President Donald Trump\u2019s executive order targeting mortgages addresses several concerns raised by banks and nonbanks, which have largely welcomed it as a road map for regulatory change. But it\u2019s also receiving pushback from consumer advocates.<\/p>\n
Friday\u2019s order<\/a> on \u201cpromoting access to mortgage credit\u201d aims to boost lending by community banks (with less than $30 billion in assets) and smaller banks (below $100 billion) while also outlining broader changes for the mortgage industry. <\/p>\n The move comes alongside housing legislation advancing in Congress<\/strong>. On Thursday, the Senate<\/strong> passed<\/a> the 21st Century ROAD to Housing Act, stripping out provisions from the House<\/strong>-passed Housing for the 21st Century Act<\/a> that would have expanded credit access for community banks. <\/p>\n The Trump administration was expected to reassure House Republicans that these provisions will be addressed separately. Meanwhile, housing affordability<\/a> remains a central issue heading into the midterm elections.<\/p>\n The executive order\u2019s focus on mortgage lending, however, caught some observers off guard. Broadly, the proposals aim to lower costs for lenders<\/a> by revising origination requirements and adjusting supervision and enforcement<\/a>. But because several provisions involve reforming or rescinding existing rules, many would require congressional action<\/p>\n \u201cSome of the elements of the executive order require congressional action, and Congress is 90% of the way through their big housing bills,\u201d said Peter Idziak, senior associate at residential mortgage lending firm Polunsky Beitel Green<\/strong>. <\/p>\n \u201cA lot of this would need to go through notice and comment rulemaking, which takes time. \u2026 Realistically, you\u2019re not looking until the very end of 2026, the beginning of 2027, before you actually have final rules.\u201d<\/p>\n The executive order calls for the Consumer Financial Protection Bureau<\/a><\/strong> (CFPB) to reform the ability-to-repay and qualified mortgage (QM) rules, including a potentially broader QM safe harbor for portfolio loans, replacing TRID timing requirements with a materiality-based standard, and easing caps on points and fees for small-balance mortgages.\u00a0<\/p>\n It also proposes modernizing rescission rules through digital processes, streamlining rate-and-term refinancing<\/a> requirements under Regulation X, and exempting certain refinances \u2014 including cash-out transactions \u2014 from rescission rights.<\/p>\n At the same time, regulators would shift supervision toward the evaluation of lenders\u2019 underwriting<\/a> practices and ability-to-repay policies, rather than strict technical compliance. Good-faith errors would be handled through corrective measures unless they result in borrower harm or repeated violations<\/a>.<\/p>\n \u201cThis order, because it directs the CFPB to consider many amendments to its rules and supervisory policies, may place pressure on the CFPB to at least keep some staff<\/a> to work on the regulatory and supervisory parts of this order,\u201d Richard Horn, former senior counsel at the CFPB\u2019s office of regulation and co-managing partner at Garris Horn LLC<\/strong>, wrote in a blog post<\/a>. <\/p>\n \u201cThis may not mean that the CFPB will substantially restart exams and investigations, however, and much of the order seeks more relaxed supervision and enforcement for these mortgage rules.\u201d\u00a0<\/p>\n The directive could complicate efforts to scale back the CFPB, a stated goal of the Trump administration, while a recent federal court decision<\/a> requiring the CFPB to continue receiving funding from the Federal Reserve<\/strong> adds another constraint. Acting Director Russell Vought\u2019s term ends in August.<\/p>\n According to Horn, the CFPB may also include a potential rescission of the loan originator compensation<\/a> rule and amend discretionary aspects of its mortgage servicing rules, proposals included in its spring 2025 regulatory agenda.\u00a0<\/p>\n The executive order also directs regulators to ease compliance for smaller banks by raising HMDA reporting thresholds, modernizing appraisal and appraiser requirements, expanding the use of electronic signatures and remote notarization, and eliminating duplicative licensing requirements for mortgage loan officers.<\/p>\n Bob Broeksmit<\/a>, president and CEO of the Mortgage Bankers Association<\/strong>, termed the order as \u201chelpful as a road map.\u201d<\/p>\n \u201cWe want all capital sources to benefit, because we want all borrowers to benefit \u2014 not if you go to this kind of lender, you get a faster process or a cheaper one,\u201d he said during an industry event this week. \u201cThey could lower the mortgage insurance premium<\/a>, probably combined with tailoring some risk out of the layered risk, and that would also flow through super uniquely. So those are the kinds of things we\u2019re working with the administration to do.\u201d\u00a0<\/p>\n For Idziak, there are \u201ca lot of positives,\u201d including appraisal<\/a> and digital modernization, eliminating duplicative licensing and revisiting the right to rescind \u2014 an issue that \u201chasn\u2019t been something high on most people\u2019s radars.\u201d<\/p>\n But Horn noted that the order directs agencies to \u201cconsider\u201d the amendments, leaving some \u201cwiggle room\u201d on whether they are ultimately proposed or finalized.<\/p>\n \u201cThat being said, the CFPB\u2019s leadership will likely follow the order and show some consideration of the amendments,\u201d Horn wrote in his blog post. \u201cBut keep in mind, rulemakings, especially substantial changes to a marketplace, can take a long time. I do not anticipate that we will see major regulatory changes finalized and take effect very soon.\u201d<\/p>\n In highlighting potential downsides, Horn said the proposals could undermine consumer shopping if disclosure requirements vary by lender. They could also increase costs for vendors that produce TRID documents and would need to adapt to multiple standards.<\/p>\n \u201cTRID is supposed to be a uniform disclosure standard across all lenders to enable consumer shopping across all lenders. Making changes that only apply to certain banks could hamper this important aspect of the rule,\u201d Horn said.\u00a0<\/p>\n Consumer advocates are also raising broader concerns about the review of mortgage rules. The National Consumer Law Center<\/a><\/strong> (NCLC) warned the changes could \u201cre-ignite the market conditions that led to the foreclosure<\/a> crisis and Great Recession.\u201d<\/p>\n According to the group, the proposals could allow lenders to disclose loan terms only at closing without advanced notice, increasing the risk that borrowers are surprised under pressure to complete the transaction. Expanded use of electronic processes<\/a> could also make it harder for some borrowers to review and understand documents.<\/p>\nCFPB role evolves<\/h2>\n
Industry road map<\/h2>\n
Raising concerns<\/h2>\n