The Mortgage Bankers Association (MBA) sent a proposal to House and Senate leaders last week calling for the establishment of a new federal regulatory framework for mortgage lending that the association says would better protect borrowers nationwide.
MBA’s proposed legislation, titled the Mortgage Improvement and Regulation Act (MIRA), is centered on the creation of new national lending standards. MBA argues that uniform nationwide lending standards are needed to replace the hodgepodge of state and federal laws currently in place.
The second pivotal piece of the association’s proposed mortgage reform is the institution of a new, single regulator, the Federal Mortgage Regulatory Agency (FMRA). This agency would be responsible for implementing and enforcing the “tough new requirements,” MBA said, as well as regulating independent mortgage bankers and mortgage brokers in partnership with state regulators.
John A. Courson, president and CEO of MBA, said, “In order to restore confidence in the housing and mortgage markets, we need to ensure that many of the excesses that led to the current crisis aren’t repeated. For this reason, we are calling on Congress to create a new national regulatory framework to regularize the mortgage market and better protect consumers.”

Among the components that MBA is calling for in the new national lending standard are: – Many of the recently published Home Ownership and Equity Protection Act (HOEPA) rules, including a borrower’s ability to repay, documentation of income and assets, limits on prepayment penalties, and establishment of escrow accounts for borrowers’ tax and insurance payments. – Improvements to the mortgage origination, servicing, and appraisal processes some of which had been included in H.R. 3915 (which passed the House of Representatives in 2007). – A new “duty of care” for mortgage bankers and mortgage brokers to assure that consumers are appropriately informed of the loan options available and the costs of their loan transaction, including compensation to the mortgage broker. – A requirement that a borrower affirmatively opt-in, in writing, to a nontraditional (often higher-risk) mortgage product.
According to Courson, “MBA has long advocated for uniform national lending standards to protect borrowers coast to coast. One standard for all borrowers to learn and understand, and one standard for all lenders to follow will offer much better protection to consumers in every state and will help to lower costs. It will also significantly cut down on the confusing and often contradictory patchwork of state laws and regulations.”
Also as part of MBA’s MIRA, the Department of Housing and Urban Development (HUD) and the Federal Reserve would be required to work together in consultation with the new regulator to develop simplified consumer disclosure forms. This would include combining Real Estate Settlement Procedures Act (RESPA) and Truth in Lending Act (TILA) disclosures.
Additionally, MIRA would increase resources for investigating and prosecuting mortgage fraud and establish a national financial literacy and counseling program. As part of that program, MBA suggests there should be pre-purchase counseling required on certain mortgage products, primarily for first-time home buyers.