Trump Administration Moves to Expand Mortgage Access with Regulatory Changes
The Trump administration is taking steps to broaden access to mortgage credit, particularly for smaller banks and borrowers, through a series of regulatory changes. These changes, outlined in a recent executive order issued on March 13, 2026, aim to reduce compliance costs and address what the administration views as distortions in the mortgage market.
Focus on Community and Smaller Banks
A key component of the initiative is a focus on tailoring regulations for community banks – those with fewer than $30 billion in assets – and “smaller banks” (under $100 billion in assets). The administration argues that regulatory burdens have disproportionately affected these institutions, leading to a decline in their participation in mortgage lending and reduced credit availability for certain borrowers, including those in rural areas and with low-to-moderate incomes. The goal is to facilitate community bank engagement in mortgage activity and reduce regulatory burdens.
Revisiting Ability-to-Repay and Qualified Mortgage Rules
The executive order directs the Consumer Financial Protection Bureau (CFPB) to consider revisions to the Ability-to-Repay (ATR) and Qualified Mortgage (QM) rules. As outlined in the White House’s official statement, this includes exploring a broader safe harbor for portfolio loans and potentially exempting or modifying “small-mortgage loans” from the current points-and-fees limits associated with qualified mortgages.
Potential Impact of Changes to Qualified Mortgages
Expanding the QM points-and-fees limit for smaller loans could make it easier to extend credit to borrowers purchasing more modest homes. It could also aid smaller banks manage the costs associated with originating these loans by allowing them to charge slightly higher rates without incurring non-QM liability. However, experts caution that lifting the points-and-fees limit could also increase the overall cost of the loan for consumers. Ron Haynie, senior vice president of mortgage finance policy at the Independent Community Bankers of America, noted that while the changes might lead to a few more loans being approved, they may not entirely solve the problem of origination costs.
Expanding the Safe Harbor for Portfolio Loans
The executive order also suggests a broader safe harbor for portfolio loans, which could allow more banks to make these types of mortgages without facing non-QM liability. Currently, a safe harbor exists for smaller creditors defined as having $2.785 billion in assets and no more than 2,000 first-lien mortgages as of 2026. Expanding this definition could allow a larger range of banks to benefit from the exemption.
Implications for Self-Employed Borrowers
The changes could also impact self-employed borrowers, who often rely on non-QM loans. If certain institutions gain a QM exemption, they could become more competitive in this space, potentially challenging non-QM specialists. Richard Horn, a former senior counsel and special adviser for the CFPB, suggested this could “provide an edge to whichever banks it applies to in the self-employed space.” However, he also cautioned that the QM safe harbor is not foolproof and consumers could still challenge the QM status of a loan.
Key Definitions Remain Unclear
Many provisions of the executive order are subject to interpretation by regulators. Key definitions, such as the boundaries of “portfolio loans” and the specific criteria for exemptions, remain undefined. Kara Ward, an attorney at Baker Donelson, pointed out in her analysis that these details will be determined by the CFPB and other agencies.
CFPB Discretion and Potential Challenges
The CFPB has significant discretion in implementing these changes. However, the extent of that discretion has been questioned in court, and any far-reaching changes to ATR and QM rules could face resistance, given the importance of these rules in post-financial crisis underwriting reform. A potential reduction in the CFPB’s staffing could impact the speed and scope of these regulatory revisions. Horn suggested that maintaining some bureau operations might be necessary to fulfill the executive order.
Looking Ahead
The Trump administration’s efforts to expand mortgage access represent a significant shift in regulatory policy. The ultimate impact of these changes will depend on how the CFPB and other agencies interpret and implement the executive order. The coming months will be crucial in determining whether these initiatives will lead to increased competition, greater affordability, and broader access to homeownership for creditworthy borrowers.
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