July 25: Opinions on housing stats, RESPA, the CFPB, and no-merge credit reports; Florida insurance trends

China has replaced the United States as the #1 automotive market, the #2 exporter of light vehicles, and controls 75 percent of global EV battery manufacturing. One of the reasons is price. Price matters. It seems that everyone in the U.S. is being squeezed, whether it is $5 for a loaf of decent bread or a head of lettuce, filling up your gas tank, or keeping a roof over their heads. Lack of housing affordability is a team effort, and, although the mainstream press points at lenders at being at fault, insurance costs and worries aren’t helping. But a series of reforms in one state (Florida) have brought Florida’s property insurance crisis down from a national embarrassment to merely noticeable. In 2018, at the height of the crisis, 80 percent of homeowners’ suits against insurance companies nationwide were opened in Florida. In 2017, 16 percent of all homeowners insurance claims in the country originated in Florida, vastly higher than their percentage of the population. Insurers were bailing on the state not just because of its position as a speed bump for tropical cyclones, but because of what appeared to be systematic and rampant fraud. Now, several years after reforms, claims originating from the Sunshine State remain disproportionate but no longer obscene: In 2025 Florida was responsible for five percent of claims and “just” 41 percent of all lawsuits.

“America cannot afford a no-merge credit report”

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Eric J. Ellman, the President of the National Consumer Reporting Association, has an opinion on “credit modernization.” The Mortgage Bankers Association continues to push for a no-merge credit report, risking safe and sound lending practices and raising costs for consumers. MBA would have us believe that picking one credit report will be the magic wand to lower the cost of housing. Unfortunately, there is no magic wand.

“The MBA has pointed to data from loans originated in the first half of 2025 as proof that moving to a one-credit-report-fits-all system within the range of 700-plus scores will see loan pricing increase or decrease by, “at most,” one pricing bucket. That means, they say, a single credit file would have minimal impact on credit risk or GSE pricing revenue. If only it was that simple.

“Consider this: First, knowing in advance that a family seeking a mortgage would fall within the middle-score band of 700-719 is impossible without using file data to calculate scores. Data from Amy Crews Cutts clearly shows sufficient variation among data from the nationwide credit bureaus. A study by Andrew Davidson & Co. demonstrates that scores based on data from a single nationwide bureau differed from the current tri-merge standard often enough to meaningfully impact loan pricing.

“Second, MBA’s assertion that moving up or down a bucket is acceptable harm for American homebuyers, a claim they base solely on the largest investor in mortgage-backed securities. Placing someone in a home they cannot afford is not a good outcome, as we learned in 2007. Pricing someone too high shuts them out of their dream home, or costs tens of thousands of dollars more than it should.

“Third, mortgage insurers will treat a single-bureau credit report as having higher risk. Higher risk means more costs to consumers; that’s a hefty price to ask them to pay. The tri-merge credit report is tried and true. A one-credit-report-fits-all fits no one.” Thank you, Eric.

CFPB and RESPA discussions are active and ongoing

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The Consumer Financial Protection Bureau’s dramatic retreat from enforcement during 2025 and 2026 has created one of the most significant shifts in consumer financial services regulation since the Bureau opened its doors in the summer of 2011, 15 years ago.

There are only twelve (12) legislative days left until the November election. What might that mean? The CFPB’s new HQ fits 500. There are 1,100 on the payroll. What might that mean? The organization is certainly still functioning and just asked for a Request for Information regarding “Promoting Access to Mortgage Credit.”

The mainstream press has been filled with information about what the CFPB is no longer doing. Enforcement investigations have slowed dramatically. Numerous pending lawsuits have been dismissed or settled on terms markedly different from those sought by the prior Administration. Supervision has been scaled back, the direction of rulemaking has changed significantly, and the Bureau’s priorities have shifted away from the aggressive enforcement agenda that characterized much of its existence.

