The Broker Action Coalition (BAC) had a full year in 2025, with its advocacy efforts helping shepherd wins like the Homebuyer Privacy Protection Act, the bill banning “trigger leads,” a term for when credit reporting agencies sell prospective homebuyers’ contact info to third parties.
Brendan McKay, co-founder of BAC, spoke with Scotsman Guide from a quiet office the day after Christmas and outlined the organization’s priorities for 2026, focusing on three major areas: loan originator compensation reform, adjustments to annual percentage rate (APR) calculations and curbing rising credit report costs. Also, BAC is championing legislation to make mortgage insurance through the Federal Housing Administration fairer for homeowners.
Leveling the playing field on LO comp
LO comp is BAC’s top legislative priority for the coming year, to the extent there it plans to have a white paper published in the first quarter of 2026.
Current regulations unfairly penalize brokers compared to other lending channels, McKay said. Under existing rules, broker compensation — even when paid by the lender — counts toward the 3% points-and-fees cap, effectively limiting broker pay to 2.75%. Other channels, however, are not subject to the same restriction.
This disparity has significant consequences in so-called “mortgage deserts” where home prices average around $70,000 and borrowers often have thinner credit profiles. These loans are usually more complex and costly to originate, making profitability nearly impossible under the current cap.
“If you’re doing them at a 2.75% compensation, you’re not running a profitable business,” McKay explained. The result is fewer options for consumers, often leaving credit unions as “the only game in town.”
BAC’s goal is to eliminate this inequity and ensure compensation rules apply equally, fostering a more competitive marketplace.
Fixing APR calculations for greater transparency
Another key initiative for BAC is reforming how the APR is calculated. Currently, it includes interest and certain closing costs but fails to account for lender credits that offset expenses. This can distort comparisons between loan offers, undermining the metric’s purpose as a consumer-friendly benchmark.
McKay highlighted a common scenario: a wholesale mortgage with borrower-paid compensation may show a higher APR than a retail loan with higher interest and fees, simply because broker compensation counts toward APR.
“It should wash out, but it doesn’t,” McKay noted, calling the current formula a “failure of the number.”
BAC plans to push the Consumer Financial Protection Bureau (CFPB) to revisit the calculation, despite past reluctance to reopen the loan estimate form for changes. While the CFPB has acknowledged the issue, its competing priorities and lack of resources have delayed action.
Taking on rising credit report costs
Beyond compensation and APR, BAC is sounding the alarm on skyrocketing credit report fees. McKay sharply criticized credit bureaus for imposing unjustified price hikes, describing the trend as “unfettered and unregulated greed.” With only a handful of bureaus controlling the market, competition is virtually nonexistent, allowing costs to rise unchecked.
BAC supports the Mortgage Bankers Association’s proposal to reduce the requirement from three credit reports to one or two, a move that could lower expenses for lenders and borrowers alike. While not a complete solution, McKay sees it as a step in the right direction.
“We’re going to support anything that rattles the cages of the credit industry right now,” he said, pledging to keep pressure on regulators and lawmakers until meaningful progress is made. The coalition plans to amplify its message through social media, industry channels and direct engagement with congressional offices, aiming to spark regulatory scrutiny of what McKay calls an oligopoly operating without sufficient oversight.
Advocating for FHA mortgage insurance reform
Finally, BAC is throwing its weight behind a bipartisan legislative effort — the Mortgage Insurance Freedom Act, known informally as the “FHA Meeks bill” — that would allow homeowners to cancel FHA mortgage insurance once they reach 20% equity. Unlike conventional loans, where borrowers can remove mortgage insurance after building sufficient equity, FHA loans typically require insurance for the life of the loan.
This issue has become particularly pressing in today’s market. Many homeowners who locked in historically low rates in 2020 now have significant equity but cannot refinance without sacrificing their favorable interest rate. “They’re trapped,” McKay explained, noting that some borrowers with 50% equity are still paying hundreds of dollars monthly for insurance that serves no practical purpose.
The proposed legislation could save the average FHA borrower about $181 per month. This would be a meaningful boost to affordability at a time when housing costs dominate voter concerns. While the change would reduce FHA’s revenue, McKay points out that the agency is sitting on reserves far exceeding its mandated requirements.
“They’re sitting on too much money right now. It’s time to give some of that back to the American people,” he said. With FHA’s reserve fund estimated at over $200 billion — more than 500% of its congressional mandate — the timing for reform is ideal, McKay said.
Looking ahead
BAC’s agenda for 2026 reflects a broader commitment to fairness, transparency and consumer advocacy in the mortgage industry. From compensation reform to credit cost accountability and FHA insurance relief, these initiatives aim to remove systemic barriers that limit choice and inflate costs for borrowers. As McKay put it, “We feel we have an obligation as stewards of the industry to point out problems like this.”
Whether these efforts succeed will depend on regulatory willingness and legislative momentum. But one thing is clear: BAC intends to keep these conversations front and center in the year ahead.
