Trump Administration Policies to Reduce the Costs of Housing

President Trump is increasingly concerned about affordability, especially in the housing market. It makes sense given the fact that rising costs are the number one concern for voters. Rising costs also materially threaten the long-term viability of tariffs. If voters universally blame import duties for inflation, it may shift sentiment about tariffs for generations.

In either event, the President is clearly motivated to address affordability. The proposal so far outlined or described by the White House would have major impacts on the housing market, mortgages, and home building. Many of the potential remedies are also unmoored from traditional conservative, limited government ideology and are unlikely to move in Congress. The White House will have to attempt most of these items through executive branch rulemaking or guidelines. 

Here is a list of some of the policies the President has announced or could announce in the coming weeks. We’ll keep this updated and recirculate. We’ve added additional commentary on items when necessary and available. 

• Preventing private investors from purchasing single family homes (SFH). 

• The President signed an executive order (EO) that would prohibit Fannie Mae and Freddie Mac from guaranteeing mortgages for large financial institutions that buy SFHs.

• Guidance will be out at the end of March.

• There is little more the White House can do without Congress. 

• Prohibiting stock buybacks by large home builders.

• The thinking is that more money will be re-invested in home building and increase home supply as a result.

• The Administration will have to attempt this through rulemaking.

• An EO could instruct agencies to restrict federal benefits, lending, grants, etc. to home builders that conduct stock buybacks.

• It would take time to promulgate rules or guidance and likely face court challenges. 

• Taking $200 billion from Fannie Mae and Freddie Mac and investing in mortgage-backed securities (MBS).

• The President working through the Federal Housing Finance Agency (FHFA) almost certainly has the authority to do this without further Congressional authority.

• Allowing 401(k) withdrawals for a home down payment.

• The President has proposed waiving the 10% tax on early 401(k) withdrawals if the money is used for down payment. 

• The 10% penalty is a matter of statutory law.

• An EO could require agencies to investigate how to implement the policy without Congress but would take at least 60 - 90 days to provide initial recommendations.

• President Trump did not elaborate on this plan during his speech in Davos as had been suggested. 

• Prioritizing owner-occupied home sales.

• Requires federal agencies to give individuals the first opportunity to buy properties owned by the government through foreclosure.  

• Nominating and confirming a Fed Chair who will lower interest rates. 

• Creating a regulatory pathway to 50-year mortgages. 

• Allowing individuals to transfer existing mortgages to new property. 

Other Potential Policy Items

• Lowering Fannie Mae and Freddie Mac guarantee fees. 

• The Administration may endorse lowering the fees it charges to private investors to guarantee MBS.

• The idea is that lower fees will boost demand for MBS and spur mortgage origination

• The Federal Housing Financing Agency (FHFA) has the ability to lower G-fees or Trump could issue an EO. 

• Reducing duties or import barriers for housing construction materials. 

• There are currently tariffs on house construction materials like softwood lumber.

• The President has already provided delays and relief for tariffs on upholstered wood products. 

• Increasing access to public lands for private home construction. 

• There have been suggestions that federal land could be conveyed or otherwise disposed of and provide for private home construction.