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How Will President-Elect Trump Affect the Mortgage Industry?

January 18, 2017

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The mortgage industry might be seeing a lot less regulation in 2017.

As President-elect Donald Trump prepares to enter the White House in January, mortgage experts are beginning to prepare for changes in the industry. Many pundits are certain that Trump will deregulate the mortgage industry and possibly repeal the Dodd-Frank Wall Street Reform and Consumer Protection Act, according to The Wall Street Journal. The legislation was approved in response to the recession that took hold of the economy in 2008 and placed several financial regulations on mortgage lenders.

“One of the reasons we want to roll it back is because we think it has had a very negative impact on small community banks,” Stephen Moore, one of Trump’s economic advisers, told American Banker. “The regulatory costs and the compliance costs have contributed to a big consolidation of the industry…”

Advocates say if the president-elect implements measures that deregulate the mortgage lending industry, it could incentivize more lenders – specifically smaller community banks – to start approving mortgages again, according to The Wall Street Journal. There is speculation that Trump might also look to reduce the impact of a powerful financial regulatory agency.

Experts believe the incoming president will also roll back the influence of the Consumer Financial Protection Bureau, which has been investigating instances of mortgage malpractice, including problems with redlining at record-high rate in recent years, the source reported. Deregulation would be focused in areas of the industry where new rules have made the cost of compliance too high for some competitors, The Wall Street Journal reported.

Some also think that Trump will raise the threshold for stricter bank regulations above its current $50 billion limit, according to American Banker.

Although it is unclear exactly what the president-elect will do once he assumes office, mortgage lenders should most likely expect fewer regulations in their future.

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