State Relations Committee Update: Policy Highlights

MBA Publishes AI White Paper: “Examining AI-Powered Mortgages Through the Lens of Federal Law”: Last Wednesday, MBA published a new white paper examining how existing federal laws and regulations apply to the use of artificial intelligence in mortgage lending. Prepared by MBA’s outside counsel, Orrick, and developed with direct input from RESBOG members, the white paper provides a roadmap on legal and compliance considerations when using AI in mortgage lending and servicing. Topics explore the role of mortgage loan officers and best practices in risk governance. The integration of AI into mortgage lending and servicing raises several legal and regulatory questions regarding expectations for human involvement with AI models and risk management. The white paper addresses those issues and provides actionable guidance for mortgage companies on adopting AI with the appropriate oversight and human support. The white paper serves as an educational resource to help members understand how existing federal law applies to AI in the mortgage process. It does not constitute legal advice. The white paper also complements MISMO’s Framework for Responsible AI in Mortgage Ecosystems (FRAME) – released yesterday (see below) – which provides a model for risk governance to assist organizations in deploying AI in the mortgage process and complying with the AI standards announced by Fannie Mae and Freddie Mac. The paper emphasizes a “human-in-the-loop” approach, in which mortgage lenders remain responsible for lending decisions while AI supports an efficient process. Among the paper's conclusions: While the SAFE Act does not require AI tools to have their own MLO license to engage in loan origination activities, a human MLO should still be assigned to each mortgage loan transaction, and their NMLS ID must be disclosed on the credit applications and other disclosures to the consumer; While Regulation Z does not directly address the level of human involvement on a transaction, lenders should continue to be aware that general consumer protection statutes at federal and state levels prohibit misrepresentations in consumer lending transactions; and, A governance framework should consider risks related to fair lending and bias, explain-ability, steering, data privacy and security, and third-party and vendor management to support AI adoption. As AI is an evolving space, MBA welcomes additional feedback on regulatory clarity most helpful to mortgage lenders and servicers. MBA will promote alignment and flexibility to ensure that state frameworks do not impede AI adoption.

MISMO Launches the MISMO Framework for Responsible AI in the Mortgage Ecosystem (FRAME): MISMO last week announced the launch of the MISMO Framework for Responsible AI in the Mortgage Ecosystem (FRAME), an AI governance toolkit designed to help mortgage companies of all sizes establish policies, procedures, controls, and oversight for the responsible use of artificial intelligence. As AI becomes increasingly embedded throughout mortgage operations, companies face growing pressure to establish governance structures capable of managing AI-related risks while supporting innovation. FRAME was developed to help organizations meet that challenge. FRAME is now available to MISMO member companies through MISMO Connect. To help organizations explore the framework in greater depth, MISMO will host a four-hour interactive workshop at the MISMO Fall Summit, August 24-27, in Reston, Virginia.

Jeff Weidell, CMB, of Northmarq Nominated to Be 2027 MBA Vice Chairman: Last week, MBA announced that Jeff Weidell, CMB, CEO of Northmarq, has been nominated to serve as MBA's Vice Chairman for the 2027 membership year. Weidell currently serves on MBA’s Board of Directors and is the 2025-2026 MORPAC Commercial/Multifamily Vice Chair, leading MBA’s political action committee outreach to its commercial/multifamily membership and pursuing new opportunities for MBA’s newest political giving program, MORPAC Direct, including efforts to recruit new major donors. Weidell was honored with the 2025 Schumacher-Bolduc Award, presented by MORPAC, in recognition of his outstanding leadership and dedication to advancing the industry’s advocacy initiatives. He previously served as 2024 Chair of MBA’s Commercial/Multifamily Board of Governors (COMBOG), where he consistently and successfully advocated for the association’s top regulatory and legislative priorities, including testifying as an industry witness on MBA’s behalf in May 2024 before the House Committee on Oversight and Accountability’s Subcommittee on Health Care and Financial Services. Weidell has also led advocacy outreach for MBA-sponsored conferences, including the tailored “CREF track” at the MBA’s National Advocacy Conference (NAC), the Commercial/Multifamily Finance Convention and Expo, and the Chairman’s Conference. Weidell assumed the role of Northmarq CEO in 2020 after serving as President for eight years. Earlier in his career, Weidell was a successful mortgage banker, beginning at Trowbridge, Kieselhorst & Company, where he became Managing Director of the San Francisco office. He earned a B.A. in Economics from Columbia University and an M.B.A. from the Stanford Graduate School of Business and also holds the prestigious Certified Mortgage Banker (CMB) designation. “Jeff Weidell’s executive leadership in both residential and commercial real estate finance, his strong record of industry advocacy, and his longstanding commitment to MBA and its members make him an outstanding choice to join MBA’s leadership ladder,” said Christine Chandler, 2026 MBA Chair and Executive Vice President, Chief Operating Officer, M&T Realty Capital Corporation. “Throughout his career, Jeff has demonstrated an ability to lead through changing market conditions, drive innovation, and deliver results. MBA and its members will benefit greatly from his collaborative approach, strategic vision, and commitment to advancing opportunities for real estate finance professionals, property owners, renters, and the communities we serve.”

