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Why Trump’s administration could mean better days for marginal buyers

Changes to regulations and GSEs might make it easier to qualify for a mortgage loan
  • Two things are certain about the 2017 GOP agenda: Federal regulation will be rolled back, beginning with the Dodd-Frank legislation, and Fannie and Freddie will be taken down several notches, perhaps even privatized.
  • A reduced federal role will include the easing of mortgage qualifications. Market forces, especially investors in mortgage backed securities, not government regulations, will reshape housing finance.
  • Marginal borrowers will be better able to get loans. However, they will pay for the increased risk with higher rates, points and mortgage insurance.

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As the top officials to serve in President-elect Donald Trump's new administration are named and they outline their priorities, the broad strokes of the new government’s housing policies are taking shape. Further details won’t complete the picture until the weeks following the inauguration. Even once they settle into office, some of the policy changes in store -- especially reducing and revoking regulations -- can take place without Congressional action. The big issues, however, will require legislation. Once politics and public reaction come into play, some changes will be more difficult than others. For an administration sworn to diminish the role of government, housing is a good place to start. For the past seven years, three agencies of the Treasury Department -- Fannie Mae, Freddie Mac and Ginnie Mae (which buys and securitizes Federal Housing Administration, or FHA, loans), also known as GSEs (government-sponsored enterprises) -- have dominated mortgage markets....