Presidential hopeful Joe Biden has offered insight into what his presidency might mean to housing. Here’s a rundown.
What would a Biden presidency mean for the residential housing industry? While housing issues haven’t received much national press attention in the presidential race, some information can be gleaned from the Obama presidency’s housing record and from Biden’s $640 billion housing plan unveiled by his campaign during the Democratic primaries. Here are some ways that a Biden win could affect homebuyers and homeowners:
Affordable Housing
A First-Time Homebuyer Tax Credit: The Biden housing plan aims to give families buying their first homes a downpayment tax credit of up to $15,000. Homebuyers would receive the tax credit when they make the purchase instead of waiting to receive the assistance when they file taxes the following year.
Housing Benefits for Public School Teachers, First Responders and other Public Service Workers: Under the housing plan, eligible homebuyers would receive downpayment assistance and discounted home prices if they buy and move into homes either in struggling, lower-income neighborhoods or in pricier communities that don’t offer more reasonably-priced housing.
Fannie Mae and Freddie Mac (the GSEs)
An End to Privatization Plans: President Trump’s plan for Fannie Mae and Freddie Mac to rebuild capital, leave government conservatorship and level the playing field between government-sponsored enterprises (GSEs) and the private-label securitization market likely would not survive in a Biden administration. Instead, Fannie and Freddie would remain under government control with an expanded affordable housing mandate.
Fair Lending and Racial Discrimination
A Return to the Disparate Impact Theory: The Trump administration has been rolling back the Obama administration’s extensive use of the disparate impact theory in housing and financial services enforcement, under which a policy or program can be found to be discriminatory if it has a disproportionate
effect
on a protected class even if the defendant did not
intend
to discriminate. The Trump administration’s changes would likely be reversed in a Biden administration.
A New Public Credit Reporting Agency: Biden’s plan would create a new public credit reporting agency within the Consumer Financial Protection Bureau (CFPB) to provide a government credit reporting option that seeks to minimize racial disparities by accepting non-traditional sources of data like rental history and utility bills.
An Expanded Community Reinvestment Act: The plan would expand the Community Reinvestment Act to apply to mortgage and insurance companies and add a requirement for financial services institutions to provide a statement outlining their commitment to the public interest.
A Reinstated Affirmatively Furthering Fair Housing Rule: The Trump administration terminated the Obama administration’s Affirmatively Furthering Fair Housing Rule, which required communities receiving federal funding to create plans to identify and eliminate housing discrimination in their localities and to encourage the building of more affordable single-family housing and apartment buildings. Biden has promised to reinstate the rule if elected.
A National Standard for Housing Appraisers: Biden’s campaign has said that he would create a national standard for housing appraisals, to ensure that appraisers do not hold implicit biases due to a lack of community understanding and to make it harder for financial institutions to pressure appraisers to their benefit. It points to a 2018 Brookings Institution study finding that homes of similar quality and with similar amenities were appraised for 23% less in majority-black neighborhoods than in neighborhoods with few black residents.
State and Local Taxes
Increased or Eliminated Cap on Deductions: House Democrats have sought to either increase or eliminate the $10,000 cap on deductions of state and local taxes imposed in the Tax Cuts and Jobs Act of 2017. In a Democratic-controlled Congress and presidency, one or the other would likely be accomplished.
The Consumer Financial Protection Bureau (CFPB)
A New CFPB Director: In light of the U.S. Supreme Court’s recent ruling in
Seila Law v. CFPB
that the CFPB’s single-director leadership structure is unconstitutional because the president can only remove the director for cause, Biden would be expected to replace current CFPB Director Kathy Kraninger with his own director before her five-year term expires in December 2023.
CFPB Enforcement: Former CFPB Director Richard Cordray, an Obama appointee, was known for capturing headlines with his aggressive enforcement of federal consumer protection statutes. While current Director Kathy Kraninger has not been reluctant to pursue clear-cut violations of the law, legal observers anticipate a return to well-publicized enforcement actions involving large civil money penalties if Biden wins the election.
Summary
Some of Biden’s housing initiatives could be accomplished through executive actions, while others would involve congressional passage and funding—so the fruition of many of his proposals not only depends on the outcome of the presidential election, but on whether the Democrats can gain control over both houses of Congress.
Sue Johnson is the former executive director of RESPRO, the Real Estate Services Providers Council Inc. She retired in 2015 and is now a strategic alliance consultant.
