Decision 2020: Where U.S. Presidential Candidates Stand on Housing Issues

The U.S. election is just weeks away, and it’s an election year like no other. What was already set to be a contentious showdown now has added intensity due to the COVID-19 pandemic.

The pandemic’s economic impact has been dramatic, with economic activity pulling back sharply earlier this year and seeing only a partial rebound. The housing market is a bright spot, though, as record-low interest rates and changing views about housing requirements have created a boom in home sales. The desire to avoid density, pent-up buying demand and a sudden increase in people working from home have driven many prospective buyers into the housing market.

Although housing isn’t one of the hottest topics on the campaign trail, the outcome of the election could have a profound impact on the housing market. President Donald Trump, the Republican incumbent, hasn’t laid out any detailed, forward-looking proposals for housing policy, but does have a record he is running on. The Democratic challenger, former vice president Joe Biden, has ambitious housing policy goals outlined on his website.

Below, we’ll dig into the key housing positions of each candidate.

President Donald Trump

The President broadly believes that the government should have a limited role in housing regulation and finance. As such, his proposals generally reduce the involvement of the federal government in lending, by proposing to privatize Fannie Mae and Freddie Mac.

Trump is also against various consumer protections, having reduced the enforcement powers of the Consumer Financial Protection Bureau (CFPB). He has also worked to remove policies designed to protect consumers against housing discrimination.

Here’s an overview of Trump’s housing stances:

Privatize Fannie Mae and Freddie Mac by 2024

• The goal: To end government control of the two agencies (privately owned, government-sponsored is the administration’s plan).
• Fannie and Freddie back about half of the nation’s mortgages, which is roughly $5 trillion of the total $10 trillion mortgage market.
• Privatizing both mortgage loan companies could alter the popular 30-year, fixed-rate mortgage. If investors interpret the changes as increasing the risk of bonds issued by Fannie and Freddie, it could lead to borrowers paying higher mortgage interest rates.
• Privatization reduces the risk that taxpayers would have to assume the cost of any future downturns. However, given the centrality of the housing market to the U.S. economy, this seems like an unlikely outcome.
• Whether privatized or not, the federal government would have to support the housing market in a crisis similar to the housing crash of 2008 in order to protect the rest of the economy.

Rolled back key housing discrimination law

• In July 2020, the Trump administration ended the Affirmatively Furthering Fair Housing (AFFH) regulation, which was introduced by President Barack Obama in 2015 and was a provision of the 1968 Fair Housing Act.
  Its focus forced cities receiving federal housing money to address local housing discrimination.
• The Obama administration’s belief was that this move would improve the lives of people living in America’s suburbs.
• AFFH regulation was often noted as one of the previous administration’s greatest achievements in housing regulation.
• Ending AFFH could reduce the availability of affordable housing for middle- and low-income Americans.

Create “opportunity zones”

• Tax code changes earlier in Trump’s presidency encouraged development and investment in poorer neighborhoods across the country. Certain census tracts were designated as opportunity zones in the 2017 Tax Cuts and Jobs Act (TCJA).
• The goal is to create economic opportunity and employment through the development of commercial properties and improve housing availability and quality via residential investment.
• A lack of consistent reporting means that it’s difficult to assess the impact of opportunity zones.

Lowered the mortgage interest deduction

• In the TCJA, the Trump administration reduced the amount of mortgage interest that homeowners are able to write off, up to $750,000 of their combined primary and vacation homes. The previous limit was $1 million.
• The decline may have marginally reduced demand in high-cost cities, but other factors of housing market demand, like record-low interest rates, loom larger.
• The TCJA also put a cap on state and local tax deductions of $10,000, reducing the deductions available to homeowners in areas with high home values and property taxes.

Relieve measures in the Community Reinvestment Act (CRA)

• Trump’s administration proposed in January 2020 to soften the CRA, which was passed in 1977 in an attempt to address the legacy of redlining in the lending industry. Redlining is a practice where banks would outline minority neighborhoods with red ink on maps, designating them as areas in which they wouldn’t lend.
• The CRA’s aim is to increase access to financing in moderate- and low-income communities. Under the CRA, banks receive a rating based on a number of criteria, including what proportion of their lending is in low-to-moderate income communities and the location of their bank branches.
• Proposed legislation would allow lenders to receive a passing CRA rating, regardless of neighborhood/borrower exclusion.
• One of the rationales of the proposed change is that online banking has changed the geographical distribution of a bank’s customers.
• The distribution of real estate loans is among the key CRA criteria, and the proposed changes could give credit for credit cards and personal loans, products that have higher market concentration. As a result, this would benefit larger institutions.

Stripped the CFPB’s enforcement powers over the Office of Fair Lending and Equal Opportunity

• The office was responsible for pursuing discrimination cases against lenders, but the Trump administration removed its oversight powers in 2018.

Signed executive order to potentially extend a federal rental eviction moratorium

• On Aug. 8, President Trump signed an executive order instructing the Department of Health and Human Services (HHS) and the Centers for Disease Control (CDC) to consider whether temporarily banning residential evictions is reasonably necessary to prevent further spread of COVID-19.
• The executive order also instructed the U.S. Treasury Department and the Department of Housing and Urban Development (HUD) to identify funds that could help renters and homeowners who could not afford their payment due to COVID-19.
• Trump’s executive order didn’t extend the eviction moratorium; it was a directive to the various agencies to study the need for a new moratorium. The CDC subsequently issued a declaration prohibiting evictions on public health grounds through the end of the year.

