Official Document Text
Source: The American Presidency Project (UCSB Archive)
By the authority vested in me as President by the Constitution and the laws of the United States of America, it is hereby ordered: Section 1. Purpose . Every American seeking to buy a home should have access to a mortgage from a reliable lender, at a rate commensurate with his or her creditworthiness. Over the past two decades, however, statutory and regulatory changes—including rules adopted under the Dodd-Frank Act, Public Law 111–203, and subsequent rulemakings—have increased the compliance costs of mortgage origination and servicing and distorted the structure of the mortgage market. These burdens have contributed to a significant decline in bank participation in mortgage lending. Community banks, generally institutions with fewer than $30 billion in assets, have been especially affected. The regulatory and rule changes have undermined community banks' businesses, concentrated credit and liquidity risk outside the banking system, and resulted in reduced access to credit for some creditworthy borrowers, including rural households and low- and moderate-income households. My Administration will reduce these regulatory burdens to ensure that these creditworthy borrowers can access the capital required to purchase a home. It is the policy of the United States to improve the availability and affordability of mortgage credit; tailor rules for community banks and "smaller banks" (banks with assets fewer than $100 billion); reduce the regulatory burden on community banks and otherwise facilitate community bank engagement in mortgage activity; foster innovation, growth, and consumer choice in the mortgage market; modernize origination and closing standards to reduce lending costs; remove regulatory distortions to the structure of the mortgage market and to ensure capital and liquidity frameworks subject similar credit and liquidity risks to similar regulation across the system; promote competition among mortgage lenders of all charter types to drive down mortgage rates; and strengthen housing-finance liquidity. Sec. 2. Origination and Ability-to-Repay (ATR)/Qualified Mortgage (QM) Reform . (a) The Consumer Financial Protection Bureau (CFPB) shall consider, as appropriate and consistent with applicable law: (i) proposing amendments to Regulation Z that tailor the following requirements for smaller banks: ATR and QM requirements (including potentially a broader QM safe harbor for portfolio loans) and the requirements of the Truth in Lending Act, Public Law 90–321 (TILA), Real Estate Settlement Procedure Act, Public Law 93–533 (RESPA), and TILA–RESPA Integrated Disclosure (TRID) rules; (ii) replacing TRID timing rules with a materiality-based standard that preserves consumer clarity and reduces closing delays; (iii) exempting small-mortgage loans from caps on QM points and fees or, as appropriate, modifying such caps to support affordability; (iv) updating regulations regarding banks' reasonable compliance with ATR and QM underwriting requirements by removing unnecessarily burdensome elements; (v) modernizing the right to rescission for mortgage lending, for example, by enabling increased secure electronic and digital forms and processes; (vi) streamlining the requirements applicable to rate-and-term refinancing under Regulation X mortgage servicing rules; and (vii) exempting rate-and-term refinancing (including cash-out refinancing) from rescission rights. (b) The Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System (Federal Reserve), the Director of the CFPB, the Chairman of the National Credit Union Administration (NCUA) Board, the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC), and the Comptroller of the Currency shall consider, as appropriate and consistent with applicable law, revising supervisory guidance to ensure that: (i) examiners evaluate mortgage lending based on the effectiveness of the lender's policies regarding a consumer's ability to repay and prudent underwriting, rather than the existing focus on process and technical compliance; and (ii) good-faith, technical compliance errors are subject to correction-first supervisory treatment, with enforcement reserved for borrower harm or repeated misconduct. Sec. 3. Modernization of Home Mortgage Disclosure Act (HMDA) Data Collection and Disclosure . (a) The CFPB shall consider, as appropriate and consistent with applicable law, proposing amendments to Regulation C to raise the asset threshold for exemption from HMDA data collection and reporting requirements for smaller banks, to exclude inquiries from the scope of HMDA, and to ensure that disclosures protect privacy and reduce burdens, including insufficiently tailored, expensive, and complex software and training needed for reporting financial institutions. Sec. 4. Capital and Liquidity Alignment . (a) The Vice Chairman for Supervision of the Federal Reserve, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, the Comptroller of the Currency, and the Director of the Federal Housing Finance Agency (FHFA) shall consider, as appropriate and consistent with applicable law: (i) revising capital regulations, consistent with appropriate risk-management requirements, to tailor risk weights for all banks, including community banks and other smaller banks, for portfolio mortgages, servicing rights, and warehouse lines of credit to the material credit risk of the exposure; (ii) modernizing collateral valuation and transfer systems between the Federal Reserve and Federal Home Loan Banks (FHLBs); (iii) expanding access to longer-dated FHLB advances tied to residential mortgage assets; (iv) creating targeted FHLB liquidity programs for entry-level housing, owner-occupied purchase loans, and small residential builders; (v) accelerating collateral boarding and valuation