Trump’s approach to solving America’s housing issues.

Last Friday, President Trump issued two executive orders related to housing. The Removing Regulatory Barriers To Affordable Home Construction order aims to “reduce regulatory barriers to building homes and to steward taxpayer dollars in a manner that promotes housing affordability.” The Promoting Access To Mortgage Credit order has the stated goal of “driving down mortgage rates; and strengthening housing-finance liquidity.’  Here’s my take:

1. Over-Simplification of the Problem

• Regulatory Blame: The order attributes declining mortgage access and community bank participation almost entirely to Dodd-Frank and subsequent rulemaking, ignoring other significant drivers: post-2008 risk aversion, technological disruption from fintechs, demographic shifts, and persistent low interest rates. This is a partial and politicized diagnosis.
• No Mention of Discrimination or Systemic Barriers: There’s no discussion of disparate impact, racial/ethnic disparities in credit access, or historic exclusion—key issues in mortgage finance and federal housing policy.

2. Deregulatory Approach: Risks and Gaps

• Tailoring for “Smaller Banks”: The order aims to relax mortgage rules for banks under $100 billion in assets. While some compliance burdens are real for small lenders, this introduces the risk of regulatory arbitrage (big banks carving out subsidiaries) and inconsistent consumer protections.
• Potential Erosion of Consumer Protections: Easing ATR/QM (Ability-to-Repay/Qualified Mortgage) standards, relaxing TRID, and exempting small loans from points and fees caps may make it easier for some banks to lend, but could open the door to riskier, less transparent lending practices such as those in place pre-2008.
• “Correction-First” Supervisory Treatment: The order prioritizes a “cure-first” approach for compliance errors, which could incentivize a culture of “ask forgiveness, not permission” and undercut the deterrent effect of strong enforcement.

3. Focus on Community Banks: Mixed Impact

• Community Bank Relief: There’s a strong case for reducing one-size-fits-all regulation for small banks, especially in rural markets. But the order largely assumes that reducing regulatory costs will spur a major return of community banks to mortgage lending, which is questionable given market consolidation, economies of scale, and the dominance of fintech and non-bank lenders.
• Liquidity and Capital Changes: Proposals for tailored risk weights, expanded FHLB access, and streamlined collateral processes are technical but could help community banks. Yet, these steps also risk increasing systemic exposure if not paired with strong risk management.

4. Modernization—With Caveats

• Digital Mortgage and Appraisal Modernization: Promoting e-signatures, remote notarization, and AI-driven appraisals makes sense, and aligns with industry trends. But “simplifying” appraiser requirements and expanding alternative models could also increase fraud risk and further erode appraisal quality, especially in under-banked or rural areas.
• Exemptions and Reduced Oversight: Reducing HMDA (Home Mortgage Disclosure Act) data collection/reporting for smaller banks may lessen regulatory burden but weakens transparency in lending, making it harder to monitor discrimination or predatory practices.

5. Construction and Housing Supply

• Community Banks & Construction Lending: The order encourages regulators to support more construction lending by community banks. This could help supply in underserved areas, but construction lending is riskier than standard mortgages, and past cycles show community banks are vulnerable to real estate downturns.

6. Enforcement Loosening

• Reduced Penalties: The order directs agencies to avoid penalties except in cases of “willful, knowing, or reckless” violations, and to allow correction for “good-faith” errors. While this may help reduce regulatory fear for small lenders, it could also lead to less rigorous compliance, especially in marginal cases.

7. Tailored Licensing/Registration

• Streamlining Licensing: Removing duplicative or unnecessary licensing requirements for mortgage loan officers may help with regulatory simplicity, but risks lowering professional standards if not carefully designed.

8. Implementation and Administrative Issues

• Vague Directives: Much of the order’s language is “consider, as appropriate and consistent with law,” which makes actual impact dependent on agency rulemaking and future interpretation. It’s (again) more of a deregulatory “wish list” than an immediately binding set of reforms.
• No Clear Metrics or Targets: There are no measurable success criteria, reporting requirements, or timelines beyond a single 120-day report on housing finance markets.

9. Political and Stakeholder Reactions

• Consumer and Civil Rights Groups: Will likely object to weakened consumer protections, reduced transparency, and less robust enforcement.
• Community Banks: Will support relief from compliance costs, but may find limited practical benefit without broader changes to market structure.
• Non-Bank/Fintech Lenders: Not directly addressed, though the order alludes to “charter neutrality.” Without parity, the risk is regulatory arbitrage and uneven competition.

10. Technical/Drafting Concerns

• Ambiguity: Frequent use of “as appropriate,” “consider,” and “modernize” gives agencies broad discretion but little guidance, risking fragmentation or inaction.
• Legal Risk: Some deregulatory steps may run counter to statutory mandates, especially if they weaken Dodd-Frank’s core consumer protection framework.

Advocacy Groups Warning

I am in 100% agreement with consumer advocates who are raising broader concerns about the review of mortgage rules. Remember how many of you pointed the finger at “greedy real estate agents” when the market crashed in 2008? “No one warned me” was a common refrain among victims. Well we’re warning you now.

The National Consumer Law Center (NCLC) warned the changes could “re-ignite the market conditions that led to the foreclosure crisis and Great Recession.”

The proposals could allow lenders to disclose loan terms only at closing without advanced notice, increasing the risk that borrowers are surprised under pressure to complete the transaction. Expanded use of electronic processes could also make it harder for some borrowers to review and understand documents.

“The market the President’s order would return us to is one of rampant discrimination, high and anti-competitive rates, and frequent calamitous market failures,” said Diane Thompson, the NCLC’s deputy director and chief advocacy officer. “We must reject this dangerous rollback and defend the hard-won protections that keep borrowers and the economy safe.”

Summary

The order is a deregulatory roadmap aimed primarily at smaller banks, seeking to roll back post-crisis consumer protection and reporting requirements in the name of expanding mortgage credit. Some modernization steps (digital, appraisal) are needed and overdue, and community bank tailoring is reasonable in places. But the order largely ignores non-bank dominance, racial and systemic barriers, and the very real risks of excessive deregulation. Because its effectiveness depends on future agency action without explicit metrics or safeguards, this plan risks repeating the mistakes of the pre-2008 era.

Read the “REMOVING REGULATORY BARRIERS TO AFFORDABLE HOME CONSTRUCTION” order here.

And read our evaluation of that order here.

Recommended reading: National Consumer Law Center