Mortgage industry now concerned with ‘too little government’

In 2024, the trade group expressed frustration over what it described as “regulatory knots,” criticizing government initiatives such as the Basel III Endgame rule, a Financial Stability Oversight Council (FSOC) report urging increased oversight of independent mortgage bankers (IMBs) by the U.S. Congress and state regulators, and the Consumer Financial Protection Bureau’s (CFPB) campaign against so-called “junk fees.”

“We had serious concerns this would reduce competition and increase costs for borrowers,” Escobar said in her opening remarks at the MBA Secondary and Capital Markets Conference in New York on Monday. “I would have pointed out that more than $93,000 of the final price of a new home is due to government regulations.”

Now that the regulatory pendulum appears to be swinging back to loosen some constraints, the industry is worried that the government may be pulling back too far. Escobar noted that the Trump administration first used a “chainsaw, then an axe, and finally a scalpel” to cut as much of the federal bureaucracy as possible.

“As we know, some of the cuts initially contemplated at agencies that mortgage bankers and borrowers rely on — HUD, the VA, FHFA, and even the CFPB — could disrupt the marketplace and sow confusion and uncertainty,” Escobar said.

While agency heads and federal courts have slowed or reversed some of the changes promoted by the Department of Government Efficiency (DOGE), “many lending programs at HUD and other agencies continue to face an uncertain future,” she added.

Another concern, according to Escobar, is the state of the U.S. economy — particularly the potential impact of a trade war on prices, supply chains and the strength of the dollar — which is contributing to both investor and consumer anxiety over a possible recession.

“A year ago, capital markets were responding to the usual external factors — Fed actions on interest rates, the upcoming elections, global events,” Escobar said. “The swift and dramatic change we are experiencing might seem overwhelming.”