President Donald Trump on Friday announced two executive orders that aim to increase the U.S. housing supply and consumer access to mortgage credit. <\/p>\n
One of the orders directs various federal agencies \u2014 including the U.S. Department of Housing and Urban Developmen<\/strong>t (HUD<\/a>) and the Federal Housing Finance Agency<\/strong> (FHFA<\/a>) \u2014 to work together on reviewing and revising a number of regulations related to the permitting and construction of new homes.<\/p>\n A second order, among other things, seeks to expand the definition of qualified mortgages under the supervision of the Consumer Financial Protection Bureau<\/strong> (CFPB<\/a>); creates tailored capital requirements for all banks, including community banks; and modernizes the appraisal process by allowing for expanded use of AI-driven valuations.<\/p>\n The executive orders arrive a few weeks after Trump\u2019s State of the Union<\/a> address to Congress<\/strong> in which the president offered limited details about his housing affordability proposals.<\/p>\n The first order, \u201cRemoving Regulatory Barriers to Affordable Home Construction,\u201d<\/a> directs agencies to scrutinize various environmental protection laws that may be leading to a reduction in new-home construction and increased homeownership costs, including higher property tax and insurance burdens<\/a>.<\/p>\n \u201cThe American dream of homeownership depends on a dynamic housing market in which a varied inventory of new homes is built and renovated each year,\u201d the order states. \u201cLayers of unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing. \u00a0These constraints have made housing less affordable for many Americans.\u201d<\/p>\n The president\u2019s directive calls for HUD Secretary Scott Turner<\/a> and FHFA Director Bill Pulte <\/a>to eliminate or reform rules that impede new residential development and affordability. <\/p>\n The order specifically mentions HUD\u2019s Pathways to Removing Obstacles to Housing (PRO Housing<\/a>) program, along with FHFA regulations on chattel loans for manufactured homes<\/a> and small-balance mortgages.<\/p>\n The order calls for boosting housing affordability through the creation of regulatory best practices at the state and local levels. Within 60 days, HUD was directed to develop a series of practices related to streamlined permitting processes, scaled-back green energy<\/a> construction requirements, and restrictions on manufactured or modular housing<\/a> that aren\u2019t related to \u201cobjective standards for building and safety.\u201d<\/p>\n The second order, \u201cPromoting Access to Mortgage Credit,\u201d<\/a> seeks to address the decline in mortgage lending by banks since the housing crisis of the 2000s. It points to increased compliance costs<\/a> for originators and servicers that have \u201cdistorted the structure of the mortgage market.\u201d<\/p>\n \u201cCommunity banks, generally institutions with fewer than $30 billion in assets, have been especially affected,\u201d the order stated. \u201cThe regulatory and rule changes have undermined community banks\u2019 businesses, concentrated credit and liquidity risk outside the banking system, and resulted in reduced access to credit for some creditworthy borrowers, including rural households and low- and moderate-income households.\u201d<\/p>\n The Trump administration is calling for the CFPB to amend Regulation Z and the Truth in Lending Act to support smaller banks. This could potentially include a \u201cbroader safe harbor for portfolio loans.\u201d <\/p>\n The bureau could also look to replace TRID timing rules to speed up the loan closing process, exempt small-balance mortgages from caps on QM points and feeds, and update \u201creasonable compliance\u201d standards for banks related to Ability-to-Repay and QM underwriting requirements.<\/p>\n The order goes on to direct the Federal Reserve<\/a><\/strong>, the Federal Deposit Insurance Corp. <\/strong>(FDIC) and other regulators to consider revised capital regulations that would tailor risk weights for all banks, including community banks. These could apply to portfolio mortgages, servicing rights and warehouse lines of credit.<\/p>\n Another section of the order targets modernized appraisals through the use of automated valuation models<\/a> and artificial intelligence. The administration also seeks to simplify the appraiser qualification process, reduce appraisal requirements for certain loans like low-leverage refinances, and align appraisal standards for Federal Housing Administration <\/strong>(FHA) and U.S. Department of Veterans Affairs <\/strong>(VA) mortgages.<\/p>\n Mortgage Bankers Association<\/strong> President and CEO Bob Broeksmit released the following statement. \u201cWe agree with the Administration\u2019s 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.<\/p>\n \u201cAmerica\u2019s housing finance system is the best in the world because it\u2019s competitive. We support efforts to increase bank participation in mortgage lending and servicing, and the goal should be to revise overly burdensome rules for lenders of all sizes and business models. This includes credit unions that support their members and independent mortgage banks (IMBs), who serve most FHA, VA, and Rural Housing borrowers, making homeownership possible for first-time buyers, low- and moderate-income families, veterans, and those living in rural communities.\u201d<\/p>\n David M. Dworkin<\/a>, president and CEO of the National Housing Conference<\/strong> (NHC), issued a statement Friday in which his organization lauded the orders.<\/p>\n \u201cThe Executive Orders signed today by President Trump highlight the importance of addressing both the supply and financing challenges that contribute to the nation\u2019s housing affordability crisis,\u201d the statement read.<\/p>\n \u201cToo often, overly complex permitting processes, duplicative environmental reviews, and costly mandates slow down housing construction and drive up costs for families. Taking a hard look at federal rules that delay development is an important step toward making it easier to build the homes our country needs while still maintaining the safeguards that protect communities.<\/p>\nLowering barriers to building<\/h2>\n
Paring back lending requirements<\/h2>\n
Industry response<\/h2>\n