October 26th, 2010

How will the mortgage market change post elections?



The latest article from, “4 Factors and 3 C’s: Mortgage Markets Past the Elections,” explores “four areas in various states of flux which need to solidify” before clarity, certainty and confidence can return to the markets. Our hope is that after the Congressional elections on November 2, we’ll get a better sense of how these four areas will change or hopefully improve our overall economic picture. As the elections grow nearer, lawmakers have come to a legislative standstill, not knowing whether their party will be in the majority come November 3.

The elections are coming at a time when our country is mired with a lack of consumer confidence because our leaders haven’t been able to provide us with much clarity about where our economy is headed in the near future.

Dodd-Frank Act and the Speed of Change

For starters, there’s the financial reform bill (the Dodd-Frank Act) which is bound to make significant changes to the mortgage market. The results of the upcoming elections could make a profound impact on the speed at which those changes come about (emphasis added):

The forthcoming Consumer Finance Protection Bureau (CFPB) is in its formative stages, and it appears to have mortgage documentation reform as its initial primary agenda. There was a significant study done on improving mortgage disclosures just a few short years ago, and it is reasonable to think that some form of streamlined documentation process will come in fairly short order. However beneficial they might ultimately be, changing regulations and documentation requirements aren’t without cost or disruption to the mortgage lending process. Pro-consumer regulations don’t necessarily need to be anti-business, but it is a reasonable guesstimation that a Democratic win in November would provide a greater tailwind for faster change. On the other hand, a Republican victory might slow this process somewhat, as business interests might find more ears for their concerns.

Will Fannie or Freddie Change Much?

The Dodd-Frank Act hasn’t addressed Fannie Mae and Freddie Mac’s desperate need for reform. Washington promised some movement on the Fannie/Freddie reform by the turn of the year. We said back in July that six months was far too little time to properly outlay a proposal for the GSEs’ future. “Four factors and three C’s” goes onto discuss what impact the elections will have on the speed of the GSE reform. It’s not that farfetched to believe that the reform could even be kicked past the 2012 presidential election.

Will Mortgage Rates Rise?

For over a year now it seems like we’ve answered that question, “It’s not will mortgage rates rise, it’s when mortgage rates rise.” But rates just keep on falling.

Yet a new and relatively untested policy from the Federal Reserve may cause mortgage rates to rise before to long. However, it’s hard to say that with any real certainty since it all depends on the interest of private (non-government) mortgage investors, who up to this point have shown only marginal interest in getting back into the mortgage game. Also, there’s no saying that this strategy won’t come with its own set of unintended consequences. We’ll have to wait and see.

Click here to continue reading our article “4 Factors and 3 C’s: Mortgage Markets Past the Elections” to find out what other factors stand to change post elections.

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About the HSH Blog's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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