But it is still in existence, as theoretically only Congress can do away with it but with the Trump Administration, who knows? Far less attention has been paid to what is replacing that federal enforcement presence. Will there be a private CFPB? At first glance, one might conclude that a “private CFPB” is emerging. But that description is probably too narrow. The more accurate characterization is that a decentralized consumer protection ecosystem is taking shape. Former CFPB officials are dispersing into public-interest law firms, nonprofit advocacy organizations, state attorneys general offices, state financial regulators, academia, and even cabinet-level state government positions. Working independently, and often in collaboration, they appear poised to pursue many of the same consumer protection objectives that previously were advanced primarily through the CFPB.

We’re seeing confirmation hearings. The Mortgage Bankers Association sent a letter to leaders in the Senate Committee on Banking, Housing and Urban Affairs, stating the real estate finance industry’s strong support for President Trump’s nomination of Brian Johnson to be director of the Consumer Financial Protection Bureau.

Certainly, the rulemaking has shifted from the legislative branch to the executive branch, which runs the agencies. And President Trump and his appointees dictate policies and priorities. Which brings up the subject of the EOs made earlier this year. Executive orders are like a wish list. “I want this… to be a policy of your agency.” They aren’t laws, but instead a way of letting government bodies and our industry what is important for Donald Trump, or any president.

Plenty of subjects have come up. Promoting access to mortgage credit, reducing the regulatory burdens for credit-worthy borrowers, TRID, RESPA, Truth in Lending, ATR, the role of ink signatures, appraisal policies, reducing zoning requirements, trying to bring back banks into origination and servicing, the expanded role of Federal Home Loan Banks, aligning supervisory requirements with the same interpretations, limiting civil money penalties, the list goes on and on.

Meanwhile, in some cases, loan originators are “stuck in the middle.” The most commonly given example is regarding immigration. A strict read of an Executive Order earlier this year suggests that lenders become immigration officers, determining whether or not a borrower is a U.S. citizen or has the potential for being deported, but they can’t discriminate based on racial background. So, lenders are stuck reconciling those two things with a fear of Fair Lending violations in their minds.

March 2026’s “Removing Regulatory Barriers to Affordable Home Construction” purpose was to remove or streamline regulatory barriers, reduce slow permitting processes, and mandates which affect home construction. But every lender knows that the federal government doesn’t control home construction; it is primarily under state or local jurisdiction.

Well-known mortgage law veteran Phil Schulman, appearing on Chrisman LLC’s Mortgage Law Today with Brian Levy, Suzanne Garwood, Loretta Salzano, and Marty Green this week, had some thoughts on RESPA and where we might go from here, if anywhere.

“I spent almost forty years practicing RESPA law, and if there is one thing I have learned, it is this: human nature does not update itself just because the technology around it does. We now live in a world of digital marketing, AI powered lead generation, and search results that can be bought and sold in an instant. People keep telling me this makes RESPA, and Section 8 in particular, a relic. I disagree. 

“Here is the truth about buying a home. Most people will buy fifteen televisions and fifteen cars in a lifetime. They will buy one house, maybe two. The process is intimidating, confusing, and honestly a little mysterious, even to smart people. So what happens? You go see the first person in the transaction, usually a real estate agent, and they tell you where to go next. You need a mortgage. You need title insurance. You need an inspector. You have no idea what any of that means, so you take the recommendation you are handed. That moment, right there, is where RESPA earns its keep.

“If there is no anti-kickback provision, and it becomes lawful to pay for that recommendation, the incentive stops being about who does the best job and starts being about who pays the most. Joe at ABC Mortgage might not have the best rate, but if Joe pays the referral fee, it’s a pretty good bet that is where the business is headed. ABC Mortgage is small, with tight margins, so they will likely raise their origination fee to cover the payout. The title company down the street does the same thing to cover its own referral payments. The consumer ends up paying more to buy a home than they otherwise would. 

“And it gets worse for competition. Once referral fees become the currency of business, the largest companies win, because they can outbid everyone else for the relationship. Small originators like ABC Mortgage cannot keep up and eventually go out of business. Fewer companies means less competition, and less competition means higher prices for consumers down the line. So the idea that scrapping Section 8 would be good for the industry gets it backwards. It would be bad for consumers, and it would be bad for the very settlement service providers who think they would benefit from a looser environment.

