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On Friday, President Trump signed two executive orders related to making housing more affordable for Americans. The first focuses on increasing home construction, and the second aims to help small banks extend mortgage loans.<\/p>\n
Since Trump began his second term, I have covered his ideas to improve home affordability, such as creating 50-year mortgages and portable mortgages. (The 50-year mortgage would make buying a home cheaper in the short term but much more expensive in the long run. Portable mortgages exist in the U.K. and Canada but would be difficult to implement in the U.S., to say the least.)<\/p>\n
Friday\u2019s executive orders are Trump\u2019s latest attempt to shift focus to his efforts on housing affordability before the midterm elections.<\/p>\n
One order focuses on revising environmental regulations to build homes faster<\/p>\n
Why does Trump focus on home construction in his first executive order? Because slow construction leads to less inventory, resulting in more demand than supply. When there are more buyers than homes for sale, houses can sell for more. Ideally, more new-construction homes would make houses less expensive.<\/p>\n
For years, new construction has struggled to keep up with homebuyer demand. According to a Zillow report released on Thursday, year-over-year single-family home constructions decreased by 6.5% in January. Speeding up new-home construction could benefit many buyers.<\/p>\n
Related: Iran war causes mortgage rate surge<\/p>\n
The executive order directs federal agencies to update a number of the regulations currently in place that slow down construction, specifically environmental regulations. \u201cThe Order directs the EPA Administrator and the Secretary of the Army to review and revise stormwater, wetlands, and other water-related permitting requirements to reduce building and ownership costs, streamline Federal regulatory approvals, and increase home insurability,\u201d the White House stated in a fact sheet.<\/p>\n
The order instructs agencies to remove or change \u201coverly burdensome\u201d housing requirements related to water, energy, and alternative energy. It asks federal agencies to offer state and local governments incentives to make the construction permit process faster, one item on the list being to \u201ccurtail \u2018green\u2019 building codes.\u201d<\/p>\n
The second order aims to help more community banks offer mortgages<\/p>\n
Trump\u2019s second executive order calls for the Consumer Financial Protection Bureau (CFPB) to alter its regulations so that more lenders \u2014 particularly smaller, community banks \u2014 can provide mortgages to its customers.<\/p>\n
\u201cCommunity banks and smaller lenders have retreated from mortgage markets they once served, unable to absorb the compliance costs associated with making, servicing, or holding a mortgage made to community borrowers,\u201d the White House wrote in a fact sheet.<\/p>\n
Among its list of demands, the order asks for streamlined regulations, alternative valuation models to make home appraisals faster and less expensive, and more digital tools to speed up the home-buying timeline.<\/p>\n
The White House claims that by making it easier for small banks to offer home loans, there will be less competition between lenders, mortgage rates would go down, and it would help low-to-moderate income borrowers, first-time home buyers, and those buying in rural areas qualify for mortgages.<\/p>\n
More on the housing market:<\/p>\n
The Iran war causes mortgage rates to surgeExisting-home sales exceed Goldman Sachs\u2019 expectationsAARP quietly releases key guidance on mortgage rates, real estateConsidering the orders\u2019 potential ramifications<\/p>\n
I felt conflicted as I read through the executive orders\u2019 fact sheets, because I care deeply about both affordable housing and the environment. It\u2019s crucial to think about how these changes could play out in reality.<\/p>\n
Large chunks of these orders focus on cutting through red tape to speed up the housing construction and home-buying processes. However, cutting red tape also leaves more room for oversights and errors.By overturning environmental regulations, it\u2019s possible homes will be built in areas that aren\u2019t necessarily safe.If federal agencies update wetland, stormwater, and water-related permitting rules, will houses be built in areas that are more likely to flood?While alternative valuation models, such as desktop and hybrid appraisals, are faster and less expensive than traditional, in-person ones, they\u2019re often less accurate. If an AVM results in a low appraisal, a homebuyer may not qualify for a mortgage large enough to buy the house.The White House wrote, \u201cOver more than a decade, a wave of regulatory changes \u2014 driven largely by the Dodd-Frank Act and subsequent rulemaking \u2014 has dramatically increased the cost and complexity of accessing a mortgage.\u201d The Dodd-Frank Act was enacted after the 2008 financial crisis to protect consumers from deceptive lending practices. Would becoming laxer about regulations make more homeowners more vulnerable to predatory lending?<\/p>\n
Related: Iran war causes mortgage rate surge<\/p>\n
#Trump #signs #executive #orders #improve #home #affordability<\/p>\n","protected":false},"excerpt":{"rendered":"
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