We’re nearly one month into the new Administration, and Orion’s brokers have gone from, “How will the Biden Administration impact the mortgage industry?” to, “How has the Biden Administration impacted the mortgage industry?” Between the FHFA, FHA and VA, government agencies control the vast majority of the mortgages funded in the United States. Politics and lending is alive and well.

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DACA? On President Biden’s first day in office, the FHA issued a waiver that removed a prior policy that, “Non-US citizens without lawful residency in the U.S. are not eligible for FHA insured mortgages.” The waiver states that FHA is permitting individuals classified under the “Deferred Action for Childhood Arrivals” program are legally permitted to work in the U.S. are eligible to apply for mortgages backed by the FHA, opening up of the mortgage market to hundreds of thousands potential borrowers and homeowners.

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Orion’s brokers are looking for any clues toward Fannie and Freddie (GSEs) conservatorship: ending or remaining? Since the U.S. government purchased preferred stock in the companies to save them, profits have gone into the U.S. Treasury to repay the funds used to purchase the stock and retained by GSEs to increase their capital. It is yet to be seen whether the Biden Administration will separate GSEs from the backing of the U.S. Treasury guaranteeing their mortgages to investors. Many in government like the profits flowing into the Treasury, while others wish to remove the risk to taxpayers of he government guarantee. Many hope the Administration leaves Freddie and Fannie alone.

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And, of course, we have the Consumer Financial Protection Bureau (CFPB). It impacts the mortgage industry through regulations like how mortgage companies must pay their loan originators and through strong involvement in other consumer credit industries treatment of borrowers. With such a narrow Democratic majority in Washington, any changes that impact the mortgage industry and homeownership will likely require partisan support for legislation to pass. A new director (Rohit Chopra) has been nominated and will likely assume that role.

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Politics and residential lending have been intertwined since the 1930s. We can expect nothing less for the next four years, and in fact Orion’s management believes we’ll see more.

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