INCREASING ACCESS TO HOME LOANS:
Today, President Donald J. Trump took a significant step by signing an Executive Order aimed at alleviating regulatory pressures that have inflated mortgage costs, restricted access for creditworthy borrowers, and hindered community banks from participating in lending practices.
- The Executive Order instructs the Consumer Financial Protection Bureau (CFPB) to tailor mortgage regulations more effectively, thereby enabling smaller banks to provide more affordable lending options. This includes modernizing and simplifying regulatory and documentation requirements.
- It also urges Federal banking regulators to revise supervisory guidance, emphasizing prudent underwriting instead of rigid, overly technical lending processes. This shift is intended to bolster construction lending by community banks.
- The Order mandates the CFPB to update the Home Mortgage Disclosure Act (HMDA) reporting requirements to alleviate compliance burdens while safeguarding borrower privacy.
- Federal banking regulators are directed to pursue responsible reforms of capital and liquidity rules to eliminate unnecessary lending burdens. This includes adjusting risk weights based on actual credit risks, broadening access to long-term Federal Home Loan Bank (FHLB) advances linked to residential mortgage assets, and establishing targeted FHLB liquidity programs for first-time homebuyers, owner-occupied purchase loans, and small residential builders.
- Additionally, the Order calls for modernizing appraisal regulations by expanding alternative valuation models, reducing unnecessary appraisal requirements for low-risk transactions, and establishing clearer timelines for appraisals.
- The Executive Order promotes digital mortgage modernization by facilitating the use of electronic signatures, e-notes, and remote online notarization, which is expected to lower lending costs and shorten homebuying timelines.
- Federal banking regulators are also tasked with considering new supervisory criteria that encourage portfolio mortgage servicing as a fundamental function of community banking. This move aims to reduce operational costs and barriers for community banks in the mortgage lending sector.
RESTORING MORTGAGE COMPETITION TO LOWER RATES AND REVERSE MARKET DISTORTIONS:
The President’s initiative is designed to cut through the red tape that has led to community banks scaling back their mortgage lending, which in turn has stifled competition among lenders and made home loans less accessible for rural, low- to moderate-income, and first-time buyers.
- In the past decade, a series of regulatory changes—largely stemming from the Dodd-Frank Act and subsequent regulatory actions—have significantly raised the costs and complexities associated with obtaining a mortgage.
- As a result, community banks and smaller lenders have gradually withdrawn from mortgage markets they once actively served, unable to cope with the compliance costs tied to originating, servicing, or holding mortgages for local borrowers.
- Outdated appraisal rules and stringent supervisory expectations have hindered lending processes and escalated costs, particularly for low-risk loans and refinancing options.
- These regulatory challenges have distorted the mortgage market, diminished lender competition that typically drives down rates, reduced available capital for creditworthy borrowers, and ultimately made homeownership less attainable for millions of Americans.
DELIVERING ON PROMISES TO AMERICAN FAMILIES:
President Trump’s aggressive agenda seeks to address the housing challenges faced by American families, aiming to make the dream of homeownership more accessible.
- Earlier this year, President Trump signed an Executive Order to prevent large institutional investors from acquiring single-family homes that could instead be owned by families, while also urging Congress to enshrine these policies into law.
- Furthermore, he has directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage-backed securities, further reducing borrowing costs.
- These targeted housing and affordability initiatives build upon President Trump’s broader efforts to enhance the financial wellbeing of Americans:
- Overall, deregulation measures in 2025 are anticipated to save Americans an astounding $212 billion—roughly $2,500 per family of four.
- He also signed the Working Families Tax Cuts into law, marking the largest tax cut in American history, which has resulted in pay increases exceeding $10,000 annually for a typical family of four.
- His America First, pro-growth, energy dominance, and deregulatory agenda have collectively reduced red tape, lowered inflation and mortgage rates, spurred GDP growth, and attracted trillions in investments to the United States.
- President Trump remains focused on delivering additional relief to Americans as they navigate the economic and financial challenges brought about during the Biden administration, enabling families to thrive and realize the American Dream of homeownership.
