Tag Archives: Affirmatively Furthering Fair Housing

Housing in the Trump Era

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The Real Estate Transactions Section of the American Association of Law Schools has issued the following Call for Papers:

Access + Opportunity + Choice: Housing Capital, Equity, and Market Regulation in the Trump Era

Program Description:

The year 2018 marks the 10th anniversary of the 2008 housing crisis—an event described as the most significant financial and economic upheaval since the Great Depression. This year is also the 50th anniversary of the Fair Housing Act, which upended many decades of overt housing discrimination. Both events remind us of the significant role that housing has played in the American story—both for good and for bad.

Of the many aspects of financial reform that followed 2008, much of the housing finance-related work was centered around mortgage loan origination and creating incentives and rules dealing with underwriting and the risk of moral hazard. Some of these reforms include the creation of the qualified mortgage safe-harbor and the skin-in-the-game risk retention rules. But when it came to the secondary mortgage market, little significant reform was undertaken. The only government action of any serious importance related to the federal government—through the Federal Housing Finance Agency (FHFA)—taking over control of Fannie Mae and Freddie Mac. This major government intervention into the workings of the country’s two mortgage giants yielded takings lawsuits, an outcry from shareholders, and the decimation of the capital reserves of both companies. Despite Fannie and Freddie having both paid back all the bailout funds given to them, the conservatorship remains in place to this day.

In the area of fair housing, the past several years saw the Texas Department of Housing and Community Affairs v. Inclusive Communities case whereby the U.S. Supreme Court upheld (and narrowed the scope of) the disparate impact theory under the Fair Housing Act. We also saw efforts aimed at reducing geographic concentrations of affordable housing through the Obama administration’s promulgation of the affirmatively furthering fair housing rule.

Yet, meaningful housing reform remains elusive. None of the major candidates in the most recent presidential election meaningfully addressed the issue in their policy platforms, and a lack of movement in resolving the Fannie/Freddie conservatorship is viewed as a major failure of the Obama administration. Additionally, housing segregation and access to affordable mortgage credit continues to plague the American economy.

In recent months, the topics of housing finance reform and providing Americans with credit (including mortgage credit) choices have been a point of focus on Capitol Hill and in the Trump White House. Will these conservations result in meaningful legislation or changes in regulatory approaches in these areas? Will programs like the low-income-housing tax credit, the CFPB’s mandatory underwriting requirements, public housing subsidies, and the government’s role in guaranteeing and securitizing mortgage loans significantly change? Where are points of possible agreement between the country’s two major parties in this area and what kinds of compromises can be made?

Call for Papers:

The Real Estate Transactions Section looks to explore these and related issues in its 2019 AALS panel program titled: “Access and Opportunity: Housing Capital, Equity, and Market Regulation in the Trump Era.” The Section invites the submission of abstracts or full papers dealing broadly with issues related to real estate finance, the secondary mortgage market, fair housing, access to mortgage credit, mortgage lending discrimination, and the future of mortgage finance. There is no formal paper requirement associated with participation on the panel, but preference will be given to those submissions that demonstrate novel scholarly insights that have been substantially developed. Untenured scholars in particular are encouraged to submit their work. Please email your submissions to Chris Odinet at codinet@sulc.edu by Friday, August 3, 2018. The selection results will be announced in early September 2018. In additional to confirmed speakers, the Section anticipates selecting two to three papers from the call.

Confirmed Speakers:

Rigel C. Oliveri, Isabelle Wade and Paul C. Lyda Professor of Law, University of Missouri School of Law

Todd J. Zywicki, Foundation Professor of Law, George Mason University Antonin Scalia Law School

David Reiss, Professor of Law and Research Director for the Center for Urban Business Entrepreneurship, Brooklyn Law School

Eligibility:

Per AALS rules, only full-time faculty members of AALS member law schools are eligible to submit a paper/abstract to Section calls for papers. Faculty at fee-paid law schools, foreign faculty, adjunct and visiting faculty (without a full-time position at an AALS member law school), graduate students, fellows, and non-law school faculty are not eligible to submit.

All panelists, including speakers selected from this Call for Papers, are responsible for paying their own annual meeting registration fee and travel expenses.

