CHICAGO — A broad range of regulatory and administrative changes could reduce mortgage rates, lower closing costs, expand access to credit and increase the supply of affordable housing without requiring congressional approval, according to a new proposal from the Mortgage Bankers Association (MBA).
As reported by Realtor.com, the MBA unveiled a wide-ranging road map during its annual convention in Chicago, identifying reforms that federal regulators, housing agencies and state and local governments could implement to address the nation’s housing affordability crisis.
The recommendations include changes to credit reporting requirements, reductions in mortgage insurance premiums and certain loan fees, greater use of artificial intelligence in underwriting, streamlined refinancing and new financing mechanisms to support affordable housing construction.
“The goal is straightforward: Strip away unnecessary costs and complexity that ultimately show up in a higher mortgage rate, excessive closing costs, or a higher rent,” said Owen Lee, MBA’s 2027 chairman and CEO of Success Mortgage Partners Inc.
According to Realtor.com, the association said the proposed changes could provide more immediate relief than waiting for Congress to enact additional housing legislation.
Proposed Changes Could Save Borrowers Thousands
Among the recommendations highlighted by Realtor.com are several changes affecting Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) that MBA said could reduce borrowing costs.
They include:
- Credit reporting reform: Replacing Fannie Mae and Freddie Mac’s current requirement for three merged credit reports with a less costly approach for lower-risk borrowers.
- Lower FHA mortgage insurance premiums: Reducing the annual FHA mortgage insurance premium by 20 basis points, which MBA estimated would save a borrower with a $400,000 mortgage approximately $800 annually.
- Reduced loan-level pricing adjustments: Lowering fees imposed by Fannie Mae and Freddie Mac based on borrowers’ credit and other characteristics. MBA said a quarter-point reduction would save $1,000 in closing costs on a $400,000 loan.
- AI-assisted underwriting: Expanding the use of artificial intelligence to streamline loan processing, reduce administrative expenses and improve efficiency.
- Simplified refinancing: Creating a streamlined refinancing option for qualified borrowers with Fannie Mae or Freddie Mac mortgages that would eliminate certain redundant underwriting requirements, including full income reverification.
According to Realtor.com, MBA said the changes could help lower borrowing costs while maintaining responsible lending standards.
“These are practical, achievable steps that can help make housing more affordable while maintaining responsible lending standards and supporting a stronger housing supply,” Lee said.
Focus on Changes Regulators Can Make Now
MBA President and CEO Bob Broeksmit said the recommendations focus heavily on actions regulators and federal housing agencies can undertake under existing authority.
“These recommendations would reduce unnecessary costs, expand access to responsible credit, support the development of more housing, and strengthen the housing finance system for the long term,” Broeksmit said.
Realtor.com noted that the Trump administration has advanced several proposals intended to make homeownership more affordable, although some have encountered political and economic obstacles.
MBA leaders also pointed to legislative progress, including the 21st Century Road to Housing Act, as well as efforts to expand manufactured housing and off-site construction as lower-cost alternatives to traditional homebuilding.
However, the association said additional administrative reforms could provide relief without requiring new legislation.
Recommendations to Expand Housing Supply
Beyond mortgage financing, MBA’s proposal addresses the costs associated with developing, financing and preserving affordable housing.
According to Realtor.com, the recommendations include:
- Multifamily financing: Improving federal multifamily housing finance programs to lower development and ownership costs, potentially reducing pressure on rents.
- Rehabilitation lending: Modernizing the FHA’s 203(k) Rehabilitation Loan program to make financing home renovations and repairs less burdensome.
- Affordable housing preservation: Encouraging state and local governments to expand incentives, including tax abatements and tax credits, to preserve existing affordable housing.
- Construction financing: Developing more efficient financing mechanisms to support new residential construction and make otherwise financially infeasible projects possible.
MBA said improvements in multifamily financing could help reduce property owners’ expenses and, in turn, the rents charged to tenants.
Housing Shortage Exceeds 4 Million Homes
The recommendations come as new research underscores the continuing imbalance between housing demand and available supply.
According to Realtor.com’s housing supply gap report released this week, the United States faces a shortage of approximately 4.03 million homes.
The National Low Income Housing Coalition has separately estimated a shortage of 7.2 million affordable and available rental homes for extremely low-income renters, highlighting the particularly severe challenges facing households with limited incomes.
Realtor.com reported that MBA’s proposals reflect the industry’s position that improving affordability will require addressing both the costs of obtaining mortgage financing and the expenses associated with developing and maintaining housing.
The association said a combination of targeted regulatory changes, more efficient mortgage processing and expanded housing finance options could help improve affordability while supporting the long-term stability of the housing finance system.
