HARRIS vs TRUMP: Comparing Real Estate and Mortgage Policy Positions and Precedents

Introduction

This analysis provides a balanced comparison of Kamala Harris and Donald Trump's historical actions and policy stances regarding the residential real estate and mortgage markets. Both Harris and Trump have made significant contributions to these sectors, with Harris focusing on consumer protection and fair mortgage practices, and Trump emphasizing deregulation and economic growth. By examining their records as Attorney General of California, Vice President of the United States, and President of the United States, we can gain insights into their potential impacts on these markets. Additionally, we will explore the pros and cons of federal involvement in the mortgage and real estate sectors.

Summary

Kamala Harris has a history of advocating for consumer protection, fair mortgage practices, and affordable housing. Her regulatory approach aligns with the missions of Fannie Mae and Freddie Mac. In contrast, Donald Trump's priorities focus on deregulation, tax cuts, and privatization, aiming to stimulate economic growth but raising concerns about financial stability and housing affordability. The current level of federal involvement in the mortgage and real estate markets provides stability and consumer protection but also has procyclical effects, market distortions, and fiscal impacts.

Kamala Harris' History and Impact

As Attorney General of California

National Mortgage Settlement (2012)

Role: Harris played a pivotal role in negotiating the National Mortgage Settlement, securing $18 billion for California homeowners.

Details: The settlement addressed widespread mortgage servicing abuses, such as robo-signing and improper foreclosure practices. It provided financial relief through principal reductions, refinancing, and other forms of assistance to homeowners affected by the foreclosure crisis. Harris' negotiation efforts were crucial in increasing the settlement amount for California, which was initially set to receive a smaller share (Los Angeles Times).

Impact: This settlement provided significant financial relief to homeowners and imposed new mortgage servicing standards to prevent future abuses.

California Homeowner Bill of Rights (2013)

Legislation: Harris championed this set of laws to protect homeowners from unfair mortgage practices and prevent avoidable foreclosures.

Details: The legislation included provisions such as prohibiting dual tracking (where banks pursue foreclosure while negotiating loan modifications), requiring a single point of contact for borrowers, and imposing penalties for robo-signing. The bill also mandated that mortgage servicers provide borrowers with a clear explanation of their options and rights (California Department of Justice).

Impact: The legislation provided stronger legal protections for homeowners and aimed to ensure fair and transparent mortgage servicing practices.

Lawsuits Against Mortgage Servicers

Ocwen Financial Corporation: Harris' office reached a $225 million settlement with Ocwen for mortgage servicing misconduct.

Details: The settlement addressed allegations of failing to properly process loan modifications and foreclosing on homeowners without proper documentation. Ocwen was required to provide $2 billion in principal reduction to California homeowners and adhere to new servicing standards (Reuters).

Impact: The settlement provided financial relief to affected homeowners and required Ocwen to implement significant changes to its mortgage servicing practices.

As Vice President of the United States

Support for Affordable Housing Initiatives

PRO Housing Grant Competition: Harris announced an $85 million grant competition to lower housing costs and boost housing supply.

Details: The competition aimed to reduce barriers to building more homes and increase the availability of affordable housing. It focused on funding projects that streamline zoning processes, reduce construction costs, and promote innovative housing solutions (White House).

Impact: These initiatives align with the missions of Fannie Mae and Freddie Mac to ensure liquidity and stability in the mortgage market.

Federal Housing Finance Agency (FHFA) Actions

Renter Protections: The FHFA announced new actions to protect renters in multifamily properties financed by loans acquired by Fannie Mae and Freddie Mac.

Details: These actions included measures to prevent unfair rent increases and ensure fair treatment for renters. The FHFA also introduced requirements for landlords to provide tenants with at least 30 days' notice before eviction and to offer flexible payment plans (White House).

Impact: These protections aim to ensure fair treatment for renters and prevent unfair rent increases.

Donald Trump's History and Impact

As President of the United States

Deregulation

Stance: Trump advocated for reducing regulations across various sectors, including housing and mortgage markets.

Details: He believed that deregulation could stimulate economic growth by making it easier for businesses and consumers to operate. This included efforts to roll back Dodd-Frank regulations and other financial oversight measures. Trump's administration also aimed to streamline the permitting process for new housing developments (HousingWire).

Impact: Deregulation could lead to more relaxed lending standards, potentially increasing housing demand but also raising concerns about financial stability and the risk of another housing crisis.

Tax Cuts and Jobs Act (TCJA)

Legislation: Trump signed the TCJA in 2017, which introduced significant changes to the tax code, including reducing the corporate tax rate and providing tax cuts for individuals.

Details: The TCJA also capped the mortgage interest deduction and state and local tax (SALT) deductions, which had mixed effects on the housing market. While the tax cuts increased disposable income for many Americans, the SALT cap particularly affected homeowners in high-tax states (Yahoo Finance).

