President Donald Trump on Thursday signed an executive order aimed at bringing down housing costs in a bid to show that his administration is addressing voters’ affordability concerns in the final sprint to the midterm elections.
The order would direct the Federal Housing Finance Agency to create a pilot program that would proactively cancel mortgage insurance on certain loans, limited to future mortgages. The move would potentially save some borrowers money in cases where their home values have sufficiently appreciated. The FHFA regulates Fannie and Freddie, the government-controlled companies backing more than half the US residential mortgage market.
The new directive comes amid flashing warning signs about the housing market: Building permits, housing starts and pending sales for September all came in significantly lower than economists expected on Tuesday, as high prices and mortgage rates above 7% bring transactions to a near standstill.
The order also establishes a new task force focused on the cost of manufactured housing. The group is to be co-chaired by the secretary of Housing and Urban Development and the FHFA director.
The order directs the departments of Agriculture and Veterans Affairs, which have direct loan programs, to lower the interest rates on single-family mortgages they make.
The directive would also expand a title insurance pilot into a permanent program, allowing the GSEs to accept an automated title review instead of a lender’s title insurance policy on certain refinance transactions. While few people are refinancing in the current rate environment – the rate on a 30-year fixed mortgage hit 7.32% this week – the move could be a boon to lenders if rates fall.
“The American Dream of homeownership is a vital pillar of our great country. It is the policy of my Administration to reduce regulatory barriers to mortgage origination and costs impeding homeownership,” the order said.
FHFA Director Bill Pulte hinted in recent days that more changes may be in the pipeline.
“We are studying the usage of just one or two credit reports to bring even more savings than we already have to American consumers,” he said in a social media post Saturday. Bloomberg earlier reported on the potential move to a so-called “bi-merge” report.
The agency is also studying loan-level pricing adjustments, he said in a separate social media post Saturday, “and I anticipate that we will make a decision on whether there will be any changes to LLPAs before year end. Stay tuned!”
Photo: Homes under construction. Photographer: Mark Felix/Bloomberg
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