Trump Housing Executive Order Targets Mortgage Insurance, Refi Costs

By
Harris
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Key Points

  • President Donald Trump signed an executive order on Thursday, Oct. 22, aimed at lowering mortgage insurance and refinancing costs.
  • A proposed Fannie Mae and Freddie Mac pilot would cancel mortgage insurance proactively once borrowers reach required equity, but only on mortgages made after the pilot is set up.
  • A title insurance waiver pilot for eligible refinances is to become an ongoing nationwide program, with savings passed through to borrowers.
  • A new manufactured housing task force has 180 days to report, and the USDA and VA must lower rates on their direct home loans.
  • The 30-year fixed mortgage rate averaged 7.32% this week, compared with 6.19% a year ago, according to Freddie Mac.

The Trump housing executive order signed on Thursday targets some of the recurring and one-time costs of owning a home: mortgage insurance, title insurance on refinances and interest rates on certain government home loans.

The order, titled “Decreasing Housing Costs for the American People,” leaves the details to federal agencies. It sets no start date, no new loan rates and no savings estimate.

What happened

President Donald Trump signed the order on Thursday, Oct. 22, and the White House posted the full text of the executive order with a fact sheet. It has four main parts.

Mortgage insurance cancellation pilot

The order tells Federal Housing Finance Agency Director Bill Pulte to have Fannie Mae and Freddie Mac create a pilot that uses automated valuation models to estimate current home values and identify borrowers who appear to meet the equity and other requirements to drop mortgage insurance.

The order text states that the pilot is “applicable only to mortgages made after the establishment of the pilot program.” Borrowers with existing loans are not covered by this pilot. The White House fact sheet does not mention that limit.

Cancellation would also depend on payment history and safety standards. Where feasible, servicers would have to notify eligible borrowers promptly and cut paperwork and appraisal costs.

Title insurance on refinances

The FHFA is to expand its title acceptance pilot into an ongoing nationwide program. Under it, Fannie Mae or Freddie Mac could accept an FHFA-approved automated title review instead of a lender’s title insurance policy on eligible refinances. The fact sheet describes this as a permanent program.

The director must consider lifting the current 80% loan-to-value limit, removing geographic limits and reducing some Fannie Mae and Freddie Mac fees on eligible refinances. Any savings must be passed through to borrowers.

Manufactured housing task force

A new Task Force on Manufactured Housing Innovation, co-chaired by the Housing and Urban Development secretary and the FHFA director, has 180 days to recommend ways to promote modern manufacturing of factory-built homes eligible for federal programs, including ending duplicative federal reviews.

USDA and VA direct loans

The agriculture and veterans affairs secretaries must reduce interest rates on single-family home loans made directly by their departments, consistent with the law and available funding.

Latest development

Industry groups welcomed the order, according to HousingWire. Scott Olson, executive director of the Community Home Lenders of America, said the steps on title insurance, manufactured homes and veterans’ loans “have long been CHLA priorities.”

Brendan McKay of the Broker Action Coalition called the order “a big deal” and said streamlined refinances and wider title waivers “could slash closing costs by thousands of dollars.” The White House has published no savings figure.

Keefe, Bruyette & Woods analysts wrote in an Oct. 21 note that the effect on title insurers would likely be limited while only refinances are covered, since those make up around 7% of title premiums.

What is confirmed

  • The order is signed and posted on the White House website.
  • The mortgage insurance pilot covers only mortgages made after it is established.

What remains uncertain

  • The order sets no launch date for the pilot or the expanded title program.
  • The mortgage insurance and title steps depend on the FHFA director finding them in the public interest.
  • The order does not say how far USDA and VA rates will fall.

Why it matters

Mortgage insurance is a monthly charge for many borrowers with small down payments, and title insurance adds to refinancing costs. Lowering either would help some homeowners, though the pilot will not cover existing loans.

The order arrives as borrowing costs stay high. The 30-year fixed rate averaged 7.32% as of Oct. 22, down from 7.40% the week before but up from 6.19% a year earlier, according to Freddie Mac’s weekly mortgage rate survey. Our explainer covers how mortgage rates are set.

Reuters also cited National Association of Realtors data showing pending home sales fell to a record low in September, and said affordability has become a political vulnerability for Republicans ahead of the November midterm elections. The White House fact sheet listed earlier steps, including a January directive for Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed securities.

What happens next

The next move belongs to the FHFA, which must decide whether and when to set up the mortgage insurance pilot and the nationwide title program. The task force report is due within 180 days of the order. The USDA and VA have not announced new direct loan rates.

The order directs federal agencies rather than changing the law, and must be carried out consistent with existing law and available funding. Our guide to what executive orders can and cannot do explains those limits.

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Sources