“Layers of unnecessary regulatory barriers, slow permitting processes, and onerous mandates at all levels of government have delayed construction, restricted development, and driven up the costs of new housing.” That sentence comes from one of two executive orders President Donald Trump signed on Friday to push down the cost of owning a home.
The orders go after two problems at once: too few homes being built, and too few banks willing to lend. They arrived a few weeks after the State of the Union, where Trump gave limited details of his housing plans.
Building more homes
The first order is titled “Removing Regulatory Barriers to Affordable Home Construction.” It tells agencies including the Department of Housing and Urban Development and the Federal Housing Finance Agency to work together on reviewing and revising rules on permitting and building. HUD Secretary Scott Turner and FHFA Director Bill Pulte are to eliminate or reform rules that get in the way of new development. The order names HUD’s PRO Housing program, along with FHFA rules on chattel loans for manufactured homes and small-balance mortgages.
It also directs agencies to look at environmental laws that may be cutting new-home construction and raising property tax and insurance burdens. Army Secretary Daniel Driscoll and EPA Administrator Lee Zeldin are to review and revise rules for construction near bodies of water. Federal permitting for residential building is to be fast-tracked.
Within 60 days, HUD was told to develop best practices for state and local governments. Examples include caps on fees and timelines, faster inspections and dispute resolution, streamlined permitting, and the removal of green-energy building requirements or other energy-choice restrictions. The order also encourages financing and homebuilding in Opportunity Zones.
Making it easier to borrow
The second order, “Promoting Access to Mortgage Credit,” starts from the fall in bank mortgage lending since the housing crisis of the 2000s. “These burdens have contributed to a significant decline in bank participation in mortgage lending,” it reads. Community banks, defined in the order as institutions with fewer than $30 billion in assets, have been hit especially hard, along with rural and low- and moderate-income households.
The Consumer Financial Protection Bureau is told to amend Regulation Z and the Truth in Lending Act to help smaller lenders, possibly with a broader safe harbor for portfolio loans. It is also asked to widen the definition of qualified mortgages. Federal Reserve, FDIC and other regulators are to consider capital rules tailored to banks of different sizes. Examiners are to judge lending on an applicant’s ability to repay rather than technical compliance. Appraisals could lean more on automated valuation models, including AI-generated estimates.
Reaction and the numbers
Trade groups mostly welcomed the orders. Bob Broeksmit of the Mortgage Bankers Association said his group agrees with the focus on costly mortgage rules but wants relief extended to credit unions and independent mortgage banks. David Dworkin of the National Housing Conference called the orders an important step. The Independent Community Bankers of America also backed them. The Community Home Lenders of America was more guarded: “only time will tell whether and to what extent these homeownership Executive Orders will translate into transformative action by the federal agencies.”
The market the orders target is tight. Redfin puts the average U.S. home price near $430,000, up about 1 percent from last year. Realtor.com says as many as one-third of homeowners hold loans between 3 and 4 percent, which keeps some from selling. Mortgage rates are around 6.11 percent, down from 6.65 percent a year earlier.
Sources
- Trump Signs Executive Orders to Boost Housing Supply, Improve Access to Mortgages
- Trump executive orders target housing supply and mortgage credit
