Trump’s Return: Reshaping Housing and Finance Through Executive Action
President Trump’s early executive orders signal a seismic shift in housing and housing finance policy. With a focus on reducing federal involvement, streamlining regulations, and redefining anti-discrimination policies, these changes promise to reshape industry landscapes. Below, we analyze some key orders and their potential impact on the housing and finance sectors. Keep in mind, all of these may be subject to change as policy evolves and we expect a number of court challenges on various fronts as political opponents try to slow down or obstruct changes over the next several years.
1. Defining Sex as Binary in Federal Policies
What It Does: Federal agencies are directed to adopt a binary, biological definition of sex, reversing Biden-era policies that sought to extend protections to gender identity and sexual orientation.
Background: The Biden administration had expanded anti-discrimination protections under the Department of Housing and Urban Development (HUD) and the Consumer Financial Protection Bureau (CFPB) to expressly include LGBTQ+ individuals. These protections impacted, among others, regulation under the Fair Housing Act and the Equal Credit Opportunity Act (ECOA).
Potential Impacts:
· Regulatory Shift: Agencies like HUD and CFPB may narrow enforcement of anti-discrimination laws.
· Industry Action: Companies must adapt policies and training to reflect these changes.
2. Eliminating DEI Programs
The Order: Ending Radical and Wasteful Government DEI Programs and Preferencing
What It Does: Abolishes diversity, equity, and inclusion (DEI) initiatives across federal agencies, focusing instead on merit-based principles.
Potential Impacts:
· Fair Lending Enforcement: Reduced emphasis on DEI may ease administrative burdens, but existing laws like the Fair Housing Act and ECOA will remain enforceable.
· Lender Obligations: Reporting requirements tied to DEI initiatives may decrease.
3. Addressing the Cost of Living Crisis Through Economic Relief
The Order: Delivering Emergency Price Relief for American Families and Defeating the Cost of Living Crisis
What It Does: Introduces measures to lower costs of living, including regulatory relief for businesses, tax cuts, and expanded access to affordable goods and services.
Potential Impacts:
· Housing Affordability: Lower inflation and household costs could boost demand for home financing.
· Borrower Stability: Reduced regulatory burdens may decrease default risks.
4. Creating the Department of Government Efficiency
The Order: Establishing and Implementing the President’s "Department of Government Efficiency"
What It Does: Forms a department dedicated to reducing federal inefficiencies and improving operational processes.
Potential Impacts:
· Streamlined Programs: Faster processing for HUD and FHA-backed loans.
· Operational Gains: Lenders may experience reduced administrative burdens.
5. Rescinding Biden-Era Executive Orders
The Order: Initial Rescissions of Harmful Executive Orders and Actions
What It Does: Repeals key Biden-era policies, including those focused on equity, gender identity protections, and climate sustainability.
Key Rescissions:
· Equity-Focused Policies (E.O. 13985): Reduces federal emphasis on initiatives aimed at underserved populations.
· Gender Identity Protections (E.O. 13988): Narrower interpretation of sex discrimination laws.
· Climate-Focused Housing Policies (E.O. 14008): Ends incentives for sustainable housing projects.
Potential Impacts:
· Compliance Simplification: Lower reporting and regulatory burdens.
· Market Dynamics: Decreased federal support for sustainability may shift market strategies.
6. Regulatory and Hiring Freeze
The Orders:
· Regulatory Freeze Pending Review
What They Do:
· The regulatory freeze temporarily halts new regulations from being finalized or enforced to allow for review by the new administration.
· The hiring freeze suspends the hiring of non-essential federal employees, with exceptions for national security, public safety, and other critical roles.
Potential Impacts:
· Delays in Rule Implementation: Any pending HUD or CFPB regulations are likely paused for review.
· Reduced Agency Capacity: Processing times for agency operations, such as those supporting FHA loans, HUD programs, or CFPB enforcement actions, may slow.
· Temporary Uncertainty: Businesses may face uncertainty as agencies reassess existing and pending rules.
What You Need to Be Doing
President Trump’s executive actions mark a brisk approach in significantly pivoting federal housing and finance policies. While streamlining compliance and reducing regulatory burdens create opportunities, the rollback of equity and sustainability initiatives poses challenges. Mortgage companies must stay actively informed during these changing times, and stay assertively proactive.
For more information on these and other regulatory issues as you navigate these quickly evolving changes, contact Troy Garris at troy@garrishorn.com.