CFPB proposal would reverse 50 years of fair housing protections

The Consumer Financial Protection Bureau (CFPB) proposed a new rule that would overhaul Regulation B of the Equal Credit Opportunity Act, weakening existing fair housing protections and making substantial changes to long term policies that enable homeownership for protected classes. The proposed rule makes three major changes: eliminating the disparate impact provision, narrowing the scope of what is considered “discouragement” standards of potential borrowers, and stopping lenders from establishing Special Purpose Credit Programs (SPCPs). Advocates quickly denounced the proposal, noting that each of the changes limits credit opportunities for women and underserved communities, particularly for rural residents and communities of color in the South. Disparate impact, which holds businesses liable for practices that result in discriminatory outcomes regardless of intent, has previously been criticized by the Trump administration through executive action. SPCPs are widely supported across the housing industry and have reportedly provided $82 million in reduced costs to 57,282 borrowers of all races from 2022 to 2024.

“These actions ignore mounds of evidence revealing ongoing lending bias, are an assault on decades of settled fair lending law and would promote discrimination in our credit markets. They are a continuation of this administration’s attack on protections against redlining. For these reasons and more, this rule must never be promulgated,” said Lisa Rice, President and CEO of the National Fair Housing Alliance (NFHA). Rice emphasized the impact on lenders as well as consumers. “The proposed rule changes are a death knell for lenders. Disparate impact is a business-growth engine and any company that wants to remain viable and competitive will continue to use this critical tool. Disparate impact helps businesses grow and expand their products and services by revealing and removing unnecessary barriers that arbitrarily limit customer reach, suppress innovation, and constrain business opportunities,” Rice said.

The proposal notes that the CFPB offered to consult with appropriate agencies regarding consistency with prudential, market, or systemic objectives administered by such agencies, but stops short of confirming such consultation occurred. Comments are due by December 15. 

Bipartisan opposition to Trump administration mortgage proposals

Director of the Federal Housing Finance Agency (FHFA) Bill Pulte announced via social media that FHFA is considering new mortgage products to reduce the cost of home purchases. The proposals included creation of a 50-year mortgage that was defended by President Trump but broadly opposed by a wide range of experts across the political spectrum. Pulte also promoted conventional, conforming assumable loans that would allow a buyer to take over an existing mortgage, and portable loans that would allow a buyer to move their existing mortgage from property to property.

The proposal for a 50-year mortgage was met with strong opposition on FOX News, The Wall Street Journal, and Bloomberg news service. President Trump dismissed the concerns as “not a big deal.” While the longer loan term decreases the monthly cost of the mortgage, it comes at the expense of significantly reduced equity earned by the homeowner and higher interest paid. “The benefits of the longer term are far outweighed by the harm that it causes,” said NHC President and CEO David Dworkin. “A 50-year mortgage dramatically depreciates the biggest value of homeownership — wealth building. Over time, the loss of equity quickly overcomes any savings on payment,” Dworkin said.

Housing industry groups expressed previous interest in assumable mortgages, but portable loans draw less optimism. Assumable loans are currently available under the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA) homeownership programs. They are rarely utilized, however, because the blended rate on the current and second mortgage don’t provide enough benefit to justify the getting two mortgages instead of one. Few people can afford to buy a new home with only the assumable mortgage.

Portable mortgages have never been attempted as the mortgage is directly tied to a property’s location and value, the foundation of mortgage lending. “So how do you lift and modify a note to another property? I don’t believe there’s an actual vehicle or mechanism that would be within the director’s power or ability to even make a mortgage fully portable,” said the CEO of Absolute Home Mortgage Corp Matthew VanFossen. “We have a mechanism for that now. It’s called paying off your current mortgage and applying for a new mortgage.”

HUD moves to slash permanent-housing funding in homelessness grants 

The U.S. Department of Housing and Urban Development (HUD) issued its largely anticipated Continuum of Care (CoC) Notice of Funding Opportunity (NOFO) that constitutes a significant change in fund allocation, shifting homelessness services focus away from permanent supportive housing toward transitional housing with work or service conditions. The $3.9 billion NOFO reportedly risks displacing 170,000 individuals at risk of falling back into homelessness due to the changes. HUD’s stance is that the policy “restores accountability” while cracking down on “DEI, gender ideology extremism, and the misuse and abuse of taxpayer dollars on illegal aliens.” Internal documents show that while about 87% of current funding supports permanent housing, this share would drop to around 30%. At the same time, more than one-third of existing projects are set to expire between January and June 2026, raising the possibility that people could lose access to support just as the winter season begins.

“Our philosophy for addressing the homelessness crisis will now define success not by dollars spent or housing units filled, but by how many people achieve long-term self-sufficiency and recovery,” said HUD Secretary Scott Turner. “We are stopping the Biden-era slush fund that fueled the homelessness crisis, shut out faith-based providers simply because of their values, and incentivized never-ending government dependency. These long-overdue reforms will promote independence and ensure we are supporting means-tested approaches to carry out the President’s mandate, connect Americans with the help they need, and make our cities and towns beautiful and safe.”

Letters from both political parties have been sent to Secretary Turner regarding the changes, urging him to implement any changes carefully to avoid destabilizing programs that serve individuals with disabilities, chronic health conditions, and substance abuse disorders.

“It’s terrible policy and really irresponsible administration of the program,” said Ann Oliva, CEO of the National Alliance to End Homelessness. “Putting out a grant opportunity with a tight turnaround and massive changes, knowing that you can’t get awards out until at least mid-year just is deeply irresponsible. They are setting communities up for failure.”