On March 13, President Trump signed an executive order directing federal financial regulators to consider a broad set of changes intended to reduce regulatory burdens affecting mortgage origination, servicing, capital treatment, appraisals, and mortgage-related licensing requirements, particularly for community banks and other smaller banks.
The order does not itself change existing law. Instead, it instructs agencies including the CFPB, Federal Reserve, FDIC, OCC, NCUA, FHFA, HUD, VA, and USDA to consider whether to pursue rulemakings, supervisory changes, and other reforms within their existing authority. The order reflects the Administration’s view that post-Dodd-Frank mortgage regulation has increased compliance costs, reduced bank participation in mortgage lending, and limited credit availability for some borrowers.
Key directives include:
- Origination and disclosure reform. The order directs the CFPB to consider changes to Ability-to-Repay and Qualified Mortgage requirements for smaller banks, including a potentially broader Qualified Mortgage safe harbor for portfolio loans. It also calls for reconsideration of TILA, RESPA, and TRID requirements, including replacing current TRID timing rules with a materiality-based standard and modifying points-and-fees caps for smaller mortgage loans.
- Supervisory and enforcement changes. The order asks federal banking regulators and the CFPB to consider shifting supervision away from technical process compliance and toward underwriting effectiveness and borrower repayment ability. It also calls for a correction-first approach to good-faith compliance errors, with enforcement measures more focused on borrower harm, repeated misconduct, or willful violations.
- HMDA, capital, and liquidity changes. The order directs agencies to consider raising the exemption threshold for HMDA reporting for smaller banks and reducing reporting burdens. It also calls for review of capital treatment for portfolio mortgages, servicing rights, and warehouse lines, along with possible steps to expand housing-finance liquidity through the Federal Home Loan Banks.
- Appraisal, servicing, and digital mortgage modernization. The order calls for expanded use of alternative valuation methods, simplified appraisal requirements for lower-risk loans, broader use of electronic signatures and remote online notarization, and streamlined mortgage servicing expectations for smaller banks. It also directs agencies to evaluate whether mortgage loan officer licensing or registration rules are duplicative for smaller institutions.
Putting It Into Practice: This executive order is another example of the broader federal pullback from more prescriptive financial-services regulation (previously discussed here). For mortgage lenders, servicers, and bank partners, the immediate significance is less about the order itself and more about what may follow through proposed rules, guidance, or examination changes. Market participants should watch closely for agency action affecting origination, servicing, appraisal, disclosure, and licensing requirements, and update compliance planning as those developments unfold.
