The future of mortgage finance? 6 key takeaways from the midterm elections

What will this split Congress mean for housing?

Record numbers of American voters turned out to cast their votes in Tuesday’s midterm elections, and in so doing revealed that the partisan divide in the country continues. Voters handed control of the House of Representatives to the Democrats after eight years of Republican control, and simultaneously strengthened Republicans’ control of the Senate. 

What will this divided Congress mean for housing?  Here are some key takeaways from this week’s midterm elections:

  1. Rep. Maxine Waters, D-Calif., will take the reins of the House Financial Services Committee. She has demonstrated a strong commitment to affordable housing, access to homeownership, and consumer protection throughout her tenure on the committee. Expect her to continue to focus on these issues, while also conducting robust oversight of the Trump administration.
  2. It is uncertain who will chair the Senate Banking Committee in the next Congress. Sen. Mike Crapo, R-Idaho, is the current chair, but there is speculation that he may seek the chairmanship of the Senate Finance Committee. If he does, Sen. Pat Toomey, R-Pa., would likely become the committee’s chairman. Regardless of which senator ultimately ends up leading the committee, the expectation is that the committee will largely maintain its current course with regard to its policy priorities.
  3. GSE reform isn’t happening this Congress. Not that there was much traction previously on this issue, but the divided Congress will only make it that much more difficult to find consensus on such monumental legislation. Any non-legislative changes that come to the GSEs would likely be minor and focused on reducing the government’s footprint in the market.
  4. The few areas of potential compromise may be in fintech and consumer privacy protections. The administration has expressed a desire to create a regulatory environment favorable to the growth of fintech, and if crafted properly, there is little incentive for Democrats to oppose such policies. And consumer privacy is another area where it is hard to disagree with well-drafted legislation.
  5. The Consumer Financial Protection Bureau will likely maintain the new normal. Whether Kathy Kraninger is confirmed before the end of the current Congress or Acting Director Mick Mulvaney continues to lead the bureau, the approach to regulation and enforcement enacted by Mulvaney will probably continue.

It is somewhat more likely that the Federal Housing Administration will get additional funding to upgrade its information technology systems, either directly via the appropriations process or through the imposition of a fee. The FY 2019 Senate appropriations bill for the Department of Housing and Urban Development included a direct appropriation of $20 million for technology improvements. And Democrats on the House side have also expressed willingness to fund such development. So, one way or another, the FHA might finally get a boost to its IT funding.

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