It’s early days in President Donald Trump’s administration, but he’s already moving fast to make changes in the housing market.
An hour after being sworn in, Trump stopped a cut to FHA costs that could save first-time homebuyers $500 a year.
The longtime real-estate developer’s other plans could cap the popular mortgage-interest deduction, do away with the federal financial and mortgage watchdog and privatize mortgage giants Fannie Mae and Freddie Mac.
Also, Trump’s order Wednesday to start a border wall as well as his plans to deport many more illegal immigrants mean fewer available construction workers, particularly for homebuilding.
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Trump’s pick to run the U.S. Treasury Department, former Wall Street banker and movie producer Steve Mnuchin, wants to limit the mortgage-rate deduction.
It’s not clear yet what he plans exactly. But housing advocates, including the National Association of Realtors, are concerned because deducting interest payments on mortgages is a big draw for many U.S. homeowners.
Now, the mortgage-interest deduction is capped at $1 million on loans, if you are married and filing jointly. The cap is $500,000 for homeowners filing taxes solo.
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The 2010 Dodd-Frank Wall Street Reform legislation, a regulatory package to help prevent another housing boom and bust, could be on Trump’s chopping block.
Mnuchin has said he wants to get rid of parts of Dodd-Frank that are slowing bank lending.
Some housing analysts say the mortgage reform part of the legislation has kept some homebuyers from getting loans.
Other housing advocates say the lending rules are needed so borrowers aren’t preyed on and pushed into subprime loans like during the boom.
The legislation created the watchdog agency the Consumer Financial Protection Bureau. That agency’s director, Richard Cordray, said at a Wall Street Journal event earlier this week he has no plans to step down or change his agency’s charge to protect consumers.
Talk about the federal government handing over the biggest mortgage backers in the country to the private sector has been swirling around for a while.
The U.S. had to take over the failing Fannie and Freddie during the crash.
Treasury pick Mnuchin backs privatizing the mortgage giants.
But analysts say the 30-year fixed rate mortgage, the most popular option for U.S. homebuyers, would go away if the Fannie and Freddie didn’t have government backing.
Plus, it could cost billions to wrest the mortgage giants from government control.
Trump moved to a start building a wall between the U.S. and Mexico this week, something that could have a big impact on border state Arizona’s already shrunken construction workforce.
Metro Phoenix’s homebuilding market, still recovering from the crash, doesn’t have the labor to keep up with buyers now. The average time to build a Valley house doubled to six months in 2016.
Arizona builders and housing analysts are really concerned about this one.
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Trump’s pick for secretary of Housing and Urban Development Ben Carson said he would look at reversing the drop in Federal Housing Administration fees.
The Obama administration announced the cut in early January, a move welcomed by the housing industry because it makes buying a home more affordable for many first-timers.
The Realtors Association estimates about 750,000 to 850,000 homebuyers will face higher costs, and 30,000 to 40,000 homebuyers will be left on the sidelines this year without the cut of 0.25 basis points to FHA insurance premiums.
Carson’s appointment cleared the Senate Committee on Banking, Housing and Urban Affairs Tuesday. Now it goes to a full Senate vote.
Some housing market watchers speculate Carson and Trump aren’t against the FHA cut. They just didn’t like the outgoing president getting credit for it.
Based on Trump’s current agenda, there are many more moves that the housing industry and homeowners can thank or blame him for during the next four years.