The housing order trims the cost of a mortgage. The shortage needs houses.

Opinion

By Simon Kettering

WASHINGTON — In two days this week, the administration took two more steps on housing costs. On Wednesday, President Trump signed an executive order telling the Federal Housing Finance Agency to test automatic cancellation of mortgage insurance and to make a title-insurance waiver for some refinances permanent. On Thursday, the Treasury Department proposed the rules for the new federal ban on large investors buying single-family homes, which takes effect Jan. 7.

Both are reasonable. Neither one adds a house.

That matters because the country’s housing problem is mainly a supply problem. Freddie Mac’s economists estimated the national shortage at 3.7 million units as of the third quarter of 2024, and called the lack of supply “the root cause of decreased housing affordability.” Other estimates are larger or smaller, but nobody in the debate disputes that the country is short of homes.

What the two actions do

The mortgage-insurance pilot would have Fannie Mae and Freddie Mac use automated valuations to find borrowers whose homes have gained enough value and cancel their insurance without being asked. That is a sensible use of data the companies already hold. But as The Inquisitor reported, the order applies the pilot “only to mortgages made after the establishment of the pilot program,” leaves the timing and the equity threshold to the FHFA director, and says nothing about how much anyone would save. Homeowners who are paying private mortgage insurance today would not be covered as written.

The title-insurance change helps people who already own homes and want to refinance. Lower closing costs are real money for those households. They do not change how many homes exist.

The investor rule shifts who gets to buy existing homes. The proposal does try to protect new building: it would let large investors keep buying newly built homes for rent and homes they substantially rehabilitate. That is the right instinct. But Treasury itself wrote in its regulatory analysis that “reliable data are not currently available regarding how many institutional investors and other entities may be affected.” A policy that cannot yet count the purchases it is meant to stop should at least promise to measure them.

The part that could add homes

The most promising item in Wednesday’s order got the least attention. It creates a Task Force on Manufactured Housing Innovation, co-chaired by the housing secretary and the FHFA director, to recommend common federal specifications, inspections and approvals for factory-built homes and to remove federal rules that slow “automation, modularization, standardized production.” Factory-built homes are among the options Freddie Mac’s economists listed for easing the shortage.

The task force has 180 days to report, which puts its recommendations in the spring of 2027. Then the work of writing rules and persuading states and localities begins.

Three changes would make this week’s actions count for more:

• Publish the numbers. The FHFA should say how many borrowers the insurance pilot is expected to reach and how much they would save, and whether existing loans will ever be included.
• Measure the investor ban. Treasury should commit to publishing data on large-investor purchases before and after Jan. 7, so the public can judge whether the ban frees up homes for owner-occupants or simply shifts purchases into the exceptions.
• Speed up the factory-built housing work. The task force does not need the full 180 days to name federal requirements that slow standardized construction. Interim recommendations would let agencies and Congress start sooner.

Lower closing costs and fewer bidding wars with investors may help some buyers at the margin. But the families priced out of the market need more homes to be built, and on that front this week’s actions mostly set up more study.

The Mortgage Bankers Association said in a statement that the order mostly creates task forces and pilot programs, with nothing that would let a borrower quantify savings right away. It said the most immediate item directs the Federal Housing Finance Agency to cut refinancing costs, including by expanding Fannie Mae and Freddie Mac’s title-insurance waiver pilot nationwide and lifting its 80% loan-to-value cap.

The Inquisitor asked the Mortgage Bankers Association, the National Association of Home Builders, the National Low Income Housing Coalition, the American Enterprise Institute and Freddie Mac for their views on the order and the proposed rule. The Mortgage Bankers Association responded; its statement is included above. The American Enterprise Institute said no one was available to comment. Any other responses will be added.

Photo: Framing and sheathing on a new house under construction. Kgacs / Wikimedia Commons, CC BY-SA 4.0.