent mortgage banks (IMBs) and credit unions. Instead, it was announced on the eve of the meeting that the hearing on the bill was “canceled at the request of author.” While the bill remains alive, this is a significant development that could delay further consideration until 2026. AB 801 is vigorously opposed by MBA, the California MBA and aligned trade groups, and which has also been the focus of a Mortgage Action Alliance Call to Action. Industry opposition has detailed the many reasons IMBs, and credit unions should not be subject to CRA and also the bill’s numerous flaws, such as how CRA would add new expensive and unnecessary compliance obligations. The bill’s alarming provision that could result in the imposition of administrative penalties of up to $100,000 for failing to comply with these new requirements has also been a key advocacy focus. The bill passed the Assembly during June, but it was weakened by industry advocacy that helped produce a sharply divided vote. While there are 60 Democrats in the Assembly, only 45 voted to approve and 15 voted either “no” or “abstain.” They were joined by all 19 Republicans. MBA and the California MBA will continue to collaborate with allied industry trade groups in the months ahead to defeat or substantially amend the bill next year.