President Trump’s presidency heralds a new regulatory era for foreclosed homes
Real estate experts can expect a changed regulatory environment for the financial sector as Donald Trump returns to The White House in January. This includes an increased likelihood of Fannie Mae again Freddie Mac exemption from conservatorship and a quick change in the agency’s leadership, analysts say.
“Trump’s win is a regulatory change likely to involve freer markets, tighter oversight (subsidy, spending, fees) and reduce regulatory risk,” the team Wells Fargo analysts covering major banks wrote in a report on Wednesday morning.
Under President Joe Biden, the The Federal Reserve attempted to implement the Basel III Endgame rules, which were designed to increase the capital requirements of central banks, including increasing their housing portfolios compared to international standards. The law is under review after a strong market reaction.
“The new era after 15 years of strict regulation should help finance (probably no increase with Basel III), bureaucracy, costs, and fees,” Wells Fargo analysts wrote. They added that regulatory risk is likely to decrease under Trump amid predictable trends, cost-benefit analysis, and a pro-business attitude.
Trump’s return is also expected to cause a reshuffle of leadership in all regulatory agencies, including those directly affecting the mortgage industry, such as Federal Housing Finance Agency (FHFA) and Consumer Financial Protection Bureau (CFPB).
“The election could have a major impact on the regulation of the financial sector, and the Trump administration may give the power to withdraw,” the analysts wrote. Keefe, Bruyette & Woods (KBW) in a report Wednesday morning. “The Trump administration could bring significant regulatory leadership change, with up to eight regulatory agencies experiencing Day 1 leadership changes.”
At the CFPB, KBW analysts see the possibility that Rohit Chopra will be replaced by an acting director soon after Trump’s inauguration. In the long run, possible replacements could be former CFPB deputy director Brian Johnson or Todd Zywicki, former chairman of the CFPB Task Force on Federal Consumer Financial Law.. The timing of this change is in question from The Senate will focus initially on key members of the cabinet.
During Chopra’s tenure, the CFPB was challenged in its approach to funding denials US Supreme Courtwhich gave him more confidence in pursuing the organization’s fight against junk money, appraisal bias and fair lending violations – all controversial topics in the industry.
“In administration, policy is about staff and who is appointed will largely determine what is done in the housing sector,” wrote David M. Dworkin, president and CEO of the National Housing Conference.
Under the Biden administration, Dworkin said The National Economic Council, i US Department of Housing and Urban Development and FHFA has “influential and effective housing leaders.” But “regulatory policy is often more problematic.”
“We need regulators who are watchdogs, not pack or attack dogs,” Dworkin wrote. “Overzealous regulation, like the recent decision of the Department of Justice and the CFPB to sue Rocket Mortgage in an appraisal bias case involving a single mortgage, despite the fact that mortgage lenders are not allowed to question the appraisal report when underwriting a loan, is just the latest example.”
Agencies, including the CFPB, expect more scrutiny in 2025 and beyond. In June, the Supreme Court overturned the 1984 Chevron precedent, meaning courts can rely on their own interpretations of ambiguous laws while limiting the power of federal agencies to interpret the laws they implement.
At FHFA, KBW analysts expect Sandra Thompson to also be replaced on the first day of the Trump administration. Jonathan McKernan, board member Federal Deposit Insurance Corp. (FDIC), cited as a possible long-term replacement. The new FHFA commissioner, however, is likely to be confirmed in the second half of 2025.
“McKernan’s leadership is likely to work toward ending GSE retention,” KBW analysts wrote, adding that they expect a positive impact from reduced regulation and a shorter application process for mergers and acquisitions.
The growing possibility that state-sponsored enterprises (GSEs) will be exempted from conservatorship under the Trump administration sent their stocks soaring on Wednesday. Fannie Mae was trading at $1.92, up 38%, while Freddie Mac rose 38% to $1.66.
The GSEs brought in $7 billion of combined revenue in the third quarter of 2024. Fannie’s total assets reached $90 billion and Freddie’s reached $56 billion.
“In the wake of Trump’s victory, we’re still seeing better upside for preferred stocks, which accounted for $25 billion in reserves last year,” BTIG analysts Eric Hagen and Jake Katsikas wrote in a report.
According to them, the transfer of credit risk may increase in the Trump administration, given the “possible reading to accelerate the release from the Conservatorship, although it may depend on the development of leadership at the Treasury and FHFA.”
Pilot programs, particularly those related to alternative title insurance and foreclosed second mortgages, are also at risk under the Trump administration. Former FHFA Director Mark Calabria recently criticized the expansion of loan-to-value (LTV) appraisal waivers, calling the decision “dumb and irresponsible.” social media posts.
Looking at The Federal ReserveKBW analysts predict possible replacements for Jerome Powell and Vice Chairman Michael Barr when their terms expire in 2026. Possible successors are Christopher Waller, a member of the Fed Board of Governors; Kevin Warsh, former member; and David Malpass, former president of World Bank Group.
“The new leadership is likely to continue Powell’s policies but may be under pressure from Trump to lower interest rates,” said KBW analysts. “Finances are likely to benefit gradually from 2026, in areas such as Basel III easing and potentially less restrictive monetary policy.”