HUD, Exit Stage Left

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Obama HUD Secretary Julián Castro

President Obama had members of his Cabinet write Exit Memos that set forth their vision for their agencies. Julián Castro, his Secretary of HUD, titled his Housing as a Platform for Opportunity. It is worth a read as a roadmap of a progressive housing agenda. While it clearly will carry little weight over the next few years, it will become relevant once the political winds shift back, as they always do. Castro writes,

Every year, the U.S. Department of Housing and Urban Development (HUD) creates opportunity for more than 30 million Americans, including more than 11.6 million children. That support ranges from assisting someone in critical need with emergency shelter for a night to helping more than 7.8 million homeowners build intergenerational wealth. Simply put, HUD provides a passport to the middle class.

HUD is many things but, most of all, it is the Department of Opportunity. Everything we did in the last eight years was oriented to bring greater opportunity to the people we serve every day. That includes the thousands of public housing residents who now have access to high-speed Internet through ConnectHome. It includes the more than 1.2 million borrowers in 2016 – more than 720,000 of them first-time homebuyers – who reached their own American Dream because of the access to credit the Federal Housing Administration provides. And it includes the hundreds of thousands of veterans since 2010 who are no longer experiencing homelessness and are now better positioned to achieve their full potential in the coming years.

Our nation’s economy benefits from HUD’s work. As our nation recovered from the Great Recession, HUD was a driving force in stabilizing the housing market. When natural disasters struck, as with Superstorm Sandy in the Northeast, the historic flooding in Louisiana, and many other major disasters – HUD helped the hardest-hit communities to rebuild, cumulatively investing more than $18 billion in those areas, and making it possible for folks to get back in their homes and back to work. And when we invested those dollars, we encouraged communities not just to rebuild, but to rebuild in more resilient ways. The $1 billion National Disaster Resilience Competition demonstrated our commitment to encourage communities to build infrastructure that can better withstand the next storm and reduce the costs to the American taxpayer.

Housing is a platform for greater opportunity because it is so interconnected with health, safety, education, jobs and equality. We responded to the threat posed by lead-contaminated homes by launching a forthcoming expansion of critical protections for children and families in federally assisted housing. And we finally fulfilled the full obligation of the 1968 Fair Housing Act by putting into practice the Affirmatively Furthering Fair Housing rule to ensure that one day a child’s zip code won’t determine his or her future.

Much has been accomplished during the Obama Administration, but new challenges are on the horizon, including a severely aging public housing stock and an affordable housing crisis in many areas of the country. Just as HUD provided necessary reinforcement to the housing market during the latest economic crisis, this vital Department will be crucial to the continued improvement of the American economy and the security of millions of Americans in the years to come. (2)

There is a fair amount of puffery in this Exit Memo, but that is to be expected in a document of this sort. it does, however, set forth a comprehensive of policies that the next Democratic administration is sure to consider. If you want an overview of HUD’s reach, give it a read.

Dr. Carson’s Slim Housing Credentials

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photo by Gage Skidmore

Law360 quoted me in Carson’s Slim Housing Credentials To Be Confirmation Focus (behind paywall). It opens,

Dr. Ben Carson will face a barrage of questions Thursday on topics ranging from his views on anti-discrimination enforcement to the basics of running a government agency with a multibillion-dollar budget at his confirmation hearing to lead the U.S. Department of Housing and Urban Development.

Carson, a famed neurosurgeon and former Republican presidential candidate, was President-elect Donald Trump’s surprise choice for HUD secretary, given the nominee’s lack of experience or statements on housing issues. That lack of a track record means that senators and housing policy advocates will have no shortage of areas to probe when Carson appears before the Senate Banking Committee.

“I want to know whether he has any firm ideas at all about housing and urban policy. Is he a quick study?” said David Reiss, a professor at Brooklyn Law School.

Trump tapped Carson in early December to lead HUD, saying that his former rival for the Republican presidential nomination shared in his vision of “revitalizing” inner cities and the families that live in them.

“Ben shares my optimism about the future of our country and is part of ensuring that this is a presidency representing all Americans. He is a tough competitor and never gives up,” Trump said in a statement released through his transition team.

Carson said he was honored to get the nod from the president-elect.

“I feel that I can make a significant contribution particularly by strengthening communities that are most in need. We have much work to do in enhancing every aspect of our nation and ensuring that our nation’s housing needs are met,” he said in the transition team’s statement.

