As housing legislation continues to seesaw its way through Congress, two new executive orders were signed Friday by President Donald Trump, both touting his administration’s efforts to make housing more affordable before the midterm elections.
One order, “Promoting Access to Mortgage Credit,” intends to make it easier for community banks to originate and service mortgages, stating that statutory and regulatory changes over the past two decades “have increased the compliance costs of mortgage origination and servicing and distorted the structure of the mortgage market.”
The order vows to “reduce these regulatory burdens to ensure that these creditworthy borrowers can access the capital required to purchase a home.”
Scott Turner, secretary of the U.S. Department of Housing and Urban Development (HUD), announced in a press release that in accordance with the executive orders, HUD “will terminate regulatory barriers, reform programs, and incentivize states and localities to change burdensome rules that hinder residential development, housing affordability, and availability of home loans.”
HUD claimed in the press release that regulatory costs account for nearly $94,000 of the final price of a new single-family home, and green energy mandates in building codes can add more than $30,000 to the cost of construction.
Turner stated the changes will “provide economic relief to American families and make homeownership affordable again. Ending burdensome regulations and improving mortgage affordability supports increased housing supply and pushes affordable homeownership back within reach for American families.”
HUD also announced it will increase efforts to expand housing supply by aligning Opportunity Zone incentives with single-family home development and New Markets Tax Credit programs.
The president’s orders follow comments made in February by Michelle Bowman, the Federal Reserve’s vice chair for supervision, who said the Fed would soon propose regulatory rule changes to increase bank incentives to engage in mortgage origination and servicing.
The second executive order, “Removing Regulatory Barriers to Affordable Home Construction,” aims to strip layers of “unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government [that] have delayed construction, restricted development, and driven up the costs of new housing.”
In an interview Friday afternoon on Fox Business, Bill Pulte, director of the Federal Housing Finance Agency, said Trump is “unleashing the community banks to give mortgages again in this country.”
Pulte said that after the 2008 financial crisis, “these community banks had handcuffs on them. Something like 5,000 banks were giving out mortgages back in the day. Now it’s less than half of that. We can’t be having that.”
Pulte also commented on Thursday’s Senate vote to pass the 21st Century ROAD to Housing Act, stating, “It’s a positive tsunami of housing momentum that we have in this country.”
The Senate’s housing bill was passed in an 89-10 vote, and now needs to be reconciled with the House of Representatives’ version, called the Housing for the 21st Century Act, which passed in that chamber of Congress on Feb. 9 by a 390 to 9 margin.
Trade groups respond
Housing groups were quick to respond to the president’s orders, welcoming the efforts aimed at increasing housing supply and expanding access to mortgage credit.
Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), commented in a statement sent to Scotsman Guide that his group appreciates the Trump administration’s and Congress’ increased focus on addressing housing affordability challenges.
“A combination of administrative and legislative reforms is necessary to make housing more affordable for homeowners and renters,” Broeksmit stated. “We agree with the Administration’s focus on addressing costly mortgage regulations that have increased costs and limited access to credit. MBA believes that those benefits should be available to every consumer, no matter which lender they choose.”
Kimber White, president of the National Association of Mortgage Brokers (NAMB), told Scotsman Guide in an email that any conversation or action regarding housing benefits the entire industry.
“NAMB has been advocating on Capitol Hill for years, fighting for changes that create a fair and more accessible mortgage market for brokers and the consumers they serve,” White commented, calling the executive orders “a direct reflection of that work — and a meaningful step forward for independent mortgage professionals and American homebuyers across the country.”
The orders highlight the importance of addressing both the supply and financing challenges that contribute to the nation’s housing affordability crisis, said David Dworkin, president and CEO of the National Housing Conference, in comments emailed to Scotsman Guide.
“A healthy housing market also depends on a competitive and accessible mortgage system. Modernizing mortgage regulations, updating appraisal requirements, streamlining reporting rules, and expanding digital mortgage tools can help community banks and smaller lenders better serve their communities,” Dworkin stated. “Reducing unnecessary compliance burdens can expand access to responsible mortgage credit, particularly for first-time buyers, rural communities, and small residential builders.”
Scott Olson, executive director of the Community Home Lenders of America (CHLA), which focuses on small and midsized community-based mortgage lenders, also issued a statement following the announcement of the orders.
“Only time will time whether and to what extent these homeownership Executive Orders will translate into transformative action by the federal agencies,” Olson stated. “However, yesterday CHLA issued a call for a Moon Shot Landing type of commitment to solving our homeownership crisis — and today’s Executive Orders look like the first retro rockets in that type of commitment.”
