A day before the federal government shutdown amid unresolved partisan disputes, Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit delivered his opening remarks at MBA’s 2025 Compliance and Risk Management Conference on Sept. 29 in Washington, D.C.
Broeksmit began by offering his own perspective – separate from that of MBA – on how the shutdown will likely play out and its impact on the real estate finance industry before diving into a comprehensive review of policy shifts under the Trump administration and MBA’s policy advocacy positions.
In the big picture, the mortgage industry has welcomed the federal government’s “pivot away from regulatory overreach” but also supports maintaining “adequate staffing and sufficient expertise” within federal agencies for the sake of consistency, Broeksmit said.
Government shutdown predictions, actions
One thing that has not changed, he noted, is that, “Washington remains sharply and evenly divided.” In spite of this, the fact that the House was able to pass a “clean” continuing resolution (CR), proposing to maintain current agency funding levels without introducing new or contentious provisions, was an encouraging sign in Broeksmit’s view.
“Usually there’s a CR filled with conservative priorities and there’s a fight, then President (Donald) Trump has to bring in the wayward fringe and they pass it two seconds before disaster,” he said. “This time, everybody agrees it’s a clean CR. The only thing they added to it was security for House members, which everybody wants. So that’s what is different about this one.”
The hold-up in the Senate, Broeksmit opined, is a result of Democratic leadership feeling they have to put up a fight, having acquiesced to Republican demands the last time a potential shutdown loomed in December 2024.
“The end game is obvious. The government will either pass a CR to avoid a shutdown, or there will be a shutdown, and the solution will be exactly what the House has already passed,” Broeksmit said. “There will be a side deal to say, ‘Hey, some Republicans agree with Democrats that we’re going to extend the Obamacare subsidies. Guess what? They don’t run out until Dec. 31. So, the Democrats want something more than a pinky swear from Republicans who are saying, ‘We’re not going to delay the CR with that. We’re going to do it separately.’ That’s the way it’s going to end. The only question is whether, politically, the Democrats would rather have a shut down and say they put up a fight and still not get anything from it.”
The government shutdown is bound to affect a broad array of government functions related to housing, Broeksmit noted. One of the most impactful will be a potential lapse in the National Flood Insurance Program, which would be disruptive to the mortgage market, especially at closing time for home purchases. In light of this threat, MBA plans to continue working with lawmakers and agency officials to try to avoid that scenario.
Broeksmit noted the association was aided by the fact that Speaker of the House Mike Johnson (R-La.) lives in a flood-prone area and, therefore, familiar with the importance of flood insurance for susceptible homebuyers.
Adjusting to regulatory policy shifts
MBA has also spent the last eight months working with the administration to cut regulatory red tape that generally impedes housing construction and adds costs and inefficiencies to the lending process, he said.
“At the same time, we have had to adjust to dramatic changes in the policy-making process of executive branch agencies,” Broeksmit said. “In the first months of the year, the administration’s plans to dramatically shrink the size and scope of the government dominated the headlines. We have found ourselves working with agencies with fewer employers, employees and different policy priorities.”
Noting he’d never describe himself as a cheerleader for the Consumer Financial Protection Bureau (CFPB), Broeksmit said the mortgage industry benefits from stability with respect to the regulatory bodies overseeing the U.S. financial markets in which they operate, even when they don’t see eye-to-eye.
“We’ve certainly had our differences with the bureau,” Broeksmit said. “However, just as nullifying its previous actions would have been disruptive to the lending process, deep and sudden staff reductions would also be disruptive.”
MBA leaders were concerned that the forced work stoppage at the bureau, initiated in February, followed by the reduction in staff (RIF) order issued by acting CFPB director Russ Vought in April, could have unintended consequences for the industry. These could include uncertainty about who to contact with compliance questions about data reporting requirements and servicing regulations, to name a few.
“The fact is Dodd-Frank remains the law of the land,” he continued. “Lenders and servicers must adhere to it, even if federal enforcement wanes. State attorneys general can enforce its provisions, as can the plaintiffs’ bar with a private right of action. The right rules provide a measure of certainty for lenders and borrowers. The wrong rules or no rules at all do the opposite.”
In May 2023, MBA filed an amicus in the case of Consumer Financial Protection Bureau (CFPB) v. Community Financial Services Association of America (CFSA), urging the Supreme Court to uphold the constitutionality of the bureau’s funding structure, which it ultimately did.
Broeksmit said the decision spared the mortgage market and the broader financial system from a lot of “unnecessary chaos.”
That being said, MBA has expressed support for several agenda items in the CFPB’s Spring 2025 Unified Agenda, proposing to rescind or reconsider regulatory provisions which have long been pain points for the industry. Broeksmit noted the bureau’s proposed rulemaking actions with respect to the CFPB’s Loan Officer Compensation Rule is a “top priority” for the association.
“We will continue to press for changes that will let loan officers reduce their compensation to meet competitive offers, allow lenders to pay loan officers less on bond program loans, and permit lenders to reduce compensation if loan officers make mistakes on the loan estimate that result in unreimbursed fees to the lender,” he said.
GSE credit scoring requirements, advocacy
With respect to the secondary mortgage market, Broeksmit highlighted MBA’s efforts to help the Federal Housing Finance Agency (FHFA) identify and address implementation issues with respect to the agency’s July announcement allowing Fannie Mae and Freddie Mac to accept scores provided by VantageScore 4.0. The following month, the MBA Residential/Single-Family Board of Governors passed a resolution calling for the end of the tri-merge scoring requirement for loans sold to the government-sponsored enterprises (GSEs), asserting it is no longer necessary.
“There was a time when data was fragmented and inconsistent, and that led to significant disparities between reports the three different credit reporting agencies provided,” Broeksmit said. “That is no longer the case. If anyone were creating a new mortgage process from scratch, they would never decide it with that sort of redundancy, the tri-merge that increases costs offers borrowers and lenders no choice and provides scant tangible benefit. We are working hard to drive change on the underlying requirement that all GSE government loans require credit scores and credit reports and scores from all three credit bureaus.”
Broeksmit followed this assertion with data from latest Fannie Mae Quarterly Report. The report indicated the weighted average credit score of all loans purchased by Fannie Mae in the second quarter of 2025 was 757, with 75 percent of loans showing a score of 740, or higher. Meanwhile, only 6 percent of loans had a score below 680.
“Are you telling me, if you pull a single loan file and you get one with a 740 score that it’s going to materially increase the predictability of the underwriting decision if you get two more that are probably 735 and 745?” he asked, rhetorically.
While there are still some variations in credit scores, large ones are much rarer than they once were and typically are not significant enough to impact a credit decision, Broeksmit added.
He concluded by reiterating MBA’s policy principles aligned with promoting liquidity, stability and competition in the housing market, including among the GSEs.