The mortgage market runs on IMBs. Washington hasn't caught up

Last week the Community Home Lenders of America released its CHLA 2025 Report on Independent Mortgage Banks.  

The report leads off by highlighting significant developments over the past year that affect mortgage lender/servicers and the homebuyers and borrowers they serve.  

In many ways, 2025 was a good year, at least for advocacy on behalf of IMBs. Three years ago, CHLA was the early leader in calling out practices within our industry regarding trigger leads – the abusive torrent of texts, calls, and emails consumers endured after a loan application is pulled.  Last year, these efforts paid off; Congress enacted a law reining in these practices.

And when CHLA was the first to call on Fannie Mae and Freddie Mac to increase MBS purchases, in order to reduce the spread of mortgages over Treasuries, we were told it couldn't be done.  But the GSEs did exactly that in 2025, culminating in the President's explicit directive to do so in January 2026.  

But our report also calls attention to our growing homeownership affordability challenges, citing a recent National Association of Realtors Release that offered the sobering news that the average first-time homebuyer is now 40 years old. 

To respond to those challenges, our report offers a detailed set of policy initiatives and priorities.  These are based on a broader homeownership strategy of focusing on entry level homeownership housing types (condominiums and manufactured homes) and on mortgage programs that serve first-time homebuyers (FHA, VA, and Ginnie Mae).

CHLA also produces these reports because, as the only national association exclusively representing non-bank mortgage lenders, we have found there is a limited – and often faulty - understanding of IMBs.  

For years, we have chronicled the remarkable growth of IMBs in the mortgage market, as banks exited in droves after the 2008 Housing Crisis. Remarkably, IMBs now originate 84% of all mortgage loans. IMBs' share of FHA loans has grown from around 50% in 2010 to 90% today – and IMBs' share of Ginnie Mae issuance has skyrocketed from 12% to 95%.  And statistics show that IMBs consistently outperform banks in mortgage loans to minorities, veterans, and other underserved borrowers.

We also produce this report to counter the myths and misconceptions that many have about non-bank mortgage lender/services. Unfortunately, certain think tanks and competitors have for many years floated the myth that IMBs are risky.  To rebut this myth, our report explains why IMBs – and particularly smaller IMBs – pose little or no financial or systemic risk.

Similarly, we have found that many in Washington are under the impression that IMBs pose greater risks to consumers, that they are less regulated in terms of consumer protections.  In the words of our former CHLA President Bill Giambrone, that view is laughable. Our report produces four pages of detailed charts showing that mortgage loans originated by IMBs are subject to far more consumer protections than bank loans.

We believe that few are aware, for example, that 100% of IMB mortgage loan originators – the people that work directly with consumers – are licensed, must pass a SAFE Act qualifications test and an independent background check, and must complete Continuing Education courses each year?  While bank mortgage originators have secured an exemption from all these consumer protections?

But the most important part of our report is to show what CHLA believes Congress and federal mortgage officials should do to address our homeownership affordability challenges.

For years, CHLA has been focused like a laser on reducing premiums for all federal mortgage loan programs, to base them on actuarial needs, and not as budget offsets to pay for unrelated federal spending. CHLA was the most vocal group calling for FHA premium reductions the last two times FHA actually cut annual fees – and we continue our longstanding call for FHA to end its Life of Loan premiums.

CHLA also supports FHFA Director Pulte's review of Loan Level Price Adjustments and offered our views on where to start (condos, manufactured homes, and entry-level homes in high-cost areas). And just last month, it was CHLA that led the charge against a Veterans Affairs Committee bill to increase VA mortgage loan fees (markup postponed; stay tuned).

CHLA is also mindful of our advocacy role in Washington on behalf of IMBs – particularly small and mid-sized ones.  Last year, we spearheaded an IMB sign on letter laying out key recommendations on how to protect smaller IMBs in any Fannie/Freddie exit from conservatorship.  Those recommendations are in our report.

We also outline a host of proposals to help families buy their first home.  These include actions to arrest the decline of FHA loans for condominiums and actions to enhance liquidity and warehousing lending for IMBs, so they can maximize competition and lower rates to borrowers through loan securitization in programs like Ginnie Mae.  

Our report states that regulations should put consumers first.  Congress or the CFPB should reform the LO Comp rule to create more competition by ending restrictions on compensation of a lender's employees, while upholding the purpose of LO Comp of ending Yield Spread Premium practices.

Our report calls for action to break up the monopoly FICO has on credit scores. In 2022 the Biden Administration FHFA announced plans for the GSEs to accept a two-bureau, bi-merge, credit report.   What followed was a new tiered pricing model for FICO scores with sweetheart deals for a privileged few lenders and a 400% price hike for everyone else.  

After aggressive opposition by CHLA, FICO dropped its tiered pricing model and bi-merge was abandoned.  But recently, similar credit pull proposals have resurfaced from within our industry.  Responsible lending requires full due diligence and a commitment to identifying mortgage credit risks across the full borrower profile.  Therefore, CHLA opposes anything less than the gold standard tri-merge credit report.

Finally, our report includes a tribute to Bill Giambrone, one of CHLA's co-founders and our first President. Although Bill has passed away, his legacy lives on in the continued efforts of so many that champion the work that IMBs do.

So, there is a lot to unpack in our report. Whether you work in Congress, a federal mortgage agency, or the press - or are just a concerned, interested citizen – we urge you to take the time to read it.