Housing Crisis Demands a “New New Deal,” Industry Leaders Say

Washington D.C. – The American dream of homeownership is slipping away for a generation, and industry leaders are calling for radical changes to address the affordability crisis.Experts are pointing to outdated financial structures, restrictive zoning laws, and a need for innovative financing solutions as key obstacles.

A core issue, according to one leading voice, is the reliance on a mortgage system rooted in the 1930s. “We’re using a 30-year fixed financial structure, and that was first installed in 1933 as part of the New Deal,” explained a source within the industry. While home prices have surged – from an average of $5,700 in 1933 to around $400,000 in 2025 – financing options have remained largely stagnant, exacerbating affordability challenges.

The solution? A potential “New New Deal” for housing, focused on first-time homebuyers. This could involve government-backed financing through the FHA with entirely new mortgage structures designed to ease the burden of entry into the market. “Give them some new mortgage structure that we haven’t seen before that helps with affordability in the same way in 1933 we had to come out with a new economic structure…to unlock housing for the country,” the source stated.

Beyond financing, the industry is also looking at alternative housing options. Century 21 President and CEO Mike Miedler emphasized the role brokerages can play in educating clients about options like accessory dwelling units (ADUs), modular homes, and repurposed commercial spaces. He also highlighted the potential of innovative financial tools, such as longer-term mortgages, tax relief for seniors selling to first-time buyers, and mortgage assumption programs.

Though, overcoming local resistance to new housing development – frequently enough referred to as “NIMBYism” – remains a significant hurdle. Experts acknowledge the challenges of scaling solutions when faced with deeply ingrained community opposition. “People want to get reelected, and you don’t get reelected if you ignore your constituents,” one expert noted, highlighting the political realities hindering progress.

Despite these obstacles, the consensus is clear: the current system is failing a generation of potential homeowners, and bold, innovative solutions are urgently needed to unlock the housing market and restore the promise of affordable homeownership.

What specific challenges, such as resistance to change, might hinder the widespread adoption of digital mortgage solutions?

Housing Industry Leaders Advocate for Mortgage Reform as Key to Addressing Housing Crises

The Growing Pressure for Mortgage System Updates

The current housing market, characterized by limited inventory and soaring prices, has spurred a unified call from prominent figures within the housing industry for critically important mortgage reform. These leaders argue that outdated mortgage systems are exacerbating the housing affordability crisis and hindering potential homeowners from achieving the dream of homeownership. The push isn’t simply about lowering rates; it’s about fundamentally reshaping how mortgages are originated, underwritten, and serviced. This includes addressing issues with mortgage rates, down payment assistance, and the overall home buying process.

key Areas of Proposed Mortgage Reform

Industry advocates are focusing on several core areas for reform. These proposals aim to streamline processes, reduce costs, and expand access to home loans for a wider range of buyers.

* Appraisal Modernization: The current appraisal process is often cited as a major bottleneck. Calls for increased use of automated valuation models (AVMs) and hybrid appraisals – combining AVMs with limited inspections – are gaining traction.This aims to speed up the process and reduce reliance on potentially biased traditional appraisals.

* Digital Mortgage Adoption: A full transition to digital mortgages is seen as crucial. This includes electronic closings (eClosings), online verification of income and assets, and automated underwriting systems. The benefits include reduced paperwork, faster processing times, and lower origination costs.

* Expanding Access to credit: Leaders are advocating for alternative credit scoring models that consider factors beyond traditional credit scores, such as rent payment history and utility bills. This is notably important for first-time homebuyers and those with limited credit histories, increasing mortgage accessibility.

* Addressing the Down Payment Hurdle: High down payment requirements remain a significant barrier to entry for many potential buyers.Proposals include expanding down payment assistance programs, creating new savings vehicles specifically for down payments, and exploring options for lower down payment mortgages.

* Reforming Loan Qualification Standards: Some argue that current debt-to-income (DTI) ratios and other qualification standards are overly restrictive, preventing creditworthy borrowers from obtaining mortgages.A nuanced approach to risk assessment is being proposed.

The Role of government-Sponsored Enterprises (GSEs)

Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs), play a central role in the mortgage market. Industry leaders are urging policymakers to clarify the future of the GSEs and to empower them to implement innovative mortgage products and technologies. Specifically, there’s a push for the GSEs to:

* Lead the adoption of digital mortgage solutions.

* Develop standardized data formats to facilitate interoperability between different mortgage systems.

* Support the progress of alternative credit scoring models.

* Expand access to affordable mortgage options for underserved communities.

Impact on Different Buyer Segments

Mortgage reform isn’t a one-size-fits-all solution. The proposed changes are expected to have varying impacts on different segments of the housing market:

* First-Time Homebuyers: Expanded down payment assistance, alternative credit scoring, and lower down payment options would significantly improve access to homeownership for this group.

* Low-to-Moderate Income Buyers: Reforms aimed at increasing affordability and expanding credit access would be particularly beneficial.

* Minority Homebuyers: addressing systemic biases in the appraisal process and expanding access to credit are crucial for closing the homeownership gap.

* Self-Employed Individuals: alternative income verification methods would make it easier for self-employed borrowers to qualify for mortgages.

Case Study: The Rise of eClosings

The increasing adoption of eClosings provides a tangible example of the benefits of mortgage modernization. States like Florida and Texas have seen significant increases in eClosing rates, resulting in faster closing times, reduced costs, and improved borrower experiences. According to a recent report by the Mortgage Bankers Association (MBA), eClosings can reduce closing costs by as much as $500 and shorten the closing process by several days. This demonstrates the potential for technology to streamline the mortgage process.

Challenges and Potential roadblocks to reform

Despite the widespread support for mortgage reform, several challenges remain:

* Regulatory Hurdles: Implementing significant changes to the mortgage system requires navigating a complex regulatory landscape.

* Technological Integration: Integrating new technologies into existing systems can be costly and time-consuming.

* Data Security Concerns: Protecting sensitive borrower data is paramount, and robust security measures are essential for digital mortgage solutions.

* Resistance to Change: Some stakeholders may be resistant to adopting new technologies or processes.

The Future of Mortgage Lending: A tech-Driven Landscape

The consensus among housing industry leaders is clear: the future of mortgage lending is inextricably linked to technology and innovation. Successful mortgage lenders will be those who embrace digital solutions, prioritize borrower experience, and adapt to the evolving needs of the market. The ongoing push for mortgage reform is not just about addressing the current housing crisis; it’s about building a more efficient, equitable, and sustainable housing finance system for the future. Refinance rates and mortgage products will continue to evolve as these reforms take shape.