The National Association of Local Housing Finance Agencies has released its 2026 National Policy Agenda, outlining policy priorities aimed at preserving and expanding the tools local housing finance agencies need to address the nation’s affordable housing crisis. The agenda emphasizes proactive engagement with Congress and federal agencies to strengthen affordable housing finance, renewed advocacy for robust staffing and capacity at the Department of Housing and Urban Development to ensure timely program delivery and compliance support, and enhanced federal investment in rural housing through USDA technology modernization, interagency coordination, and the Community Facilities Program. Distributed to lawmakers and administration officials, the agenda reinforces NALHFA’s role as a leading voice for local HFAs and its mission to equip communities with the resources needed to deliver safe, resilient, and affordable housing nationwide.
“The Mortgage Action Alliance (MAA), MBA’s free grassroots advocacy network, helped MBA secure several legislative wins in 2025, including trigger leads reforms, Veterans Affairs (VA) loss mitigation options, and major tax legislation. In 2026, the need for continued, robust industry support is crucial as MBA addresses the future of the housing GSEs, the need for fairer credit score pricing, TRIA Reauthorization, and many more issues. Make it a 2026 New Year’s resolution to remain an engaged MAA member by renewing your membership or joining today to be a part of the action! Email maa@mba.org to learn more.”
With so much lending activity in California, it is good to know what the California MBA has its eyes on, legislatively, since other states pay attention. I asked California MBA CEO Paul Gigliotti, “What’s up?” Here is his report.
AUTOMATED DECISION SYSTEMS / AI (AB 1018 (Bauer-Kahan)): This bill would regulate the use of automated decision systems to address “algorithmic discrimination.” While it stalled in the Senate, the bill is eligible to be considered again in 2026. We secured amendments to narrow the bill and exempt financial service developers already subject to the federal Gramm–Leach–Bliley Act. The industry impact is that it requires new obligations related to ADS disclosures, appeals, corrections, and retention. Poorly scoped rules duplicative of federal and state regulation and supervision and would create an overly burdensome and unnecessary additional regulatory scheme. Fails to account for the many ways ADS are essential to preventing fraud and protecting consumers across the full spectrum of financial services.
Its net effect on business is to increase compliance costs, increase documentation burden, and increase potential production slowdowns. A GLBA carve-out is in place, but debate will return in 2026.
AB 130 (Budget Trailer Bill) is a RETROACTIVE SERVICER LIMITS ON “ZOMBIE SECONDS.” After California MBA opposed SB 681 (Wahab) that stalled in the Assembly, provisions from that bill were added at the last minute to AB 130 (Chapter 22, Statutes of 2025), a budget trailer bill effective June 30, 2025.
These new rules target so-called “zombie mortgages” or dormant second liens and apply retroactively. On September 5, 2025, the California Mortgage Association, California Credit Union League, United Trustees Association, and several impacted institutions filed a lawsuit to block enforcement. The lawsuit, supported by California MBA, argues that AB 130 unconstitutionally impairs existing contracts, deprives lenders and investors of property rights, violates due process and equal protection, and is preempted by federal law.
This law retroactively restricts enforcement on second liens if various notices weren’t handled to new standards. Lawsuit filed to challenge constitutionality. If passed it would increase litigation exposure, decrease recoveries on second liens, potential markdowns on MSRs and whole loans. The California MBA is supporting the litigation effort to block retroactive provisions and will be poised to engage on potential legislation in 2026 to address industry concerns.
WILDFIRE FORBEARANCE: California MBA engaged on AB 238 (Harabedian, Chapter 128, Statutes of 2025), a bill that took effect immediately upon signature by the Governor on September 22, 2025. The bill requires mortgage servicers to provide up to 12 months of forbearance to a borrower experiencing financial hardship due to the January 2025 Los Angeles wildfire disaster. Through negotiations, California MBA and other industry trade groups worked to re-structure the bill to address liability concerns, added a safe harbor when following servicing guidelines, and resolved implementation issues.
What is the industry impact? It requires up to 12 months of forbearance for borrowers in declared wildfire disaster zones; prohibits fees/default interest. It increases the servicing/admin cost in impacted areas; but clarity and safe harbor tied to investor guides reduces litigation risk.
AB 493 (Harabedian) HAZARD INSURANCE PROCEEDS – 2 PERCENT INTEREST. AB 493 (Chapter 103, Statutes of 2025) was an urgency measure effective June 29, 2025. It requires mortgage lenders that make loans for family residences to pay two percent interest on any insurance proceeds following property damage or loss that is held by the mortgage lender. California MBA secured amendments to align requirements with CRMLA so mortgage banks can deposit loss draft proceeds in an interest-bearing account.
Servicers must pay 2% interest on held loss-draft proceeds for 1–4 family properties. Aligns with CRMLA but requires new accounting and IT updates. It increases operating costs and accounting complexity; borrower expectation management is needed.
SB 825 (Limon & Grayson): DFPI INDEPENDENT UDAAP AUTHORITY. SB 825 (Limon & Grayson), pending Governor’s action, grants the DFPI independent enforcement authority for unfair, deceptive, and abusive acts and practices by licensees otherwise exempt from the CCFPL. Despite industry engagement, amendments to limit remedies were rejected.
The Bill expands DFPI’s authority to pursue unfair/deceptive acts independently of federal regulators. It increases compliance and audit costs as well as enforcement exposure for advertising, fees, servicing, and complaints. Partnering with compliance officers to surface “pain points” most likely to trigger UDAAP scrutiny.
AB 226 (Calderon & Alvarez): INSURANCE MARKET REFORM. California MBA supported AB 226 (Calderon & Alvarez), pending Governor’s action. The bill authorizes the FAIR Plan to issue bonds through IBank to increase liquidity and claims-paying capacity, ensuring resilience after major wildfire events. It improves liquidity in the FAIR Plan and begins to stabilize insurance availability in high fire-risk areas, increases the ability to close loans in fire-prone ZIPs, and decreases the fallout and property value deterioration.
AB 801 (Bonta): CALIFORNIA CRA. AB 801 (Bonta) would have created a California Community Reinvestment Act overseen by DFPI. It would impose obligations on IMBs, banks, CUs, and money transmitters. The bill stalled in the Senate but is a two-year bill likely to return in 2026. Co-sponsored by Rise Economy, SEIU California, California Housing Partnership, and Inclusive Action for the City.
It would impose a California-specific Community Reinvestment Act on IMBs, duplicating federal requirements. It stalled in 2025 but is expected to return this year. It would increase reporting and compliance costs, especially for IMBs already meeting federal CRA-like obligations.
The California MBA is working with the author on potential alternatives to address her concerns in the next legislative session.