Joe Biden has emerged as the winner of the 2020 U.S. presidential election. The change within the presidential administration will likely result with new regulations for the real estate sector. So what exactly is in store for the mortgage industry? The Joist team reviewed the various promises made by the Biden campaign to see how the industry may change throughout the coming years.
- Joe Biden has promised to fund $100 billion towards the Affordable Housing Act, which includes incentives to build properties in regions where affordable housing is especially short in supply.
- The United States Department of Housing and Urban Development (HUD) will receive additional funding for programs that support first-time homebuyers. These programs are not new, but we expect the funding to be increased once Joe Biden takes office.
- Biden has also promised to directly help more Americans achieve homeownership through a down payment tax credit that can valued up to $15,000.
- The Biden administration plans to enact the “Homeowner and Renter Bill of Rights,” modeled after the California Homeowner Bill of Rights that was enacted into law in 2013. This policy protects borrowers, homeowners, and renters against foreclosures and evictions.
- Biden also has various plans to help out renters who were affected by the economic hardships resulting from the pandemic.
Another big concern is the fate of Fannie Mae and Freddie Mac, the two quasi-governmental institutions that play major roles in support of the housing sector. As we mentioned a few weeks back in this very newsletter, the Trump administration has been conceiving a plan to take Fannie and Freddie private. We're not entirely sure if they will be taken private before Trump is out of office, but if that does happen, Biden will likely reverse that decision. Biden has long been vocalizing his support for Fannie and Freddie as government-backed lenders, so he likely won't let them escape from government control. In attempt to maintain control of the two institutions, Biden may remove Mark Calabria—the head of the Federal Housing Finance Agency (FHFA). This would reverse the direction of current FHFA directive to move Fannie Mae and Freddie Mac out of government conservatorship. At the very least, the path to releasing the GSEs from conservatorship will be much more difficult under Biden.
There future of the real estate sector is unclear at the moment. Biden's plans may seem advantageous to some and not-so-great for others. Renters and borrowers definitely the upper hand compared to landlords and lenders under this new administration. Regardless, the United States Senate will be majority controlled by Joe Biden's opposing party, so many of his proposed policies may never get past the governmental checks and balances. We're simultaneously excited and nervous just like many other lenders who face unpredictable potential regulatory hurdles that can turn out to be very opportunistic.