Brian Johnson Nominated to Lead CFPB: Last Wednesday, President Donald Trump nominated Brian Johnson to serve as Director of the Consumer Financial Protection Bureau (CFPB). Johnson, currently a senior executive at Capital One, previously served as CFPB Deputy Director during President Trump's first term. Johnson also brings experience from across the government and the private sector, including serving as policy director and chief financial institutions counsel for the House Financial Services Committee, and advising financial institutions on consumer finance regulatory matters in private practice. Johnson's nomination signals the Administration's continued focus on regulatory reform and reducing compliance burdens across the financial services sector, including mortgage lending. If confirmed, he would oversee the Bureau's rulemaking, supervision, and enforcement activities, including those related to the President’s wide-ranging March 13 Executive Order (EO) “Promoting Access to Mortgage Credit.” Read MBA’s recent joint letter to the Bureau on targeted regulatory reforms to implement the EO. In a press statement, MBA President and CEO Bob Broeksmit, CMB, said, “The CFPB is an important partner to our industry, and we will continue to work together to advance reforms that lower costs, reduce unnecessary regulatory burdens, and improve access to sustainable homeownership opportunities.”Johnson's nomination now goes to the Senate for consideration. A confirmation hearing is expected later this summer before the Senate votes on his nomination.

CFPB Releases Guidance Addressing Immigration Status and the Ability to Repay: Last Monday, the CFPB issued a statement reminding mortgage lenders of their obligation to assess repayment ability and explaining how to consider an applicant’s immigration status under the Ability to Repay Rule (ATR). Specifically, the Bureau reminds creditors that, when determining repayment ability, they may, under certain facts and circumstances, be obligated to consider information that bears on the consumer’s underlying and continuing ability to earn income when residency in the United States is a necessary component of such employment. Under Regulation B, creditors may take an applicant’s immigration status into account when ascertaining the applicant’s ability to repay. As a matter of “sound compliance practice,” lenders should treat a borrower's immigration status as a factor that could signal a “reasonably expected change in future income.” Additionally, the Bureau states that “failure to account for such a reasonably expected change in income may not comply with a creditor's obligation to reasonably assess a borrower's ability to repay.” This is particularly the case when application materials or available information suggest the borrower may lack lawful presence or work authorization. The statement notes that indications of lawful presence may come through “direct inquiry or the consumer’s reliance on atypical identification methods, such as an Individual Taxpayer Identification Number (ITIN), typically issued to taxpayers to individuals who lack proof of legal residency.” However, the Bureau also notes that there are a wide variety of lawful immigration statuses and that it, “cannot be assumed that consumers with different lawful statuses have identical abilities to repay.” MBA is evaluating the statement’s compliance implications and may, after consultation with members, provide further guidance. 

MBA Responds to FEMA Review Council Final Report: Last Monday, MBA submitted a comment letter in response to FEMA’s Review Council Final Report, supporting efforts to improve disaster response while raising significant concerns with recommendations that could disrupt borrower protections and housing finance markets. MBA cautioned that devolving disaster response and flood insurance frameworks to individual states could complicate mortgage servicing operations, disrupt secondary market confidence, and weaken the uniform standards relied upon by lenders and regulators. The report’s proposal to tighten federal disaster declaration criteria could limit access to critical assistance programs (e.g., Individual Assistance), particularly for mid-scale disasters, and create gaps in borrower protections. Reduced federal involvement could shift costs to borrowers, lenders, servicers, and federal housing programs, while increasing operational complexity and regional inconsistencies. A more decentralized, state-led disaster response model may introduce uneven outcomes due to varying state capacity and increase administrative costs and inefficiencies. Recommended changes to the National Flood Insurance Program (NFIP)—including greater reliance on private markets and localized decision-making—could undermine the mandatory purchase requirement and create inconsistencies in flood mapping and compliance standards. MBA also outlined a set of targeted reforms to strengthen the NFIP, including long-term reauthorization, improved recognition of private flood insurance, modernization of coverage limits, and removal of commercial mandatory purchase requirements to better align with market realities. MBA will continue to engage with FEMA and policymakers to advocate for a balanced approach that preserves a strong federal role, maintains national consistency, and promotes long-term stability for borrowers, housing providers, and the real estate finance system.

HUD Changes Control Over Noise Issues: Last Thursday, the Department of Housing and Urban Development (HUD) published a notice to provide individual program offices the authority to issue approvals related to projects in unacceptable noise zones. Previously this was concentrated in the Office of Community Planning and Development. The locations of FHA multifamily properties in urban areas or near mass transit are considered benefits to residents. However, these same properties were often penalized due to the noise these conveniences may cause. Giving the multifamily office more control over this issue will allow them to focus on the marketability of a property, as it relates to proximity to noise, rather than an objective measure. MBA will continue to advocate for flexibilities in FHA programs to help them meet the needs of the market.

VA Releases Updated Loss Mitigation and Partial Claim Policies: On Monday, June 1, 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 November 28, 2026. 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; and, 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. 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. MBA will work with members and VA to address remaining questions about the new policy and bring greater clarity where ambiguities remain.

MBA Submits Coalition Letter to FCC on Foreign Call Centers: On Tuesday, June 2, 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. 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. 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. MBA will continue to monitor this rulemaking and provide any relevant updates. 

Prudential Regulators Appear Before Key House Panel: Thursday, June 4, 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 Coroporation (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. 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." 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. 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.

MBA Joins Industry Letter Supporting Appraisal Modernization: Friday, May 29, 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”. 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.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. 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.

Key House Panel Re-examines Data Privacy Proposal: On Wednesday, June 3, 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. 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. 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. 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.

MBA Launching 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. 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. 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. 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.