The nomination came as a bit of a surprise given that Carson, who has decades of experience in medicine, has none in housing policy. It also came soon after a spokesman for Carson said that he had no interest in a Cabinet position because of a lack of qualifications.

Now lawmakers, particularly Democrats, will likely spend much of Thursday’s confirmation hearing attempting to suss out just what the HUD nominee thinks about the management of the Federal Housing Administration, which provides insurance on mortgages to low-income and first-time home buyers; the management and funding for public housing in the U.S.; and even the basics of how he will manage an agency that had an approximately $49 billion budget and employs some 8,300 people.

“You will have to overcome your lack of experience managing an organization this large to ensure that you do not waste taxpayer dollars and reduce assistance for families who desperately need it,” Sen. Elizabeth Warren, D-Mass., said in a letter to Carson earlier in the week.

To that end, Carson could help allay fears about management and experience by revealing who will be working under him, said Rick Lazio, a partner at Jones Walker LLP and a former four-term Republican congressman from New York.

“The question is will the senior staff have a diverse experience that includes management and housing policy,” Lazio said.

One area where Carson is likely to face tough questioning from Democrats is anti-discrimination and fair housing.

Carson’s only major public pronouncement on housing policy was a 2015 denunciation of the Affirmatively Furthering Fair Housing rule that the Obama administration finalized after it languished for years.

The rule, which was part of the 1968 Fair Housing Act but had been languishing for decades, requires each municipality that receives federal funding to assess their housing policies to determine whether they sufficiently encourage diversity in their communities.

In a Washington Times, op-ed, Carson compared the rule to failed efforts to integrate schools through busing and at other times called the rule akin to communism.

“These government-engineered attempts to legislate racial equality create consequences that often make matters worse. There are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous,” Carson wrote.

Warren has already indicated that she wants more answers about Carson’s view of the rule and has asked whether Carson plans to pursue disparate impact claims against lenders and other housing market participants, as is the current policy at HUD and the U.S. Department of Justice.

Warren’s concerns are echoed by current HUD Secretary Julian Castro, who said in an interview with National Public Radio Monday that he feared Carson could pull back on the efforts the Obama administration has undertaken to enforce fair housing laws.

“I’d be lying if I said that I’m not concerned about the possibility of going backward, over the next four years,” Castro said in the interview.

HUD, as the agency overseeing the Federal Housing Administration, has also been involved in significant litigation against the likes of Deutsche Bank, HSBC, Bank of America and JPMorgan Chase & Co., among others, seeking to recover money the FHA lost on bad loans they sold to the agency.

“Will you commit to continuing to strictly enforce these underwriting standards in order to protect taxpayers from fraud?” Warren asked.

Carson has also drawn criticism from fair housing advocates for his views on the assistance the government provides to the poor, saying in his memoir that such programs can breed dependency when they do not have time limits.

To that end, housing policy experts will want to hear what Carson wants to do to ease the affordability crisis, boost multifamily building and improve conditions inside public housing units. HUD also plays a major role in disaster relief operations, another area where people will be curious about Carson’s thinking.

“I’d be looking at hints of his positive agenda, not just critiques of past programs,” Reiss said.

Fair Lending Fade-out

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open-book-fade

Bloomberg BNA quoted me in In 2017, Look for Pullback on Fair Lending Enforcement (behind a paywall). It opens,

Expect a pullback in fair lending enforcement in 2017, and especially less focus on disparate impact discrimination as the Trump administration takes office.

That’s the assessment of banking attorneys and others weighing the role of the Consumer Financial Protection Bureau, the Department of Housing and Urban Development, and the Justice Department in the uncertain year ahead.

Although a recent court ruling raises questions about CFPB Director Richard Cordray’s tenure, several said they expect the CFPB to be less assertive no matter who heads the agency.

Meanwhile, new leadership at the Justice Department and HUD means that disparate impact claims—allegations of discriminatory effect, without regard to subjective intent—will get less attention than in recent years.

David Reiss, professor of law at Brooklyn Law School in Brooklyn, N.Y., summed up the assessment of several interviewed by Bloomberg BNA on the picture ahead for 2017.

“I would guess that disparate impact won’t be a priority for the Trump administration,” Reiss said.

New Leadership Ahead

In November, Trump said he’ll nominate Sen. Jeff Sessions (R-Ala.) as attorney general. The president-elect also Dec. 5 named Ben Carson, the former director of pediatric neurosurgery at Johns Hopkins, as his candidate to lead HUD.

