During the MBA's annual convention in Chicago, the trade group released a wide-ranging road map to improving housing affordability.
A wide range of reforms is available to make housing more affordable, without requiring Congress to act, the Mortgage Bankers Association has said.
During the MBA's annual convention in Chicago, the trade group released a wide-ranging road map to improving housing affordability, including reforms to credit scoring to lower the costs of a mortgage, new rules around loan programs, and new financing mechanisms to build affordable housing.
MBA leaders touted significant progress in legislative advancements, including the comprehensive 21st Century Road to Housing Act, a housing reform bill. They also touted advances for manufactured housing and off-site construction, seen as a cheaper method of building homes.
But with Americans urgently concerned about affordability, MBA said there are more levers to pull.
“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.
Rather than wait for rare congressional consensus, MBA highlighted rules that don't require new laws. For instance, replacing Fannie Mae and Freddie Mac's current tri-merge credit reporting mandate to help lower-risk borrowers. Or the Federal Housing Administration could take action to reduce mortgage insurance premiums.
The Trump administration has floated a number of ideas to make it cheaper to buy a home, but many have run into political or economic obstacles. And yet there has been more willpower to reform the rules and regulations that increase the cost of building, buying, and selling a home.
“These are practical, achievable steps that can help make housing more affordable while maintaining responsible lending standards and supporting a stronger housing supply," said Lee, who is also CEO at Success Mortgage Partners Inc.
Affordable ideas
Changing the rules at Fannie, Freddie, and FHA could make it easier, and cheaper, to obtain a mortgage, MBA said. For example, a 20-basis-point reduction in the annual FHA Mortgage Insurance Premium translates to $800 a year in savings for a borrower with a $400,000 loan.
MBA also suggests reducing Loan Level Price Adjustments—fees assessed by Fannie and Freddie that increase borrower costs based on credit and other characteristics. A one-quarter-point reduction in the LLPA would save $1,000 at the closing table for a $400,000 loan, according to MBA.
Other ideas could save time. MBA recommended using AI-assisted underwriting to reduce processing costs for loan files. A streamlined refinance option for Fannie or Freddie loans, one which doesn't require full income verification, removes redundant underwriting costs. That would be a good idea for well-qualified borrowers, MBA said.
The Mortgage Bankers Association calls for replacing Fannie Mae and Freddie Mac’s current tri-merge credit report mandate for lower-risk borrowers. (Photographer: Al Drago/Bloomberg via Getty Images) MBA President and CEO Bob Broeksmit said the recommendations cover things that regulators can do now, at a time that congressional consensus is infamously hard to come by.
“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.
Supply side
MBA also recommended lawmakers look at ways to lower the cost of financing for new housing construction. That could include improving multifamily housing programs and places developers rely upon for capital.
More efficiency for multifamily finance systems reduce owner costs and thus the rents they charge. MBA further recommended modernization to the FHA's 203(k) Rehabilitation Loan program, which could help provide further relief for borrowers whose projects often empty their wallets.
MBA also said state and local incentives, like tax abatements and tax credits, could make it easier to preserve affordable housing. It could also make infeasible projects possible.
Those kinds of updates matter because the housing crisis is in part a supply problem. The Realtor.com® housing supply gap report released this week shows the shortage of homes hit 4.03 million units. Other groups like the National Low Income Housing Coalition estimate a shortage of 7.2 million affordable and available rental homes for very-low-income renters.