The New Normal: A Government in Motion, a Mortgage Industry in Flux by BeSmartee’s Tim Nguyen
Tim Nguyen is the CEO & Co-Founder at BeSmartee, a fintech powering the digital transformation of mortgage and commercial lenders. As CEO, Tim sets the direction of the company, defines its product vision, defines its culture, leads mergers & acquisition initiatives and stays close to the company’s most strategic clients and partners.
Donald Trump has been in office for just over two weeks and boy have there been lots of changes. From the moment he stepped back into the White House, his administration has hit the ground running, dismantling regulations, shaking up federal agencies, and setting the stage for a different kind of government. Whether you see it as long-overdue reform or reckless chaos, one thing is undeniable: this is the new normal in Washington.
And it’s not just the government – the mortgage and real estate industries are undergoing their own seismic shifts. Just like the political landscape, the housing market is being reshaped by forces that are moving faster and more unpredictably than ever before. Interest rates remain at near multi-decade highs and government-backed institutions like Fannie Mae and Freddie Mac are on the verge of privatization.
For mortgage lenders, real estate professionals, and homebuyers alike, the new normal is one of uncertainty, adaptation, and rapid transformation. The rules of the game have changed, and everyone is just trying to keep up.
The Government’s New Normal: Fast, Aggressive and Market-Driven
Trump’s presidency is proving to be a government in motion. Unlike past administrations that took months to settle in, Trump has wasted no time in making major policy shifts. His approach is clear: cut regulations, shift power away from federal agencies, and let the private sector take the lead.
Here’s how that’s playing out (at least as of February 3, 2025):
The CFPB Has Been Neutralized
The Consumer Financial Protection Bureau (CFPB), once a watchdog for predatory lending and mortgage fraud, is no longer the same force it once was. Trump removed CFPB Director Rohit Chopra and replaced him with acting director Scott Bessent, who immediately froze enforcement actions and regulatory initiatives.
New Normal: Less federal oversight on mortgage lending, but not necessarily a return to the pre-CFPB era. While regulatory enforcement is loosening, many lenders may voluntarily maintain key consumer protections that have become industry standards over the years. Compliance frameworks, responsible lending practices, and borrower transparency have already been integrated into operations, making a complete rollback unlikely. However, with fewer enforcement actions, market-driven practices will shape lending standards more than government mandates.
Fannie Mae and Freddie Mac Are on the Path to Privatization
The Trump administration is reviving efforts to privatize Fannie Mae and Freddie Mac, which currently guarantee a majority of U.S. mortgages. Before being placed under conservatorship in 2008, these entities operated as private companies while ensuring liquidity in the housing finance system.
Their continued government control has been a topic of debate. Some argue that conservatorship has provided long-term stability and prevented excessive risk-taking, while others contend that it has limited their ability to operate as fully independent financial institutions. Privatization would represent a significant shift toward a market-driven model, potentially impacting loan availability, lending costs, and overall market dynamics.
New Normal: A transition to private control would likely bring changes to lending requirements, but the impact is uncertain. While some expect stricter underwriting, privatization could also lead to expanded programs and increased competition, potentially lowering costs for some borrowers.
Tariffs May Drive Up Housing Costs
President Trump’s recent tariffs on imports – particularly on steel, aluminum, and lumber – have the potential to increase home construction costs, exacerbating existing housing affordability issues. However, following negotiations as of this writing, the administration has agreed to pause the implementation of these tariffs on Mexico and Canada for 30 days to allow for further discussions.
New Normal: Higher material costs naturally increase homebuilding expenses, but the long-term impact depends on how the market adjusts. While tariffs could lead to short-term price hikes for builders and developers, the Trump Administration’s broader goal is to balance trade and encourage domestic production. If successful, this could lead to a stronger U.S. manufacturing sector and potentially stabilize supply chains, which might offset some of the initial cost increases over time.
Deregulation and Executive Orders
President Trump has enacted executive orders aimed at reducing regulatory barriers in the housing market to encourage increased home construction. Specifically, the Executive Order on Delivering Emergency Price Relief for American Families and Defeating the Cost-of-Living Crisis (January 20, 2025): This order directs federal agencies to take actions to lower housing costs and expand the housing supply. It emphasizes reducing regulatory requirements that contribute to construction expenses and seeks to dismantle policies that drive up prices.
New Normal: A housing market with fewer federal regulatory barriers, shifting more control to private-sector development. While Trump’s executive orders aim to reduce construction costs and expand housing supply, state and local regulations still play a significant role in zoning, building codes, and consumer protections. The impact will vary across regions – some areas may see faster housing development, while others may maintain stricter oversight, limiting widespread deregulation.
The Mortgage & Real Estate Industry’s New Normal
Just as the government is moving fast, the mortgage and real estate industries are experiencing their own era of transformation. Today’s reality remains uncertain, volatile, and competitive.
Mortgage Rates Are Here to Stay – At Least for Now
The era of sub-3% mortgage rates is over. With inflation still a concern and the Federal Reserve keeping interest rates high, 7%+ mortgage rates remain the new norm. Borrowers are adjusting to higher monthly payments, and many are putting off buying altogether.
New Normal: As affordability tightens, borrowers are shifting toward adjustable-rate mortgages (ARMs), Non-QM loans, and wholesale mortgage options. Mortgage brokers, with lower overhead than retail lenders, can often pass on better pricing to borrowers, making wholesale lending a more attractive alternative in a high-rate environment.
Stricter Lending Standards Are Coming
Privatizing Fannie Mae and Freddie Mac could reshape the mortgage market, shifting them toward a more competitive, market-driven model. While some expect stricter lending criteria without government backing, privatization could also expand loan programs and introduce more flexible underwriting as private investors seek to compete.
New Normal: A shift toward a more market-driven mortgage system, where lending standards may tighten in some areas but expand in others. While some borrowers could face stricter requirements, privatization may also increase competition, leading to new loan products and expanded private lending options that weren’t previously available under government conservatorship.
Affordability Challenges Are Getting Worse
Home prices remain high, and with rising mortgage rates and construction costs, affordability is a growing problem. At the same time, federal housing assistance is shrinking, leaving many first-time homebuyers in limbo.
New Normal: A rental-heavy market continues as high home prices and elevated mortgage rates push more potential buyers into long-term renting. With affordability challenges remaining for now, demand for alternative financing solutions like rent-to-own, NonQM loans, and shared-equity programs is increasing. First-time homebuyers now make up the smallest share of the market in over 40 years, signaling a shift away from traditional homeownership.
How to Adapt to the New Normal
For lenders and real estate professionals, understanding these changes isn’t optional – it’s survival. The mortgage and real estate industries are no longer playing by the old rules, and those who fail to adapt will be left behind. Success now demands agility, market awareness, and bold decision-making.
This is the new normal. You can fight it. You can fear it. Or you can own it. The choice is yours.
Welcome to the new normal, subject to change as the Trump Administration continues to move.
(Views expressed in this article do not necessarily reflect policies of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Editor Michael Tucker or Editorial Manager Anneliese Mahoney.)
