DSNews delivers stories, ideas, links, companies, people, events, and videos impacting the mortgage default servicing industry.
Issue link: http://digital.dsnews.com/i/1541210
27 November 2025 November 2025 » C O V E R S T O R Y JOHN COMEAU Policy Economist, Council of Federal Home Loan Banks Q: From a policy perspective, what are the most underappreciated regulatory or legislative issues that could impact the housing and mortgage markets in 2026 (e.g., GSE reform, affordable-housing tax credits, servicing regulation)? COMEAU: Home prices, property taxes, rents, and insurance premiums are all near record highs, while mortgage rates have hovered between 6% and 7% since late 2022—roughly double the 3% range of 2020–2021. As we enter 2026, affordability challenges will remain front and center, driven by a shortage of housing supply. Federal housing policy levers have traditionally focused on the demand side rather than on supply. The omnibus economic and housing package passed by Congress in 2025 expanded Low-Income Housing Tax Credit (LIHTC) allocations, established a middle-income housing tax credit, and sought to streamline permitting and incentivize infill development, all beginning in 2026. All of these measures are intended to positively impact the supply side of the equation. In 2026, I will be watching to see the impact of the changes—especially LIHTC, as the other two will have longer implementation timelines—on the nation's housing supply. I will also be watching the property insurance market. Wildfires, hurricanes, and other extreme weather events have driven premiums and loss rates higher, causing insurers to withdraw from high-risk geographies despite rate hikes. In 2025, discussion of capping insur- ance premium increases has increased among state legislators and regulators. While well-intentioned, the measures could backfire if insurers are prevent- ed from recouping losses, resulting in further retrenchment by private carriers and greater reliance on state-backed in- surance pools such as California's FAIR Plan and Florida's Citizens Property Insurance Corporation. This would shift risk from experienced insurers to states with less capacity to manage catastroph- ic exposures—an underappreciated negative risk factor for housing markets and mortgage credit in 2026. Q: Considering the role of the Federal Home Loan Banks in supporting housing and community lending, how do you see the flow of credit in 2026? Will constraints tighten, loosen, or stay about the same? What drives that outcome? COMEAU: The Federal Home Loan Banks were established to ensure a re- liable supply of liquidity to their mem- bers in all economic conditions. For 93 years, the FHLBanks have executed this mission, bolstering the financial insti- tutions—large and small—that keep local communities moving forward. The reliability of FHLBank liquidity fosters confidence among depositors, resilience among lenders, and stability across the financial system. As of September 30, 2025, the FHLBanks were supporting affordable housing finance and com- munity investment with $693.5 billion in advances and an on-balance-sheet mortgage portfolio [Acquired Member Asset (AMA) program] exceeding $77 bil- lion, together providing critical liquidity to member institutions. Through the first nine months of 2025, the FHLBanks have committed $480 million to their Afford- able Housing Programs and an additional $349 million to voluntary initiatives designed to expand housing affordability, strengthen small businesses, and increase the resilience of the housing stock across the System's 11 districts. After pausing for the first eight months of the year, the Federal Re- serve cut interest rates in September and October 2025. There has been a Wildfires, hurricanes, and other extreme weather events have driven premiums and loss rates higher, causing insurers to withdraw from high-risk geographies despite rate hikes." —John Comeau, Policy Economist, Council of Federal Home Loan Banks