DS News - U.S. Bank

74 agency's inability to improve oversight of both GSEs while strengthening internal review processes for nondelegated matters, 2) upgrad- ing supervision of the GSEs and Federal Home Loan Banks, 3) oversight in cybersecurity, ensuring effective information security in order to protect the sensitive borrower data gathered by the GSEs, and 4) enhancing oversight over the GSEs' relationship with counterparties and third parties. While it is possible the conservatorship will be unwound in the next few years, Democratic control of the House makes it likely they will look to build language into any such agreement that would provide funds for affordable housing and offer expanded credit provisions for underserved borrowers. e size and scope of the GSEs are also expected to change. e stewardship of the Bureau of Consumer Financial Protection (BCFP) is another area that is likely to be impacted by the election results. "Who replaces Director Mick Mulvaney—and whether that new director will continue to take the bureau in the same direction—will depend to a certain extent on which party controls the House and Senate. A more stridently conservative director, for example, is unlikely to be approved by a Democratic House," Rick Sharga, EVP, Carrington Mortgage Holdings, recently told DS News. One likely source of friction will be Rep. Maxine Waters (D-California), a vocal critic of President Trump now expected to become the Head of the House Financial Services Committee, which oversees the United States banking system. Waters released a statement after the election indicating that she will make it a key priority to ensure "that [the BCFP] can be allowed to resume its essential role of protecting consumers from harmful practices without interference from the Trump administration." is could put her on a course to butt heads with BCFP Acting Director Mick Mulvaney, or his appointed successor, Trump nominee Kathy Kraninger, assuming she is confirmed (which is likely with a Republican- controlled Senate). Waters also said that the House Financial Services Committee would work to protect consumers from fraud and predatory lending. Sharga said that while the BCFP has been working in tandem with the mortgage industry by soliciting input from practitioners and creating an environment where qualified borrowers got a better chance to secure a loan, "a return to more of an 'enforcement' mentality could cause the pendulum to swing back once again and make it more difficult for borrowers to achieve their dreams of homeownership." LEGISLATION AT STAKE With the Democrats in control of the House and Republicans maintaining a majority in the Senate, legislation will demand more partisan cooperation or run the risk of stalling. is new dynamic has the potential to impact numerous pieces of affordable housing legislation, including the Affordable Housing Credit Improvement Act, the New Markets Tax Credit Extension Act, and the Historic Tax Credit Enhancement Act. Furthermore, while Republican control of the Senate and the White House will make it challenging for Democrats to pass any new regulatory legislation, it will be equally difficult for any new deregulatory bills to make it past the House—a definite change from the landscape of the past two years. Tax cuts have long been a primary objective of the Republican Party, leading up to the successful passage of the Tax Cuts and Jobs Act in December 2017. However, even with Democrats in control of the House, the two parties might find common cause in further tax reform, and that would inevitably send further ripples through the housing market. Nine months in, the Tax Cuts and Jobs Act of 2017 appears to have had some impact on home-value growth. Some of the changes brought by the December 2017 act were a $10,000 cap on total state and local tax (SALT) deductions, a lower threshold for full mortgage interest deductions, and higher standard deductions for most filers. According to a report by Zillow, following the introduction of the act, home growth appears to have slowed, particularly in areas with homeowners that historically used the SALT deduction, compared to areas with a lower percentage of homeowners who use the SALT deduction. Speaking to Yahoo Finance, Robert Hockett, Edward Cornell Professor of Law at Cornell Law School, said, "e progressive wing of the [Democratic] party, which has all the momentum, is not as concerned about the deficits. ey would look to keep the corporate tax cuts (instead of repealing them), but also add tax cuts for the middle class and those who need it the most." "I congratulate the voters of Oklahoma for electing Kevin Stitt as their next Governor. They have voted for someone whose strong business acumen helped propel a business he founded in 2000 into a nationwide mortgage company and will also help to strengthen Oklahoma's economy." — Ed Delgado, President and CEO, The Five Star Institute

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