The news coming out of the Republican National Convention in Cleveland has so far been dominated by whether Melania Trump intentionally ripped off a chunk of her speech from first lady Michelle Obama (blame the speechwriter), angry protests outside the event, and which celebrities and politicos showed up to support presidential nominee Donald Trump (and those who stayed away). But here’s what the press hasn’t been focused on: what a Republican in the White House, especially a real estate mogul, would mean for the U.S. housing market. Surprised? After all, buying a home is the biggest purchase most Americans will make in their lifetime—and represents the kind of financial stability that many of Trump’s supporters say is impossible for them to achieve in the new economy. Trump has been pretty tight-lipped about what his potential presidency would mean for renters, buyers, and homeowners.
But not anymore.
The Grand Old Party released its 66-page Republican Platform 2016 this week at the convention. And in it, finally, are at least some details of how the Republicans hope to define—and ultimately limit—the federal government’s role in the real estate market.
It’s still a bit vague—but hey, with the election just four short months away, it’s something. “Homeownership expands personal liberty, builds communities, and helps Americans create wealth,” reads the platform. It later goes on, “We must scale back the federal role in the housing market, promote responsibility on the part of borrowers and lenders, and avoid future taxpayer bailouts.” But real estate analysts were quick to point out that these reforms could, in some instances, potentially force buyers to plunk down larger down payments or pay higher interest rates. “The heart of Republican support—blue-collar, middle-aged workers—are the people who will [be affected] the most,” says Bob Edelstein, co-chair of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley. “It may be harder to get mortgages, and those that will be available will be less advantageous.”
Bye-bye, Fannie Mae and Freddie Mac?
The language in the platform is unclear, but it appears the party wants to do away with—or substantially shrink—both Fannie Mae and Freddie Mac. The platform referred to the business models of the pair as “corrupt” and allowing “shareholders and executives [to] reap huge profits while the taxpayers cover all losses.” But calling the current system broken is the easy part, says Christopher Palmer, a real estate professor at the University of California, Berkeley. “The platform doesn’t propose any replacement for the current mortgage-market system that we have, with its reliance on Fannie and Freddie and [the Federal Housing Administration],” he says.
The Republicans would also stop the FHA from providing taxpayer-guaranteed mortgages to wealthy home buyers. The FHA typically insures loans for low-income, first-time, and other buyers who don’t have enough for a 20% down payment.
Currently, the largest FHA-backed loan that borrowers can receive is $625,500—but that’s only in the country’s most expensive areas. The average FHA-backed mortgage so far this year is just over $194,000.
The GOP platform also calls for an end to the government-mandated number of loans that Fannie, Freddie, and federally insured banks are encouraged, if not required, to set aside for “specific groups.” “Discrimination should have no place in the mortgage industry,” reads the platform.
It’s unclear which groups the party is referring to, but Fannie and Freddie currently have goals for at least 24% of their single-family mortgages to go to low-income borrowers.
Less federal oversight of local housing markets
The party also appears to want to end the Affirmatively Furthering Fair Housing rule, although the platform doesn’t explicitly say so. The rule requires communities getting federal housing dollars to take steps to overcome segregation in their areas—or pay fines. “While the federal government has a legitimate role in enforcing non-discrimination laws, this regulation has nothing to do with proven or alleged discrimination and everything to do with hostility to the self-government of citizens,” according to the platform.
But doing away with the rule and leaving these issues in the hands of local leaders is risky, warns urban policy professor Rachel Meltzer of the New School in New York. “There’s a long history of local governments using zoning essentially to discriminate against lower-income residents,” she says.
Hit the road, Dodd-Frank?
The Republicans also seem to want to repeal—or at the very least, limit—the Dodd-Frank Wall Street Reform and Consumer Protection Act. Now this is something that has been talked about—a lot. The act provides more oversight of financial institutions in the wake of the housing bust that plunged the nation into a recession.
“From start-ups forgone to home loans not made, Dodd-Frank’s excessive regulation and burdensome requirements have helped contribute to the slow economy we all endure today,” reads the platform.
The party also wants to get rid of the Consumer Financial Protection Bureau (or subject it to congressional appropriation). The bureau, created through Dodd-Frank, is charged with protecting consumers against predatory financial services companies, including those providing mortgages.
Republicans allege that its “regulatory harassment of local and regional banks, the source of most home mortgages and small business loans, advantages big banks and makes it harder for Americans to buy a home” in the platform.
But Dodd-Frank and agencies such as the CFPB are key to ensuring financial markets are kept in check and act fairly, says Berkeley’s Edelstein. “The financial system needs to be protected,” he says.