White House Issues Executive Order to Reduce Mortgage Regulatory Burdens
President Trump issued an Executive Order ("EO") intended to boost the mortgage market by rolling back regulatory costs imposed on community banks.
The EO attributes reduced mortgage lending—particularly by community banks—to increased compliance burdens arising from statutory and regulatory changes. It emphasizes tailoring requirements for "smaller banks" (those with assets under $100 billion) to promote participation in mortgage lending, foster competition, and improve the availability and affordability of credit. The EO frames these changes as necessary to address market distortions, support capital formation, and "strengthen housing-finance liquidity."
To that end, the EO directs the Consumer Financial Protection Bureau to propose revisions to mortgage origination rules, including Ability-to-Repay and Qualified Mortgage requirements, as well as disclosure and closing processes. Proposed reforms include adopting a materiality-based approach to disclosure timing, adjusting fee limitations for small loans, and modernizing rescission and refinancing requirements. The EO also calls for reducing reporting burdens by raising thresholds for Home Mortgage Disclosure Act requirements and streamlining compliance expectations to focus on substantive borrower protections rather than technical errors.
The EO further calls on federal banking and housing regulators to consider changes to capital, liquidity, and housing supply frameworks. These include revising risk weights for mortgage-related assets, enhancing liquidity through the Federal Home Loan Bank system, and supporting construction lending by reconsidering its treatment under commercial real estate concentration guidance.
Finally, the EO calls for supervisory and enforcement reforms aimed at increasing certainty and reducing regulatory friction. It encourages a shift toward evaluating lending based on "prudent underwrit[ing]" and borrower outcomes rather than strict technical compliance, promotes a "correction-first" approach for good-faith errors, and discourages penalties absent willful or harmful misconduct. The EO also calls for eliminating duplicative licensing requirements and improving coordination across regulators, while reaffirming the broader goal of supporting innovation, competition, and access to mortgage credit without compromising consumer protection.