- Key insight: The White House issued an executive order directing the Consumer Financial Protection Bureau and bank regulators to tailor mortgage rules for community banks.
- What's at stake: The move is part of a broader Republican strategy to shore up its credibility around housing affordability ahead of the 2026 midterms, and comes as a bipartisan Senate-passed housing bill is facing resistance in the House in part because of the absence of community bank tailoring provisions in the Senate-passed version.
- Forward look: Any regulatory changes stemming from the order will take years to finalize and could be reversed by future administrations.
WASHINGTON — The Trump administration has issued an executive order aimed at increasing small banks' ability to dive back into the mortgage lending space.
The order comes only days after a bipartisan housing bill passed the full Senate by a wide margin. The bill faces a more
The White House has publicly supported the Senate version of the bill after it included a provision favored by President Donald Trump that puts limits on large financial companies' ownership of single family homes. The executive order is another part of a broader Republican effort to shore up its messaging on affordability ahead of the 2026 midterm elections.
Dodd-Frank, the White House said, has "increased the compliance costs of mortgage origination and servicing and distorted the structure of the mortgage market."
"These burdens have contributed to a significant decline in bank participation in mortgage lending," the executive order said. "Community banks, generally institutions with fewer than $30 billion in assets, have been especially affected. The regulatory and rule changes have undermined community banks' businesses, concentrated credit and liquidity risk outside the banking system, and resulted in reduced access to credit for some creditworthy borrowers, including rural households and low- and moderate-income households."
The order largely calls for regulators to tailor rules for community banks — an effort that prudential bank regulators have already been engaged in for months. The order also calls on the Consumer Financial Protection Bureau to make changes to regulations like Regulation Z and the Home Mortgage Disclosure Act that would reduce regulatory requirements for small institutions, and for regulators to expand access to Federal Home Loan bank advances tied to residential mortgage assets.
The executive order also tells bank regulators to "modernize" appraisal regulations by increasing "alternative valuation models, reducing unnecessary appraisal requirements for low-risk transactions, and setting clearer timelines for appraisals."
The order — which can tell agencies to pursue these rulemakings within their existing abilities — doesn't have any immediate effect, and rulemaking processes can often take years. Even then, finalized rules can be reopened by future administrations.
Banking groups immediately applauded the move.
"The proposed regulatory changes would help remove some of the significant obstacles preventing many banks, especially community banks, from being able to fully participate in the mortgage market," the American Bankers Association said in a statement.
Lindsey Johnson, president and CEO of the Consumer Bankers Association, likewise praised the order, saying that "well-intentioned but overly complex regulatory requirements have increased the cost of originating and servicing mortgages, disproportionately affecting community and regional banks and limiting credit availability for many creditworthy borrowers."
