July 25, 2024

By Monica Hogan, Inside Mortgage Finance

Now that President Joe Biden has announced that he won’t seek re-election and has endorsed Vice President Kamala Harris as the next Democratic nominee, the housing-finance market is pondering what a Harris White House would look like.

Though her nomination isn’t certain yet, Harris has secured support of many top Democrats, and has won the delegates she needs to become the party’s nominee.

Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy, believes Harris is likely “to continue pushing for demand-side Biden administration proposals such as tax credits for first-time homebuyers and downpayment assistance.”

However, he said the proposals are unlikely to get traction in Congress.

“The greatest opportunities for bipartisanship involve efforts to increase the supply of affordable homes by strengthening the Low-Income Housing Tax Credit and enacting the Neighborhood Homes Investment Act,” Shea said.

Capital Alpha analyst Ian Katz in a note this week said he expects Harris’s choices for key regulatory positions would be similar to Biden’s. “Harris could be faced with a Republican Senate,” he added, “which would force her to choose more centrist nominees” to head federal agencies.

In a research note this week, BTIG analyst Eric Hagen said, “We don’t expect housing finance to be a focal point of Harris’ agenda, although we still see tweaks to [the government-sponsored enterprise] guarantee fees being used as a potential tool (by either administration) to help address the demand side for lower-income and first-time buyers which are still getting squeezed at these mortgage rates.”

Ed Pinto, co-director of the American Enterprise Institute Housing Center, said Harris might try to reduce FHA mortgage insurance premiums, which he warned would translate into higher home prices, especially in a low-supply, high-demand market. That would make it harder for first-time homebuyers to afford a home, he cautioned.

Hagen also highlighted Harris’ work as California’s attorney general in leading a multi-billion-dollar settlement with the five largest mortgage servicers in 2012, “including Harris’ vocal support during that process of principal forgiveness for GSE borrowers with negative equity driven by the decline in home values.”

Many servicers and mortgage investors oppose principal forgiveness.

Pinto said Democrats could be expected to continue to favor forbearance to help drive down foreclosures. “A housing-finance system without foreclosures isn’t a finance system,” he cautioned.

Pinto noted that both Democrats and Republicans support selling federal lands to make room for more housing. However, the parties differ on how the land should be used and how many of the resulting housing units would receive government subsidies, he said.

Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders, said the Biden administration has given greater attention to the nation’s housing challenges than any recent administration, including initiatives to boost housing supply, provide relief for homeowners during the pandemic and tackle appraisal bias.Now that President Joe Biden has announced that he won’t seek re-election and has endorsed Vice President Kamala Harris as the next Democratic nominee, the housing-finance market is pondering what a Harris White House would look like.

Though her nomination isn’t certain yet, Harris has secured support of many top Democrats, and has won the delegates she needs to become the party’s nominee.

Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy, believes Harris is likely “to continue pushing for demand-side Biden administration proposals such as tax credits for first-time homebuyers and downpayment assistance.”

However, he said the proposals are unlikely to get traction in Congress.

“The greatest opportunities for bipartisanship involve efforts to increase the supply of affordable homes by strengthening the Low-Income Housing Tax Credit and enacting the Neighborhood Homes Investment Act,” Shea said.

Capital Alpha analyst Ian Katz in a note this week said he expects Harris’s choices for key regulatory positions would be similar to Biden’s. “Harris could be faced with a Republican Senate,” he added, “which would force her to choose more centrist nominees” to head federal agencies.

In a research note this week, BTIG analyst Eric Hagen said, “We don’t expect housing finance to be a focal point of Harris’ agenda, although we still see tweaks to [the government-sponsored enterprise] guarantee fees being used as a potential tool (by either administration) to help address the demand side for lower-income and first-time buyers which are still getting squeezed at these mortgage rates.”

Ed Pinto, co-director of the American Enterprise Institute Housing Center, said Harris might try to reduce FHA mortgage insurance premiums, which he warned would translate into higher home prices, especially in a low-supply, high-demand market. That would make it harder for first-time homebuyers to afford a home, he cautioned.

Hagen also highlighted Harris’ work as California’s attorney general in leading a multi-billion-dollar settlement with the five largest mortgage servicers in 2012, “including Harris’ vocal support during that process of principal forgiveness for GSE borrowers with negative equity driven by the decline in home values.”

Many servicers and mortgage investors oppose principal forgiveness.

Pinto said Democrats could be expected to continue to favor forbearance to help drive down foreclosures. “A housing-finance system without foreclosures isn’t a finance system,” he cautioned.

Pinto noted that both Democrats and Republicans support selling federal lands to make room for more housing. However, the parties differ on how the land should be used and how many of the resulting housing units would receive government subsidies, he said.

Sarah Brundage, president and CEO of the National Association of Affordable Housing Lenders, said the Biden administration has given greater attention to the nation’s housing challenges than any recent administration, including initiatives to boost housing supply, provide relief for homeowners during the pandemic and tackle appraisal bias.

Brundage said there’s still more to be done, including critical funding and needed legislation in Congress. “Housing policy is a top issue for voters nationwide, and we believe that it should be a priority for the next president and the next Congress.”

Julian Castro, who served as secretary of the Department of Housing and Urban Development during the Obama administration, in a post on X this week said, “More than half of voters say housing costs will affect their vote in 2024. On this key issue, the contrast between Kamala Harris and Donald Trump couldn’t be clearer.

Trump made a living by cheating tenants. Harris took on Wall Street banks to help families in the foreclosure crisis.”

Faith Schwartz, founder and CEO of Housing Finance Strategies, said if Trump wins the election, his administration would reverse many housing policies set during the Biden administration.

“I anticipate some relief on regulation, some relief around ‘junk fees’ and a review of the bank capital rules to be less onerous,” she said.
Schwartz added that she’s not sure that GSE reform and a release from conservatorship would be a top priority if the Republicans reclaimed the White House, even though it was an agenda item during the last presidency.

“The GSEs have remained a steadfast party to housing remaining stable, and any departure from the current state may have risks to that stability,” she said.

Brundage said there’s still more to be done, including critical funding and needed legislation in Congress. “Housing policy is a top issue for voters nationwide, and we believe that it should be a priority for the next president and the next Congress.”

Julian Castro, who served as secretary of the Department of Housing and Urban Development during the Obama administration, in a post on X this week said, “More than half of voters say housing costs will affect their vote in 2024. On this key issue, the contrast between Kamala Harris and Donald Trump couldn’t be clearer.

Trump made a living by cheating tenants. Harris took on Wall Street banks to help families in the foreclosure crisis.”

Faith Schwartz, founder and CEO of Housing Finance Strategies, said if Trump wins the election, his administration would reverse many housing policies set during the Biden administration.

“I anticipate some relief on regulation, some relief around ‘junk fees’ and a review of the bank capital rules to be less onerous,” she said.
Schwartz added that she’s not sure that GSE reform and a release from conservatorship would be a top priority if the Republicans reclaimed the White House, even though it was an agenda item during the last presidency.

“The GSEs have remained a steadfast party to housing remaining stable, and any departure from the current state may have risks to that stability,” she said.

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