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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 38 July 2024 C O V E R S T O R Y Home Lending Division and Ancillary Services businesses, which include a title company, an REO disposition company, a foreclosure trustee, and a quality control review business. Prior to BSI, Goldstone was Founder and CEO of Thornburg Mortgage, a NYSE-listed mortgage REIT focused on agency and private-label RMBS portfolio investing and high-quality jumbo lending and securitization. Rick Sharga serves as President & CEO of CJ Patrick Company, a market intelligence firm geared towards real estate and mortgage companies. As one of the country's most frequently quoted sources on real estate, mortgage, and foreclosure trends, Sharga has appeared on CNBC, CBS News, NBC News, CNN, ABC News, FOX, and Bloomberg. He is a founding member of the National Mortgage Servicing Association (NMSA) and sits on the Board of the National Association of Default Professionals. He has more than 20 years of experience in the industry, including roles as EVP at ATTOM Data, Carrington Mortgage Holdings, RealtyTrac, and Chief Marketing Officer at Auction.com. Q: What do you anticipate will be the primary impact on mortgage and housing if President Biden wins re-election in November? How do you anticipate the housing and mortgage markets may evolve over the next four years of that administration? Pete Carroll: The primary impact on housing and mortgage under President Biden will be the status quo of focusing on the broader narratives of so-called "junk fees" and perceived "anticompetitive behaviors." We will see a continued focus on increasing affordability and equity in housing, as well as continued scrutiny of so-called "junk fees" in rental housing and increases in certain mortgage closing costs. As part of addressing the expiration of the Tax Cuts and Jobs Act, President Biden might use that opportunity to persuade Congress to include tax credits to stimulate new housing supply and subsidies to pro- vide down payment and rental assistance to first-time homebuyers and lower in- come families. Maintaining the increased annual rate of immigration may provide a tailwind for construction labor critical to stimulating new housing supply. We also expect to see continued focus on climate-related financial risks to homes, including how these risks are contributing to the disruption of homeowners' insur- ance availability, and the costs and benefits of investing in municipal infrastructure and home adaptations to make for more resilient communities. Jacob Channel: President Biden has laid out a robust set of policy goals related to housing. For example, the Biden Administration outlined several proposals including a mortgage relief tax credit designed to make homebuying more affordable to middle-class first-time buyers, a call on Congress to expand down payment assistance for first-generation homeowners, FHFA rule changes to reduce mortgage closing costs, tax credits and other incentives to help build and pre- serve more affordable housing units, and tighter regulation of the rental industry to help keep costs lower for renters. Thus far, many of these proposals have not come to fruition, owing in large part to inaction from Congress. But changes like reduced mortgage insurance (MI) premiums for FHA mortgages have gone into effect. If Biden wins another term, I imagine that we will see his Administra- tion continue to push these proposals, and we may even see more Congress-bypassing executive action that, among other things, aims to compel federal agencies to reduce fees on government-backed mortgages. That said, I do not anticipate that we will see a major overhaul of the broader mortgage industry or massive changes to the housing market over the next four years should Biden win. That would require Congressional action that doesn't seem likely barring some unforeseen sweep by Democrats in both chambers of Congress and the presidency in November. With that in mind, another Biden term may force the broader mortgage industry to adopt some changes and deal with more regulation, but, again, things probably are not going to change too dramatically. Unfortunately, this means that even if the market becomes a bit more affordable, many will struggle with housing costs in another Biden term. Larry Goldstone: There are various aspects to this question. First, I suspect that not much will change if President Biden is re-elected when it comes to interest-rate policy and the Fed. Biden is taking a hands-off approach and is not influencing the Fed and their interest-rate policies. There are certainly risks here, but the risks are double-edged. If the Fed is too tight, we will likely end up in a recession. If the Fed is too easy, we will have continued above-target inflation. Exactly right is hard to achieve. Second, I think that the current ad- ministration has worked extremely hard to make foreclosure almost impossible. Most of the defaulted mortgages are in the Ginnie Mae portfolio. Ginnie Mae has continued to grow its portfolio, which also means its risk. I worry about those policies and the moral hazard created by those actions. Not everyone can afford to be a homeowner, and using taxpayers to backstop those that cannot afford to own a home is a problem. Third, I do not expect that Biden will address the issue of what to do with Fannie Mae and Freddie Mac ... they seem to like the status quo. It serves both a public policy and social policy agenda for Dems, so I doubt they are motivated to resolve the conservatorship any time too soon. Rick Sharga: The housing and mortgage markets are struggling to recover from Fed policy whiplash: several years of zero-inter- est-rate policies leading to historically low mortgage rates and soaring home prices followed by historically unprecedented hikes in the Fed Funds Rate, which doubled mortgage rates in a few months, decimating affordability and creating massive "rate lock" among millions of homeowners. The most likely scenario—no matter which party occupies the White House in 2025—is that it will take several years to work through these issues ... several years of sluggish home sales, gradually declining mortgage rates, and slowly improving affordability resetting the market into a "new normal." That said, there are some fundamental differences in approach between President