Joe Biden, former Vice President and U.S. Senator

Biden’s plans are largely designed to assist those who face difficulty and discrimination in accessing the housing market. Broadly, his plans aim to make some progress addressing historical inequities in how housing finance and development has been conducted in the United States.

Biden has released detailed plans covering access to housing finance, fighting the racial homeownership gap, increasing affordable housing, protecting renters, fighting homelessness and increasing the supply of homes through zoning changes.

Here’s a closer look at Biden’s housing proposals. (Note: Many of these initiatives can be found in more detail in this memo.)

Released a detailed $640 billion housing plan

• “Joe Biden will invest $640 billion over 10 years so every American has access to housing that is affordable, stable, safe and healthy, accessible, energy efficient and resilient, and located near good schools and with a reasonable commute to their jobs,” according to a campaign statement.

Create a new advanceable tax credit of up to $15,000 to increase homeownership

• Affording the down payment is an obstacle to homeownership for many Americans. This is particularly true for groups who have not been historically able to build equity due to prior and ongoing discrimination.
• Biden’s tax credit would help cash-strapped buyers be able to afford a home. Homebuyers would get the tax credit when they purchase a home (before filing their taxes the next year) instead of paying out of pocket, then getting refunded at tax time.
• Additionally, public and national service workers, such as teachers and first responders, may be eligible for down payment help and discounted prices on homes.

Establish a new Homeowner and Renter Bill of Rights

Key facets of the proposed legislation would:

• Address high-cost loans, which are disproportionately taken out by minority borrowers.
• “Prevent mortgage servicers from advancing a foreclosure when the homeowner is in the process of receiving a loan modification.”
• “Give homeowners a private right of action to seek financial redress from mortgage lenders and servicers that violate these protections.”

Create a national standard for home appraisals to fight racial housing wealth gap

• Ensure that properties in communities of color wouldn’t be assessed at lower values than similar homes in comparable white neighborhoods.
• “Biden will establish a national standard for housing appraisals that ensures appraisers have adequate training and a full appreciation for neighborhoods and do not hold implicit biases because of a lack of community understanding.”

Create a public credit reporting agency

• Working with the CFPB, Biden wants to establish a new federal credit reporting agency to reduce racial gaps in credit scoring.
• Biden’s proposal seeks to minimize racial credit reporting disparities by using algorithms that won’t focus on discriminatory factors and include alternative credit information, such as rent payment histories and on-time utility bill payments.

Fully fund Section 8 vouchers

• The Section 8 program helps low-income renters afford private market apartments and ensures they do not spend more than 40% of their income on rent.
• Every low-income American who qualifies for the program would receive assistance under Biden’s plan.
• Currently, only a quarter of households eligible for vouchers receive them due to a shortage in supply as a result of budget caps on the program.

Increase accountability for discriminatory practices in the housing market

• Specifically, Biden wants to hold financial institutions accountable when they practice predatory and discriminatory lending.
• By contrast, the Trump administration is “seeking to gut this disparate impact standard by significantly increasing the burden of proof for those claiming discrimination,” according to Biden’s campaign.

Strengthen and expand the Community Reinvestment Act

• Plans to expand the act to apply to non-bank mortgage lenders and insurance companies.
• Biden also wants to “add a requirement for financial services institutions to provide a statement outlining their commitment to the public interest, and to close loopholes that would allow these institutions to avoid lending and investing in all of the communities they serve.”

Roll back Trump administration policies gutting fair lending and fair housing protections for homeowners

• Reinstate the Affirmatively Furthering Fair Housing regulation, which was eliminated by the Trump administration.
• Biden also wants to bring back the federal risk-sharing program, which helped obtain financing for thousands of affordable rental homes by partnering with local housing agencies.

Invest in a $100 billion Affordable Housing Fund to develop affordable housing

• The fund would add $65 billion in new incentives for state housing authorities and the Indian Housing Block Grant program to build or renovate affordable housing in areas with low supply of such homes.
  Allocate $10 billion to make homes more energy efficient, and another $5 billion to build new, affordable housing.

“Enact legislation requiring any state receiving federal dollars through the Community Development Block Grants or Surface Transportation Block Grants to develop a strategy for inclusionary zoning”

• Inclusionary zoning, which allows for higher-density construction, has emerged in recent years as a strategy for increasing the stock of housing with the goal of making it more affordable.
• Single-family zoning policies have their roots in discriminatory practices early in the last century, and this plan would help “eliminate local and state housing regulations that perpetuate discrimination.”
• “Biden will also invest $300 million in Local Housing Policy Grants to give states and localities the technical assistance and planning support they need to eliminate exclusionary zoning policies and other local regulations that contribute to sprawl.”

Expand the Low-Income Housing Tax Credit

• The LIHTC has added more than 3 million housing units since it was created in 1987 by incentivizing the construction or rehabilitation of affordable housing.
• The tax credit has an annual budget of $8 billion, which Biden would expand to $10 billion.

Ensure rural communities have access to affordable homes

• The U.S. Department of Agriculture’s Rural Housing Service funds various programs in rural areas for both multifamily and single-family homes.
• Biden plans to expand these programs, which guarantee USDA loans under favorable underwriting and repayment terms, and low rates in communities with less than 35,000 residents.

“Pursue a comprehensive approach to ending homelessness”

• To make housing a right for all Americans, Biden plans to invest at least $13 billion over a five-year period, in conjunction with Congress passing the Ending Homelessness Act.
• The plan would be paired with comprehensive mental health and addiction assistance for the homeless, and job training programs to help with workforce integration.
• The plan also aims to reduce homelessness amongst veterans.
• For formerly incarcerated individuals, the plan would create housing options so they all have housing when released and increase more access to public assistance programs for them.