While Trump said very little about specific housing policy ideas during the campaign, he spoke often of scaling back regulation on business. Trump has also spent a lifetime in the real estate industry, and his affinity for the real estate industry in general was clear in comments he made to the National Association of Home Builders three months ago.
But realistically speaking, what changes are we likely to see to the real estate finance industry over the next four years under Trump? Here’s the view from my perch.
CFPB - There’s no question change is coming here. An elimination of the Bureau? Unlikely. A new director, bi-partisan oversight, a scale back of authority? Yes.
Dodd-Frank - While Trump spoke on the campaign trail of a full repeal of Dodd-Frank, that's unrealistic. But a full review of the law and an attempt to unwind components that unnecessarily hamper financial institutions is certain.
The GSE’s - This is a tough one, as any solution surrounding removing Fannie and Freddie from conservatorship is highly complex and would need broad bi-partisan support. Also, think about this climate. Due to regulation and technology, our industry is producing the safest loans in the history of mortgage lending, and as a result, Fannie and Freddie have been an incredible source of revenue for the federal government, pumping billions of dollars into the US Treasury account each quarter. I see this trend continuing, and see nothing happening with the GSE’s any time soon, espeically with a huge deficit and expensive tax cuts promised. You could see them start to be allowed to rebuild capital as opposed to funneling all profits to Treasury quarterly.
Heads of Federal Housing Agencies - The only certainty is that we’ll see a new HUD Secretary, as current head of HUD Julian Castro was a huge Hillary supporter. Too early to speculate what may happen with the heads of FHFA (Mel Watt), Ginnie Mae (Ted Tozer), and the Fed Chair (Janet Yellen) and FHA Commissioner (Ed Golding) roles.
Rates - A pro-business President is likely positive for the stock market, which typically moves opposite of fixed-income assets like mortgage-backed securities, which fuel mortgage rates. On the flip side, some have speculated that the Fed may be less likely to raise rates in December now. At the end of the day, mortgage rates are driven primarily by two things Trump will have little to no control over in the short term, fiscal policy and statements and the health of the economy and it’s impact on the financial markets.