“I understand the argument that digital marketing has created a new kind of relationship, one that RESPA was never built to anticipate. But when I went back and read the 2023 advisory opinion on digital mortgage marketing, I noticed something interesting. It leaned heavily on a 1996 HUD policy statement about computer loan origination. Everything old is new again. The delivery mechanism changes, the platform changes, but the underlying behavior, someone in a position to steer business making that steering conditional on getting paid, has not changed at all. Some argue that this thing should be handled as a disclosure and transparency issue under UDAP principles rather than folded into a RESPA violation, but that is a separate conversation from whether the core protection is still needed.

“People sometimes ask me whether this is really about ethics rather than economics. Back in 1974, the people who wrote this statute already answered that question. Their answer, built into the affiliated business arrangement rules and later into the marketing agreement guidance, was that a referral made for payment has to be disclosed as such. You cannot let a consumer believe you are recommending someone out of professional judgment when you are actually being compensated for the recommendation. That is not a technicality. That is the whole point. 

“Listen, RESPA doesn’t prohibit referrals, it only prohibits payment of a thing of value for the referral of settlement service business. RESPA does not cure every ill, and I will be the first to admit it needs improvement in places. 

“But the core idea behind Section 8 is not aging out just because we have new tools for building relationships. As long as there is a human being in a position to send business to someone else in exchange for something of value, we need guardrails around that relationship, whether the referral happens over a handshake, a marketing agreement, or a search engine result. Technology changes the packaging. It has never changed what is inside the box.” Thank you, Phil.

Home ownership stats being questioned

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Much of our society, and economics, is based on statistics. We hope that they are reliable, consistent, and objective. But Axios’ Emily Peck published a story focused on the Census Bureau’s accuracy of something very basic to government policy: home ownership in America. “A new way of measuring America’s homeownership rate finds that it is far lower than commonly understood, especially for young adults.

“Housing is the largest source of wealth for many Americans, and the new measure finds that barely half of adults have access to that piggy bank. The findings show ‘that younger people are having an even harder time buying a house than traditional data would suggest,’ per a note about the findings from housing policy analyst Jaret Seiberg at TD Cowen.

“The new measure, calculated by the Federal Reserve Bank of Minneapolis, finds that only about 53 percent of American adults own their own homes, not the commonly cited homeownership rate of 65 percent calculated by the Census Bureau. For adults under age 35, it’s bleaker: Only 22 percent are homeowners under the new measure, compared with 37 percent under the traditional one. The difference has to do with the way the Census Bureau measures homeownership. Basically, it counts homes instead of people, asking: Does the owner live in the house? That means an owner-occupied house counts the same whether it contains one homeowner or a homeowner plus adult children, parents, relatives, or roommates.

“Instead of looking at home occupancy, the researchers counted the share of those 18 and over who own their home. (They call this the ‘homeowners-to-population ratio,’ or HPOP.) Those who count as homeowners: the head of an owner-occupied household, including their spouse or unmarried partner. Those who don’t: other adults in the house, including adult children, parents, relatives, friends, or roommates. Erik Hembre, a senior economist at the Minneapolis Federal Reserve who coauthored the research, stated, ‘It’s not that the old measure was doing anything wrong, but you had to know what it was doing to interpret it correctly. I think this is more aligned with what people have in their mind when we talk about the homeownership rate.’

“14 percent of adults in the U.S. live in owner-occupied homes, but are not themselves homeowners, per the research. ‘In other words, more than one in eight of the nation’s adults are misrepresented in the most-cited statistic on homeownership,’ the Minneapolis Fed economists wrote.

“The biggest adjustment comes from accounting for adult children who live at home. Between the lines: The U.S. is often described as a nation of homeowners, and certainly tax policy is written to benefit those with homes. But the new measure complicates that understanding: Barely half of adults count as homeowners. Yes, but some people choose to live in multigenerational households. Parents may want to give their adult children some time to save up for their own home or prefer living with others to defray costs.

“TD Cowen’s Seiberg says the new measure might come up next year when Congress looks to do more on housing… The housing affordability crisis is actually worse than it seems.”

What do scientists do when they see a monkey hording all the bananas while others are starving? Here’s a short video worth thinking about.

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