Impact: Extending the tax cuts could boost the housing market by increasing disposable income, allowing more people to afford home purchases. However, it could also increase the federal deficit.

Privatization of Fannie Mae and Freddie Mac

Stance: Trump advocated for ending the government conservatorship of Fannie Mae and Freddie Mac, aiming to privatize these GSEs.

Details: He believed that privatization would reduce the government's role in the mortgage market and encourage more private sector involvement. The Trump administration proposed a plan to recapitalize and release the GSEs from conservatorship, but the plan faced significant regulatory and market challenges (The Real Deal).

Impact: Privatizing Fannie Mae and Freddie Mac could lead to higher mortgage costs and reduced access to affordable housing for low- and moderate-income families. The process would be complex and lengthy, with significant implications for the housing market.

Comparative Analysis

Regulatory Approach

Kamala Harris: Advocates for stronger regulations and legal protections for homeowners. Her actions as Attorney General and Vice President reflect a commitment to consumer protection and fair mortgage practices.

Donald Trump: Advocates for deregulation to stimulate economic growth. His approach could lead to more relaxed lending standards but raises concerns about financial stability and the risk of another housing crisis.

Affordable Housing

Kamala Harris: Supports initiatives to increase affordable housing and provide financial assistance to first-time homebuyers. Her policies align with the missions of Fannie Mae and Freddie Mac to ensure liquidity and stability in the mortgage market.

Donald Trump: Introduced Opportunity Zones to stimulate investment in economically distressed areas but has faced criticism for the program's mixed effectiveness in improving housing affordability.

Fannie Mae and Freddie Mac

Kamala Harris: Has taken legal action against Fannie Mae and Freddie Mac to ensure transparency and accountability. Supports the roles of these GSEs in providing mortgage liquidity and stability.

Donald Trump: Advocates for privatizing Fannie Mae and Freddie Mac, which could lead to higher mortgage costs and reduced access to affordable housing for low- and moderate-income families.

Pros and Cons of Federal Involvement in Mortgage and Real Estate Markets

Pros

Stability and Liquidity

Federal involvement through GSEs like Fannie Mae and Freddie Mac ensures liquidity and stability in the mortgage market, making it easier for consumers to obtain mortgages.

Example: During the 2008 financial crisis, the federal government's intervention helped stabilize the housing market and prevent a complete collapse.

Consumer Protection

Federal regulations and oversight protect consumers from predatory lending practices and ensure fair treatment in the mortgage market.

Example: The Dodd-Frank Act introduced significant consumer protection measures, including the establishment of the Consumer Financial Protection Bureau (CFPB).

Affordable Housing

Federal programs and initiatives, such as the Low-Income Housing Tax Credit (LIHTC) and Section 8 vouchers, help increase the availability of affordable housing for low-income families.

Example: The LIHTC program has been instrumental in financing the construction and rehabilitation of affordable rental housing.

Cons

Procyclical Effects

Federal involvement can have procyclical effects, amplifying housing demand and values during economic booms and exacerbating downturns during recessions.

Example: The availability of government-backed mortgages can lead to increased housing demand and higher home prices during economic expansions, potentially creating housing bubbles.

Market Distortions

Government intervention can distort market dynamics, leading to inefficiencies and misallocation of resources.

Example: The conservatorship of Fannie Mae and Freddie Mac has led to ongoing debates about the appropriate level of government involvement in the mortgage market.

Fiscal Impact

Federal housing programs and interventions can have significant fiscal impacts, increasing government spending and contributing to the federal deficit.

Example: The cost of maintaining the conservatorship of Fannie Mae and Freddie Mac and providing financial assistance to homeowners during the 2008 crisis added to the federal deficit.

Conclusion

Kamala Harris' history with the residential real estate and mortgage industry reflects a strong commitment to consumer protection, fair mortgage practices, and increasing affordable housing. Her regulatory approach and support for government intervention align with the missions of Fannie Mae and Freddie Mac. In contrast, Donald Trump's priorities focus on deregulation, tax cuts, and privatization, aiming to stimulate economic growth but raising concerns about financial stability and housing affordability. The impacts of their policies on the real estate and mortgage markets would likely differ significantly, with Harris emphasizing stronger protections and affordability, while Trump focuses on reducing regulatory barriers and stimulating investment.

The current level of federal involvement in the mortgage and real estate markets provides stability, consumer protection, and support for affordable housing but also has procyclical effects, market distortions, and fiscal impacts. An even higher level of involvement could further enhance consumer protections and affordable housing initiatives but may also exacerbate these cons. Balancing the benefits and drawbacks of federal involvement is crucial for ensuring a stable and equitable housing market.

SitusAMC Impact Capitol DC Mortgage Bankers Association The Mortgage Collaborative Mortgage Professional America The White House Federal Reserve Board Federal Reserve Bank of New York Federal Reserve Bank of Chicago Federal Housing Finance Agency Fannie Mae Freddie Mac CNBC Fox Business Network Yahoo Finance