Alan S. Kaplinsky, a partner in Philadelphia who leads the consumer financial services practice at Ballard Spahr, said he doesn’t expect Sessions “to be a strong advocate for pushing the legal envelope on fair lending issues.”

And Carson might not use what some have called an “enforcement by litigation” approach to housing policy, according to Joseph Pigg, the American Bankers Association’s senior vice president for mortgage finance.

“Returning to a more normal enforcement regime should be a positive for borrowers and lenders alike,” Pigg told Bloomberg BNA. HUD spokesman Brian Sullivan declined to comment on the fair-lending outlook at HUD.

A Well-Known Unknown

Carson, a well-known physician and education reform advocate, took on an even higher profile by entering the 2016 White House race. But on lending, housing and other matters likely to come before him should he take the helm at HUD, Carson’s record is sparse.

One exception is a July 23, 2015, opinion piece in the Washington Times, where Carson criticized HUD’s Affirmatively Furthering Fair Housing rule. Although HUD has a distinct regulation that governs disparate impact claims under the Fair Housing Act, the AFFH rule has a different focus. The regulation, drawn from language in the Fair Housing Act itself, lays out a new process that HUD says “promotes housing choice and fosters inclusive communities free from housing discrimination.”

Carson criticized the AFFH rule, saying it would inject too much government decision-making into local housing policy. The rule, issued in the wake of the U.S. Supreme Court’s ruling in a major 2015 case on disparate impact claims under the Fair Housing Act, might actually frustrate efforts to develop new housing, he said.

Reiss predicted that Carson will either try to get rid of the AFFH rule, or decide not to enforce it. But he also said Carson’s stance on the regulation probably is somewhat nuanced.

“He’s acknowledged the history of redlining, restrictive covenants, and other problems,” Reiss told Bloomberg BNA. “He doesn’t seem to be denying a history of structural racism in the housing market. He seems to be saying the Affirmatively Furthering Fair Housing rule goes too far.”

Carson and Fair Housing

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photo by Warren K. Leffler

President Johnson signing the Civil Rights Act of 1968 (also known as the Fair Housing Act)

Law360 quoted me in Carson’s HUD Nom Adds To Fair Housing Advocates’ Worries (behind a paywall). It opens,

President-elect Donald Trump’s Monday choice of Ben Carson to lead the U.S. Department of Housing and Urban Development added to fears that the incoming administration would pull back from the aggressive enforcement of fair housing laws that marked President Barack Obama’s term, experts said.

The tapping of Carson to lead HUD despite a lack of any relative experience in the housing sector came after Trump named Steven Mnuchin to lead the U.S. Department of the Treasury amid concerns that the bank for which he served as chairman engaged in rampant foreclosure abuses. Trump has also nominated Sen. Jeff Sessions, R-Ala., to serve as attorney general. Sessions has drawn scrutiny for his own attitudes towards civil rights enforcement.

Coupled with Trump’s own checkered history of run-ins with the U.S. Justice Department over discriminatory housing practices, those appointments signal that enforcement of fair housing laws are likely to be a low priority for the Trump administration when it takes office in January, said Christopher Odinet, a professor at Southern University Law Center.

“I can’t imagine that we’ll see any robust enforcement or even attention paid to fair housing in this next administration,” he said.

Trump said that Carson, who backed the winning candidate after his own unsuccessful run for the presidency, shared in his vision of “revitalizing” inner cities and the families that live in them.

“Ben shares my optimism about the future of our country and is part of ensuring that this is a presidency representing all Americans. He is a tough competitor and never gives up,” Trump said in a statement released through his transition team.

Carson said he was honored to get the nod from the president-elect.

“I feel that I can make a significant contribution particularly by strengthening communities that are most in need. We have much work to do in enhancing every aspect of our nation and ensuring that our nation’s housing needs are met,” he said in the transition team’s statement.

The problem that many are having with this nomination is that Carson has little to no experience with federal housing policy. A renowned neurosurgeon, Carson’s presidential campaign website made no mention of housing, and there is little record of him having spoken about it on the campaign trail. One Carson campaign document called for privatizing Fannie Mae and Freddie Mac, the government-run mortgage backstops that were bailed out in 2008.

