The Trump administration moved swiftly to deliver its deregulatory agenda to the mortgage industry in the president's first 100 days.
Some of those many changes could lead to lower housing costs, following President Trump's day one executive order to address the constrained housing market. Other rollbacks of Biden-era initiatives and politically motivated actions however will have a murkier impact on lenders, servicers and home loan borrowers.
Additionally, the administration has slashed an untold number of jobs and vendor contracts at federal housing regulators. Those moves have purportedly gotten rid of fraud, waste and abuse at the overseers, but have also raised concerns that the government is dismissing its statutory duties and ability to protect consumers.
Trump's uncertain tariff strategy meanwhile has put pressure on home builders and kept mortgage rates elevated amid greater economic uncertainty. The average 30-year fixed-rate mortgage was 7.02% the week Trump took office, according to the Mortgage Bankers Association. Nearly 100 days later, they were still on the cusp of 7%.
Read on for a walkthrough of the Trump administration's changes affecting the industry at-large.
No more CFPB?
The Trump administration is defanging the financial regulator despite a federal judge's efforts to slow the dismantling. U.S. District Court Judge Amy Berman Jackson has sided with the CFPB employees' union so far, recently halting Acting Director Russell Vought's attempt to fire more than 1,400 employees.
Amid the chaos, the bureau has wound down some of its enforcement activity but kept up some statutory duties like distributing Home Mortgage Disclosure Act data. It notably dropped lawsuits against financial institutions including lenders Rocket Cos. and Vanderbilt Mortgage.
Borrower rules rolled back
The Federal Housing Administration in March reversed the Biden-era implementation of a reconsideration of value process, an initiative the prior administration made in response to appraisal bias. The rescission, made to reduce unnecessary regulatory burden, was in line with the Trump administration's removal of references to a Biden administration appraisal bias task force.
Consumers could also continue to receive unwelcome telemarketing correspondences, following the Federal Communications Commission immediately postponing the implementation of its one-to-one rule. The order would've banned the use of auto-dialers to contact consumers via call or text.
A new-look Consumer Financial Protection Bureau also halted several consumer protections, including banning the appearance of medical debt on credit scores. Lawmakers are seeking to repeal the rule.
New lending restrictions on FHA and USDA loans
The government will no longer sponsor FHA or U.S. Department of Agriculture loans to non-citizens. HUD will stop offering FHA loans on May 25 for borrowers who are in the U.S. on work visas, have asylum status, or are Deferred Action for Childhood Arrival, or DACA, recipients.
The USDA in March rolled back a waiver that allowed some non-U.S. citizens, including those with valid Social Security numbers and work authorizations, to apply for rural housing-related mortgages.
The FHFA also ended Fannie Mae and Freddie Mac's participation in special purpose credit programs, which allow creditors to consider race, ethnicity or geographic location when assessing credit eligibility. Pulte's order however didn't apply to the Federal Home Loan Banks.
Loss mitigation changes for VA loans
The Department of Veterans Affairs is ending its loss mitigation option for its borrowers, with new VA leadership suggesting the protection lacked congressional authority. The Veterans Affairs Servicing Purchase Program, or VASP, will expire May 1, and the government currently has no loss mit alternative for distressed veteran borrowers.
The FHA is also squeezing relief for delinquent borrowers, moving to end a temporary loan-modification program Sept. 30 and making permanent loss mitigation more scarce. Lenders so far have reacted warmly to the changes dictated in HUD's recent 251-page update to serving changes.
Lender oversight evolves
Amid a flurry of actions, Federal Housing Finance Agency Director Bill Pulte rescinded renter requirements for multifamily mortgages and pulled back his agency's regulation of unfair and deceptive acts or practices. The UDAP action leaves enforcement to the Federal Trade Commission and avoids duplicative regulation, the director said.
The CFPB in April also said it's considering eliminating a nonbank registry of repeat corporate offenders, which industry stakeholders have characterized as redundant.
While the moves should reduce strain on mortgage businesses, the FHFA is emphasizing its focus on bad actors. Pulte has hinted at ratcheting up the FHFA's Suspended Counterparties program, a rare continuation of a Biden administration effort. The director has also followed the fraud, waste and abuse mantra closely, rolling out a a mortgage fraud tip line.
Construction burdens ease via HUD and FHFA
Department of Housing and Urban Development Secretary Scott Turner has pledged to cut 20% to 25% of single-family home- related regulations in an effort to spur homebuilding.
The FHA in February waived an elevation requirement for developers, a Biden-era rule intended to mitigate flood risk. A week later, HUD postponed compliance dates for energy-efficient standards for FHA-insured single-family and multifamily loans, which an industry stakeholder suggested would have added tens of thousands of dollars to the cost of new construction.
The FHFA also directed Fannie Mae to end its "Repair All" policy for real-estate owned properties, claiming the policy led to longer processing times and increased vendor costs. HUD also axed the on-again, off-again Affirmately Furthering Fair Housing Rule, which Turner said would cut red tape and shift control from feds to state and local governments.
What's on the horizon
The Trump administration teased further changes to the mortgage industry that didn't come to fruition by the new government's 100th day.
Democrats on Capitol Hill in April sought clarity on the future of the Community Development Financial Institutions Fund, a bipartisan-supported initiative which supports 1,440 lenders nationwide. Trump targeted the CDFI Fund in a March executive order, but the U.S. Treasury Department subsequently assured the government that the programs were required by law.
The FHFA hasn't yet hinted at widely desired plans to free the government-sponsored enterprises from conservatorship. Pulte in frequent social media updates has rather shared messages pledging to make the GSEs "great again," including mulling a way for the regulator to "recall loans."
