WASHINGTON — President Donald J. Trump on Friday signed an executive order directing federal agencies to overhaul mortgage lending regulations, aiming to increase access to homeownership for a wider range of borrowers, particularly those in rural areas and with moderate incomes. The order specifically targets rules implemented under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which the administration argues have unduly burdened lenders and constricted the mortgage market.
The executive order instructs the Consumer Financial Protection Bureau (CFPB) to consider amending Regulation Z to tailor Ability-to-Repay (ATR) and Qualified Mortgage (QM) requirements for smaller banks – defined as those with less than $100 billion in assets. Proposed changes include a potentially broader QM safe harbor for portfolio loans, revisions to TRID timing rules, and exemptions for small-mortgage loans from certain fee caps. The CFPB is too directed to modernize rescission rights for mortgage lending, potentially allowing for increased use of secure electronic processes.
Beyond the CFPB, the order mandates a coordinated review across multiple federal agencies. The Federal Reserve, the NCUA, the FDIC, and the Office of the Comptroller of the Currency are tasked with revising supervisory guidance to focus on the effectiveness of lenders’ underwriting policies rather than strict process compliance. The guidance would also prioritize correction-first treatment for decent-faith, technical errors, reserving enforcement for instances of borrower harm or repeated misconduct.
The order also addresses the Home Mortgage Disclosure Act (HMDA), directing the CFPB to consider raising the asset threshold for exemption from data collection and reporting requirements for smaller banks. The administration argues that current HMDA requirements place an undue burden on community lenders.
A key component of the order focuses on aligning capital and liquidity regulations. Agencies are directed to revise capital regulations to tailor risk weights for portfolio mortgages, servicing rights, and warehouse lines of credit, reflecting the actual credit risk. The Federal Housing Finance Agency (FHFA) and the Federal Reserve are also tasked with exploring increased access to the Federal Reserve’s discount window for Federal Home Loan Banks (FHLBs) and expanding access to longer-dated FHLB advances.
The administration also aims to address appraisal modernization, directing agencies to consider expanding the use of alternative valuation models, desktop appraisals, and artificial intelligence valuation tools. Simplifying appraiser qualification requirements and reducing requirements for low-risk transactions are also outlined.
Further, the order seeks to streamline digital mortgage processes by eliminating unnecessary wet-signature requirements and standardizing the acceptance of electronic signatures and remote online notarization. The Secretaries of Agriculture, Housing and Urban Development, and Veterans Affairs, along with the FHFA Director, are directed to consider these changes.
The order also addresses mortgage servicing, calling for alignment of supervisory expectations to support portfolio mortgage servicing as a core community banking function and simplifying loss mitigation requirements. A proposed rule exempting smaller banks from complex mortgage servicing rules is also envisioned.
Finally, the order outlines a policy against enforcement actions for minor violations of consumer financial laws, prioritizing good corporate conduct and self-identification of compliance errors. It also calls for eliminating duplicative licensing requirements for mortgage loan officers at smaller banks.
Within 120 days, the FHFA Director, in consultation with other agencies, must submit a report to the President’s economic policy advisor and the Office of Management and Budget on the efficiency of national housing finance markets, identifying potential regulatory or legislative changes.
