President Trump Signs Orders to Boost US Housing Supply and Mortgage Credit

President Donald Trump recently signed two executive orders to increase the US housing supply and make it easier for people to get mortgage credit. The orders aim to help more Americans achieve their dream of owning a home. The first order focuses on removing regulatory barriers that slow down the construction of new homes, while the second order seeks to expand access to mortgage credit.

Removing Regulatory Barriers

The first order directs federal agencies to review and revise regulations related to the construction of new homes. This includes looking at environmental protection laws that may be contributing to higher construction costs and reduced homeownership. The order calls for the creation of regulatory best practices at the state and local levels to boost housing affordability.

The order specifically mentions the need to streamline permitting processes, scale back green energy construction requirements, and remove restrictions on manufactured or modular housing that are not related to safety standards. This is expected to help increase the supply of new homes and make them more affordable for many Americans.

Promoting Access to Mortgage Credit

The second order aims to address the decline in mortgage lending by banks since the housing crisis of the 2000s. It points to increased compliance costs for lenders that have distorted the mortgage market and reduced access to credit for some borrowers. The order calls for the Consumer Financial Protection Bureau to amend regulations to support smaller banks and expand the definition of qualified mortgages.

Impact on Community Banks

The order is expected to have a positive impact on community banks, which have been affected by increased regulatory costs. Community banks play a crucial role in providing mortgage credit to rural households and low- and moderate-income households. The order directs regulators to consider revised capital regulations that would tailor risk weights for all banks, including community banks.

Modernizing Appraisals

The order also targets modernizing appraisals through the use of automated valuation models and artificial intelligence. This is expected to simplify the appraisal process and reduce costs for borrowers. The administration also seeks to simplify the appraiser qualification process and reduce appraisal requirements for certain loans.

Industry Reaction

The mortgage industry has welcomed the executive orders, with many organizations expressing support for the administration's efforts to address costly mortgage regulations. The Mortgage Bankers Association and the National Housing Conference have issued statements praising the orders and calling for further action to address the nation's housing affordability crisis.

Looking Ahead

As the federal agencies begin to implement the executive orders, it is likely that we will see an increase in the supply of new homes and improved access to mortgage credit. This could have a positive impact on the US housing market and help more Americans achieve their dream of owning a home. However, it remains to be seen how effective the orders will be in addressing the complex issues surrounding housing affordability. The administration will need to work closely with regulators, lenders, and other stakeholders to ensure that the orders have the desired impact and do not create unintended consequences.