processes through standardized data and digital documentation; and (vi) refocusing the FHLBs' Affordable Housing Program on faster-cycle execution and greater financial leverage for small-scale and owner-occupied housing projects. (b) The Director of the FHFA and the Vice Chairman for Supervision of the Federal Reserve shall consider, as appropriate and consistent with applicable law, authorizing FHLBs' intermediate access to the Federal Reserve's discount window for FHLBs' member depository institutions under standardized collateral, operational, and risk-management protocols. (c) Within 120 days of the date of this order, the Director of the FHFA, in consultation with the heads of other relevant executive departments and agencies, shall submit a report to the Assistant to the President for Economic Policy and the Director of the Office of Management and Budget on the efficiency of national housing finance markets. The report shall identify recommendations for regulatory or legislative changes necessary to address any regulatory or oversight gaps. Sec. 5. Construction and Housing Supply . (a) The Vice Chairman for Supervision of the Federal Reserve, the Director of the CFPB, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, and the Comptroller of the Currency, shall consider, as appropriate and consistent with applicable law, revising supervisory guidance both to exclude one-to four-family residential development and construction lending from commercial real estate concentration guidance and to ensure supervisory expectations support responsible construction lending by community banks. Sec. 6. Appraisal Modernization . (a) The Vice Chairman for Supervision of the Federal Reserve, the Director of the CFPB, the Chairman of the NCUA Board, the Chairperson of Board of Directors of the FDIC, the Comptroller of the Currency, and the Director of the FHFA shall consider, as appropriate and consistent with applicable law and their statutory authorities: (i) modernizing appraisal regulations and guidance to expand the use of alternative valuation models, desktop and hybrid appraisals, and artificial intelligence valuation tools; (ii) simplifying appraiser qualification requirements; and (iii) reducing appraisal requirements for low-risk transactions, including low loan-to-value refinancing and small-balance loans; and setting clear appraisal timelines. (b) The Secretary of Housing and Urban Development (HUD) and the Secretary of Veterans Affairs (VA) shall consider, as appropriate and consistent with applicable law: (i) aligning appraisal standards between the Federal Housing Administration and VA Home Loan Program where risk is comparable; (ii) clarifying the distinction in an appraisal inspection between safety and habitability concerns that necessitate pre-closing repairs versus cosmetic concerns; and (iii) expanding post-closing repair flexibility. Sec. 7. Digital Mortgage Modernization . (a) The Secretary of Agriculture, the Secretary of HUD, the Secretary of VA, and the Director of the FHFA shall consider, as appropriate and consistent with applicable law: (i) eliminating unnecessary wet-signature requirements for disclosures, applications, closing documents, and similar documents; (ii) standardizing acceptance of electronic signatures, e-notes, and remote online notarization; and (iii) promoting digital mortgage standards. Sec. 8. Servicing and Supervisory Certainty . (a) The Secretary of HUD, the Vice Chairman for Supervision of the Federal Reserve, the Director of the CFPB, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, and the Comptroller of the Currency shall consider, as appropriate and consistent with applicable law: (i) aligning supervisory expectations to support portfolio mortgage servicing as a core community banking function; extending cure-first standards to good-faith servicing errors; simplifying loss mitigation requirements; and issuing a proposed rule providing exemptions from complex mortgage services for smaller banks; and (ii) ensuring that supervisory evaluations of performing, prudently underwritten portfolio loans do not focus on technical defects or rely on evolving supervisory interpretations. Sec. 9. Enforcement . (a) The Vice Chairman for Supervision of the Federal Reserve, the Director of the CFPB, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, and the Comptroller of the Currency shall consider, as appropriate and consistent with applicable law, promulgating a policy against enforcement actions for violations of consumer financial laws that: (i) discourages imposing civil monetary penalties, except where the underlying violations are willful, knowing, or reckless; (ii) considers good corporate conduct, including a bank's correction of good-faith, technical compliance errors; and (iii) allows institutions a reasonable opportunity for self-identification and remediation of appropriate compliance matters. Sec. 10. Duplicative or Unnecessary Licensing Requirements . The Vice Chairman for Supervision of the Federal Reserve, the Director of the CFPB, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, and the Comptroller of the Currency shall consider, as appropriate and consistent with applicable law, eliminating duplicative or unnecessary requirements regarding licensing or registration for mortgage loan officers of any smaller bank. Sec. 11. General Provisions . (a) Nothing in this order shall be construed to impair or otherwise affect: (i) the authority granted by law to an executive department or agency, or the head thereof; or (ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals. (b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations. (c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person. (d) The costs for publication of this order shall be borne by the Department of the Treasury.