How Project 2025 would change U.S. mortgage policy

The conservative Heritage Foundation has rolled out a proposed blueprint for federal change that includes some drastic housing items, and some think it reveals more details of Trump campaign goals not necessarily in its official Agenda 47.

The think tank's plan, dubbed Project 2025, overhauls and shrinks many federal agencies, while simultaneously eliminating swaths of career support staff, reprising some ideas previously floated during Trump's first term. The foundation estimates Trump's actions have been in line with its agenda about two-thirds of the time.

These hypothetical initiatives impact all agencies that govern the financial services space, including the Department of Housing and Urban Development, the Federal Housing Administration and the Consumer Financial Protection Bureau. Ben Carson, who headed HUD during Trump's first term, contributed to the report.

Recommendations include breaking up HUD and transferring its functions to separate federal agencies, states and localities. The foundation also seeks to raise FHA's mortgage insurance premiums, unwind the CFPB and release Fannie Mae and Freddie Mac from conservatorship, something the Trump administration took many steps toward during his first term.

Ultimately, the plan suggests overhauling many Biden-era rules and initiatives, including the PAVE task force and HUD's Affirmatively Furthering Fair Housing rule, which was recently restored after the first Trump administration rolled it back.

Housing groups contacted for comment on Project 2025 hadn't immediately responded at the time of this writing.

Some Democratic lawmakers are opposing the foundation's agenda, with Rep. Jared Huffman of California saying that the increase in presidential powers and diminishing independent agencies' could disrupt governmental checks-and-balances and be "a tool of repression."

Here's a detailed breakdown of recommended changes that could turn housing-related agencies upside down, some of which would require congressional action:

A "reset" for HUD/FHA/Ginnie Mae

• One of the stark changes proposed in the section written by Carson is an overhaul of executives who run the department, limiting positions to the politically-appointed principal deputy assistant secretary, DAS and other office leadership positions.
• HUD's Secretary would be made a member of the Committee on Foreign Investments in the U.S., giving "broader oversight authorities to address foreign threats, particularly from China…in both rental and ownership markets of single-family and multifamily housing."
• HUD's Secretary also would also be tasked with undoing "all actions taken by the Biden Administration to advance progressive ideology." This includes climate change in addition to PAVE and the Affirmatively Furthering Fair Housing rule, which is currently pending in its final iteration with the Office of Management and Budget. 
• The undoing of the Federal Housing Administration's premium cut would be in line with a shift toward encouraging homeownership opportunities through "shorter-duration mortgages." As such, FHA's mortgage insurance premiums would be increased for all products above 20-year terms. For products below 20-year terms and refinances the MIP would be maintained.
• FHA would also move its reverse mortgage program to its own special-risk insurance fund, an idea that was floated by Dana Wade, a former FHA Commissioner under Trump.
• Also, Ginnie Mae "would be right-sized to serve a defined mission." 

Government-sponsored enterprises

• Heritage Foundation's plan asks the Department of the Treasury to end the conservatorship of Fannie Mae and Freddie Mac and "wind both down in an orderly manner." Tasking the department to privatize both, thereby "restoring a sustainable housing finance market with a robust private mortgage market."

CFPB

• The plan calls the federal watchdog an unconstitutional "highly politicized, damaging, and utterly unaccountable federal agency."
• It also urges for the CFPB's "immediate dissolution," and failing that, other measures that gut its powers.
• Stripping the CFPB of its ability to penalize as a whole.
• Requirements that no CFPB funds be spent on enforcement actions that are not based on rulemaking that complies with the Administrative Procedure Act.
• Specifying the nature of "deceptive, unfair, and abusive" practices to define the scope of the CFPB mission more precisely.
• Repealing Dodd-Frank requirements 
• The blueprint also urges Congress to ensure that civil penalty funds are not used to recompense wronged consumers through the Treasury Department.

Federal Reserve

• Project 2025 would limit the Federal Reserve's ability to intervene with the mortgage-backed securities market, as well as eliminate the Fed's interventions in corporate and municipal debt markets. The section covering changes to the Fed blames it for "increasing the amount of capital available for real estate purchases while lower interest rates on mortgage borrowing — driven down in part by the Federal Reserve's MBS purchases — induced and enabled borrowers to take on even larger loans."