The nomination also comes in the weeks after a spokesman for Carson said that the former presidential candidate had no interest in serving in a cabinet post because he lacked the qualifications. That statement has since been walked back but has been cited by Democrats unhappy with the Carson selection.

“Cities coping with crumbling infrastructure and families struggling to afford a roof overhead cannot afford a HUD secretary whose spokesperson said he doesn’t believe he’s up for the job,” said Sen. Sherrod Brown of Ohio, the ranking Democrat on the Senate Banking Committee. “President-elect Trump made big promises to rebuild American infrastructure and revitalize our cities, but this appointment raises real questions about how serious he is about actually getting anything done.”

HUD is a sprawling government agency with a budget around $50 billion and programs that include the Federal Housing Administration, which provides financing for lower-income and first-time homebuyers, funding and administration of public housing programs, disaster relief, and other key housing policies.

It also helps enforce anti-discrimination policies, in particular the Affirmatively Furthering Fair Housing rule that the Obama administration finalized. The rule, which was part of the 1968 Fair Housing Act but had been languishing for decades, requires each municipality that receives federal funding to assess their housing policies to determine whether they sufficiently encourage diversity in their communities.

Carson has not said much publicly about housing policy, but in a 2015 op-ed in the Washington Times compared the rule to failed school busing efforts of the 1970s and at other times called the rule akin to communism.

“These government-engineered attempts to legislate racial equality create consequences that often make matters worse. There are reasonable ways to use housing policy to enhance the opportunities available to lower-income citizens, but based on the history of failed socialist experiments in this country, entrusting the government to get it right can prove downright dangerous,” wrote Carson, who lived in public housing for a time while growing up in Detroit.

That dismissiveness toward the rule has people who are concerned about diversity in U.S. neighborhoods and anti-discrimination efforts on edge, and could put an end to federal efforts to improve those metrics.

“If you’re not affirmatively furthering fair housing, we’re going to be stuck with the same situation we have now or it’s going to get worse over time,” said David Reiss, a professor at Brooklyn Law School and research affiliate at New York University’s Furman Center.

Expectations for Carson at HUD

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Dr. Ben Carson

The Christian Science Monitor quoted me in What Could US Cities Expect From Ben Carson as HUD Secretary?

Ben Carson, a former neurosurgeon and erstwhile rival of Donald Trump, was nominated Monday by the president-elect to lead the Department of Housing and Urban Development (HUD).

If confirmed by the Senate to be secretary of HUD, Carson would oversee a department dedicated to developing and enacting policies on housing, focusing on building community in lower-income neighborhoods, providing financial assistance for homeowners, and preventing racial discrimination in local housing policies.

Reactions to the nomination have fallen largely along party lines, with many Democrats criticizing Carson’s lack of experience, having never held public office before – inexperience that also makes it hard to predict his potential priorities in a Trump administration. But he has been a frequent critic of social welfare programs, saying that church- and community-based initiatives are a better vehicle than government programs for assisting Americans in poverty.

“I am thrilled to nominate Dr. Ben Carson as our next secretary of the US Department of Housing and Urban Development,” Trump said in a statement released by his transition team. “Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities. We have talked at length about my urban renewal agenda and our message of economic revival, very much including our inner cities.”

Trump and Carson had discussed the job before Thanksgiving, but Carson initially expressed reluctance to take a position on the cabinet, despite his campaign for the US presidency, because of his lack of experience in a political office. Since then, Carson has evidently overcome those reservations.

“I feel that I can make a significant contribution particularly by strengthening communities that are most in need,” Carson said in the statement.

Carson is the first African-American pick for Trump’s cabinet, and would likely be confirmed by the Republican-controlled Senate.

Carson’s communication skills give him “the ability to bring the message of poverty alleviation to people nationwide and I hope he would quickly learn the importance of HUD and would try to make it better, stronger, more efficient” Robert C. Moss, the national director of government affairs at CohnReznick, a public accounting firm, tells The Christian Science Monitor in an email.

“Carson is a very skilled speaker, maybe one of the best we’ll see in this role,” writes Mr. Moss, who specializes in affordable housing, “and if he hits on the right direction and takes the message around the country, he could help make the case for affordable housing.”

Trump’s campaign did not focus much on housing or urban development, other than to describe the state of poor “inner city” African-Americans and Hispanics as “disastrous” on multiple occasions. Many critics of Carson say that the former Republican presidential candidate ran on a platform of shrinking the role of government agencies like HUD, putting him at philosophical odds with the very department he will be in charge of.

