T
he Federal Housing Finance Agency recently postponed the implementation of the new adverse market fee on refinanced mortgages backed by the GSEs after an industry outcry. The implementation of the new Refi fee was pushed to December, which is almost a month after the November 3 presidential election. As we all know, both presidential candidates (Donald Trump and Joe Biden) have distinct policies they plan to implement once elected to office. The distinct policies are likely to have different impacts on the financial sector and the housing market.
Obama-era policies that he championed. In general, Biden wants to “strengthen and protect” Dodd-Frank Act provisions in efforts to ensure American’s finances aren’t harmed during a financial crisis resulting from negligent lending or investing, according to a laundry list of recommendations formed through a “unity taskforce” with Sen. Bernie Sanders of Vermont. Biden also aims to strengthen consumer lending oversight through credit cards and regulate ”usurious” interest rates that may be regarded high for certain regions of the country and borrower demographics. Moreover, he wants to utilize the Consumer
What If?
Just What if Biden wins. What happens to Refi Fee? President Trump has spent a lot of time in office rolling back Obama-era policies and regulations in the banking sector that cracked down on firms since the financial crisis, and policies that the industry regarded as costly and burdensome. Former Vice President Joe Biden plans to undo most of that, backstopping consumers’ finances and rendering depository institutions responsible to prevent the same financial crisis. As much as policies differ between the two candidates, the fact remains that the president cannot control rates. Instead, the market is usually the primary influence over rates, no matter what the president or the Fed wants. Biden’s Agenda Through his campaigns, Joe Biden has promised to reinstate most of the DoddFrank era financial reforms, which are 18
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Financial Protection Bureau (CFPB) to curb abusive or deceptive lending practices and make borrowing costs transparent by zip code. Biden is also proposing to update the CRA and extend it to apply to mortgage and insurance companies. If former Vice President Joe Biden wins the elections, “all bets are off,” said Stephen Myrow, managing partner of Beacon Policy Advisors in Washington, D.C. Even if FHFA implements the fee, it could be reversed by a Biden administration, who would likely stop plans to recapitalize and release the two GSEs, Myrow added. Works Cited. https://www.bankrate.com/banking/whatpresidential-election-trump-biden-means-forbanking/. https://truenorthtitle.com/what-happens-to-the-refifee-if-biden-wins/.
The Power Is Now Magazine | OCTOBER 2020
