Trump Wants Cheaper Mortgages. Here's the Catch.

The White House has a plan to make mortgages less shit great again. There's just one teeny-tiny problem: Most of the savings would go to people who already own homes. 🙃 We've got the draft EO, a breakdown of the potential savings & some unintended consequences worth thinking about. 

Plus, exclusive reporting on a new Zoom drama at Better, an AI bot named Cindie closing loans while LOs sleep, a sizable retail mortgage deal & some seriously ugly servicing allegations. Let's get into it!

Tariffs, $4-plus gas & a war in Iran. Not exactly the affordability agenda Americans thought they were signing up for. And w/ the midterms less than two weeks away, the Republicans have a pretty big problem: Voters are still getting hammered by the cost of living, & they're not particularly happy about it.

A Reuters/Ipsos poll found 78% of Americans hold Trump’s policies at least partly responsible for rising prices. And in a Clever Real Estate survey, 70% said housing costs are a bigger issue in this election than in 2024.

So…uhhh, how about some cheaper mortgages?

The White House has been circulating a draft executive order titled “Decreasing Housing Costs for the American People” that could upend mortgage insurance, title insurance & refi pricing. Scotsman Guide’s Ryan Kingsley first reported on the draft Tuesday. The Mortgage Scoop has also obtained a copy.

Nothing is final, & Trump may never sign it. But I wanna quickly hit on some of the highlights.

1. Goodbye, PMI? The proposal would have Fannie Mae & Freddie Mac regularly screen their portfolios using automated valuation models to find homeowners whose equity has grown enough to qualify for mortgage insurance cancellation. Instead of waiting for borrowers to ask, the GSEs would establish procedures to cancel PMI proactively when all eligibility conditions are met, w/ servicers notifying borrowers.

Fannie already loosened its rules in September to let servicers contact borrowers who might qualify based on current property values. This would go further, potentially shaving monthly payments for eligible homeowners. Are the servicers operationally prepared do this? That’s a different question, one I explored a few weeks ago. (Here’s a link.)

2. A cheaper refi? FHFA Director Bill Pulte would be directed to expand the Biden-era title acceptance pilot nationwide & make it an ongoing program at both GSEs. The program substitutes automated title-risk reviews for lender’s title insurance on eligible refinances.

The draft also proposes considering eligibility above 80% LTV, more title-assessment providers & fewer appraisal, income re-verification & documentation requirements for limited cash-out refis that lower monthly payments.

And here’s a biggie for pricing desks: reducing or eliminating LLPAs & other GSE fees on those refis. Lenders would be required to pass savings along to borrowers. (Are you dreaming of streamlines on conventional loans???)

3. Factory-built homes get some love. A HUD-FHFA task force would have 180 days to recommend standardized permitting, inspections and certifications for manufactured & modular housing, potentially tying federal grants to state & local reforms. (This is a good idea, & tbf HUD Secretary Scott Turner has been consistently strong on this one.)

4) Lower govie rates (subject to law & funding). That’s not an across-the-board rate cut on lender-originated, government-guaranteed loans. The draft even calls for incorporating “Super Intelligence” into mortgage risk & valuation, whatever the fuck that means haha (I’m guessing Palantir in some form?).

My take on the draft proposals: Between tariffs, war & the growing rate of Treasury debt ($40T), the Trump administration has unfortunately made housing more expensive. 

But credit where it’s due: the potential savings from this EO aren't exactly pocket change. FHFA previously estimated that eliminating lender's title insurance on certain refis could save borrowers $500 to $1,500, while appraisal waivers could save another $550. And if the GSEs eliminate LLPAs on qualifying rate-reduction refinances? A borrower w/ a $300K mortgage, 750 credit score & 80% LTV could avoid a pricing adjustment equivalent to $3,375. Add it all up & we're talking about potentially $4,000 to $5,500 in upfront savings on a single refi. That's assuming, of course, the agencies actually implement the proposals & borrowers receive the savings. Lenders would still need to compensate for risk & price that in, so this is still very rough math. (I also have no idea if all the ideas would survive legal scrutiny - above my pay grade.)

I want to leave you w/ one last thought: It's essentially a homeowner affordability plan, not a homebuyer affordability plan. The biggest immediate savings would flow to people who already own homes. Proactive PMI cancellation lowers their monthly carrying costs, while title waivers, appraisal waivers & LLPA relief make refinancing cheaper. But none of those measures directly addresses high home prices, down payments or the shortage of existing homes for sale. IMO, some of these policies could make the mortgage lock-in problem worse. The industry would love to have more at-bats at refis, & I’m sympathetic to that, but we need more supply-side policy changes, folks. Period.

Vishal is back & he’s wasting no time trimming costs at Better. Per a press release his team put out, since he got back Better has already eliminated about $22.5M in annualized costs, mostly tied to sales & marketing. 

But how it’s been carried out has been very Better, if you know what I mean. I’ve got exclusive reporting on how it’s playing out for staffers.