In particular, a ban on large investors purchasing single-family homes would likely fall outside the budget reconciliation process, meaning it would require 60 votes in the Senate — a high bar that makes passage unlikely in the near term.
Still, trade groups are broadly pleased with the administration’s focus on affordability at a time when mortgage rates remain above 6%, while emphasizing the need for additional details and policies.
“MBA welcomes the Trump Administration’s focus on making homeownership and rental housing more affordable and attainable for more Americans,” said Bob Broeksmit, president and CEO of the Association of Mortgage Bankers (MBA), in a statement. “We look forward to learning more about the government’s upcoming proposals and have made targeted recommendations to reduce housing costs.”
Other proposals
Among these recommendations, MBA continues to advocate for a reduction in the number Federal Housing Administration (FHA) mortgage insurance premiums – a position also supported by the National Association of Mortgage Brokers (NAMB). NAMB has additionally called for an end to FHA’s mortgage insurance rule, which would allow borrowers to cancel premiums once their loan balance reaches 78% of the home’s value.
MBA has also urged policymakers to reduce the GSE’s loan-level pricing adjustments for middle-income borrowers and for rate-and-term refinances, and to eliminate the tri-merge credit report requirement for lower-risk GSE-backed loans.
Other proposals include reforming the mortgage lender compensation rule, improving construction loan options, providing targeted tax relief on capital gains on the sale of a first home, and expanding condominium and multifamily lending through updated GSE and FHA policies.
Down payments for housing through family support
Meanwhile, the Community Home Lenders of America (CHLA) said it “fully supports President Trump’s reported proposal to allow individuals to withdraw money from their retirement accounts without penalty for a home down payment,” said Executive Director Scott Olson.
CHLA has also urged Congress to consider a complementary approach aimed at helping first-time buyers through family support. Olson mentioned the group’s proposal to allow parents to defer capital gains taxes — similar to a Starker exchange — when the proceeds are given to a child or grandchild for a down payment.
Under the proposal, parents would be able to defer or exclude long-term gains on the sale of up to $50,000 of stocks, bonds, mutual funds, publicly traded real estate investment trusts (REITs) or taxable gains in excess of the exclusion on the sale of a primary residence. The money should be donated and used for the first home purchase within six months.
“It makes no sense to let seniors with appreciated shares choose to hold the shares until they die to get the basic step and only then pass the assets on to their children and grandchildren,” CHLA wrote. “This proposal now makes the same tax outcome possible to help their children or grandchildren buy a home.”
Individual, AnnieMac Mortgage CEO and President Joe Panobianco said in a LinkedIn post that Trump could announce additional affordability initiatives at Davos, including incentives for homebuilders focused on multifamily and entry-level single-family homes, relaxing regulations by local governments to lower construction costs and using public land to support lower-cost housing construction.
He also said, “If you can cap credit card interest rates at 10%, why not cap home insurance premiums, too? Homeowners insurance has hurt housing affordability almost as much as interest rates (not to mention what it does to delinquency).”
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