Lost amid the uproar over Melania Trump’s supposed plagiarism of Michelle Obama on Monday night, the Republican Party actually conducted some official party business during the first night of its convention, when it approved its 2016 party platform.
And if the Republican Party sweeps November’s elections, the world of housing finance could be in for some significant changes, as the 2016 Republican Party platform calls for seriously cutting the government’s role in housing, potentially abolishing the Consumer Financial Protection Bureau and ending the use of disparate impact to enforce fair lending laws.
According to the Republican Party platform, which can be read in full here, one of the GOP’s goals for 2016 and beyond is to “advance responsible homeownership while guarding against the abuses that led to the housing collapse.”
The GOP platform states that the party believes in the importance of homeownership and wants to do more to help more people achieve it.
“Homeownership expands personal liberty, builds communities, and helps Americans create wealth. ‘The American Dream’ is not a stale slogan. It is the lived reality that expresses the aspirations of all our people,” the Republican Party platform states. “It means a decent place to live, a safe place to raise kids, a welcoming place to retire. It bespeaks the quiet pride of those who work hard to shelter their family and, in the process, create caring neighborhoods.”
And to return to healthier levels of homeownership, instead of the current near-record lows, more needs to be done, but not by the government, the Republican Party argues.
According to the Republicans, the government has already done more than enough.
“The Great Recession devastated the housing market. U.S. taxpayers paid billions to rescue Freddie Mac and Fannie Mae, the latter managed and controlled by senior officials from the Carter and Clinton Administrations, and to cover the losses of the poorly-managed Federal Housing Administration," the Republican platform states. “Millions lost their homes, millions more lost value in their homes.”
To remedy this problem, the Republican Party believes the government should play far less of a role in housing than it does currently.
“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,” the Republican platform states.
“Reforms should provide clear and prudent underwriting standards and guidelines on predatory lending and acceptable lending practices,” the platform continues. “Compliance with regulatory standards should constitute a legal safe harbor to guard against opportunistic litigation by trial lawyers.”
The Republicans also call for a “comprehensive” review of federal regulations, “especially those dealing with the environment,” that make it “harder and more costly for Americans to rent, buy, or sell homes.”
But much of the Republican animus towards the government’s (and the Democrats’) role in housing is centered on the ongoing conservatorship of Fannie Mae and Freddie Mac.
And the Republicans’ message on Fannie and Freddie’s ownership structure should give pause to the Fannie and Freddie shareholders fighting for the recapitalization and release of Fannie and Freddie.
“For nine years, Fannie Mae and Freddie Mac have been in conservatorship and the current Administration and Democrats have prevented any effort to reform them,” the platform states.
“Their corrupt business model lets shareholders and executives reap huge profits while the taxpayers cover all losses,” the Republicans continue. “The utility of both agencies should be reconsidered as a Republican administration clears away the jumble of subsidies and controls that complicate and distort home buying.”
The Republicans also call for the FHA to end its “support” of “high-income individuals,” and state that the public “should not be financially exposed by risks taken by FHA officials.”
The Republicans also state that they will “end the government mandates that required Fannie Mae, Freddie Mac, and federally insured banks to satisfy lending quotas to specific groups,” adding that “discrimination should have no place in the mortgage industry.”
The Republicans also state their opposition to the Obama Administration’s Affirmatively Furthering Fair Housing program, which the administration heavily touted last year as a way to ensure that all children are given a “fair shot.”
The Republicans argue that the Affirmatively Furthering Fair Housing program is an attempt by the government to “seize control” of the zoning process away from local governments.
("The Affirmatively Furthering Fair Housing program) threatens to undermine zoning laws in order to socially engineer every community in the country,” the Republicans state. “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.”
The Republican platform also echoes several points of the recently released Republican-crafted plan to repeal and replace the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Part of that plan involves changing the structure of the Consumer Financial Protection Bureau to replace the agency’s director, a position currently filled by Richard Cordray, with a bipartisan commission and changing the CFPB’s funding mechanism to bring the agency’s budget under Congressional oversight.
The Republican Party platform goes a step beyond that.
“The worst of Dodd-Frank is the Consumer Financial Protection Bureau, deliberately designed to be a rogue agency. It answers to neither Congress nor the executive, has its own guaranteed funding outside the appropriations process, and uses its slush fund to steer settlements to politically favored groups,” the Republican platform states.
“Its Director has dictatorial powers unique in the American Republic. 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,” the Republicans continue.
According to the Republicans, the CFPB’s “one-size-fits-all approach” to every issue “threatens the diversity of the country’s financial system” and could lead to the U.S. having just a few “enormous” financial institutions.
“If the Bureau is not abolished, it should be subjected to congressional appropriation. In that way, consumer protection in the financial markets can be advanced through measures that are both effective and constitutional,” the Republicans state. “Any settlements arising from statutory violations by financial institutions must be used to make whole the harmed consumers, with any remaining proceeds given to the general Treasury. Diversion of settlement funds to politically connected parties should be a criminal offense.”
And last, but certainly not least, the Republicans call for an end to the government’s use of disparate impact theory to enforce fair lending laws.
Last year, the U.S. Supreme Court ruled that the government is allowed to use disparate impact, an allegation that a law or practice has a discriminatory effect, even if it wasn’t based on a discriminatory purpose, to enforce anti-discrimination laws in lending.
But if the Republicans win big in November, not only is disparate impact out, the landscape of housing in this country also undergoes a seismic shift.