HUD was created in 1965 in order to build stronger communities and create affordable housing for Americans with low incomes. The department was given the responsibility of enforcing the Fair Housing Act of 1968, which outlawed most forms of housing discrimination, including racial, religious, or based on family status.

African-Americans, in particular, have experienced decades of housing discrimination, says Professor Reiss.

“Redlining, the practice of refusing to provide credit in minority communities, was implemented on a national scale since the beginning of the New Deal, by government agencies like the Federal Housing Administration,” he says. “Such policies continued on for decades. These policies led, in part, to the disinvestment in cities through the 1960s that impacted African-American communities most of all.”

But some of the HUD’s recent rules have come under criticism for “social engineering.” One particular policy Carson has publicly opposed is the Affirmatively Furthering Fair Housing (AFFH) rule adopted by the Obama administration, which requires cities to monitor and report on any housing patterns of racial bias, in an effort to promote less segregated neighborhoods.

“The purpose of the AFFH rule is to reduce segregation which had been caused in part by the federal government’s own actions,” David Reiss, the academic program director for the Center for Urban Business Entrepreneurship
 at Brooklyn Law School, tells the Monitor in an email. The secretary of HUD “can signal that fair housing allegations and violations will be taken seriously or not. If Carson is confirmed, it will send a strong signal that local governments do not need to worry about the Affirmatively Furthering Fair Housing rule for the foreseeable future.”

Housing Finance Reform, Going Forward

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photo by Michael Vadon

President-Elect Trump

Two high-level officials in the Treasury Department recently posted Housing Finance Reform: Access and Affordability Going Forward. It highlighted principles that should guide housing finance reform going forward. It opened,

Access to affordable housing serves as a cornerstone of economic security for millions of Americans. The purchase of a home is the largest and most significant financial transaction in the lives of many households. Access to credit and affordable rental housing defines when young adults start their own households and gives growing families options in choosing the quality and location of their homes. Homeownership can be an opportunity to build wealth, placing a college education within reach and helping older Americans attain a secure retirement. Whether they are aware of it or not, some of the most momentous decisions American families make are shaped by how the housing finance system serves them.

Financial reform has sought to reorient financial institutions to their core mission of supporting the real economy. The great unfinished business of financial reform is refocusing the housing finance system toward better meeting the needs of American families. How policymakers address this challenge will be the critical test for any model for housing finance reform. The most fundamental question any future system must answer is this: Are we providing more American households with greater and more sustainable access to affordable homes to rent or own? It is through this lens that we will assess the performance of the current marketplace and evaluate a set of policy considerations for addressing access and affordability in a future system. (1-2)

These principles of access and affordability have guided federal housing finance policy for quite some time, particularly in Democratic administrations. They now appear to fallen by the wayside as Republicans control both the Executive and Legislative branches.

President-Elect Trump has not yet outlined his thinking on housing finance reform. And the Republican Party Platform is somewhat vague on the topic as well. But it does give some guidance as to where we are headed:

We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders, and avoid future taxpayer bailouts. Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices. Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.

We call for a comprehensive review of federal regulations, especially those dealing with the environment, that make it harder and more costly for Americans to rent, buy, or sell homes.

For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them. Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all loses. The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home-buying.

The Federal Housing Administration, which provides taxpayer-backed guarantees in the mortgage market, should no longer support high-income individuals, and the public should not be financially exposed by risks taken by FHA officials. We will end the government mandates that required Fannie Mae, Freddie Mac, and federally-insured banks to satisfy lending quotas to specific groups. Discrimination should have no place in the mortgage industry.

Turning those broad statements into policies, we are likely to see some or all of the following on the agenda for housing finance reform:

  • a phasing out of Fannie Mae and Freddie Mac, perhaps via some version of Hensarling’s PATH Act;
  • a significant change to Dodd-Frank’s regulation of mortgage origination as well as a full frontal assault on the Consumer Financial Protection Bureau;
  • a dramatic reduction in the FHA’s footprint in the mortgage market; and
  • a rescinding of Obama’s Affirmatively Furthering Fair Housing Executive Order.

Some are already arguing that Trump and Congress will take a more pragmatic approach to reforming the housing finance system than what is outlined in the Republican platform. I think it is more honest to say that we just don’t know yet what the new normal is going to be.