U.S. Housing Finance Overhaul Could Affect Millions of Borrowers

Under a cloudless sky, a row of beige stucco homes with “For Sale” signs staked into gravel yards sit on a quiet cul-de-sac outside of Phoenix. Bidding wars were common here a few years ago. These days, conversations are more circumspect and showings are slower. The argument over a housing finance reform in the United States begins to feel less theoretical and more personal in neighborhoods like these, which are neither booming nor collapsing.

The government-sponsored companies that support a large portion of the $12 trillion mortgage market in America, Fannie Mae and Freddie Mac, are at the heart of the debate. They maintain the flow of funds through lenders by purchasing and guaranteeing mortgages under the supervision of the Federal Housing Finance Agency. Reforming them could change borrowing costs for millions of people, whether that means reducing or increasing their footprint.

U.S. Housing Finance Overhaul Could Affect Millions of Borrowers

In Washington, the most recent proposals range from a $200 billion mortgage bond purchase program to lower interest rates to more extensive structural changes that could change who is eligible for loans and how much they cost. Proponents contend that in a market where high rates have frozen affordability, even a brief reduction in mortgage spreads could help. Critics respond that structural supply shortages are rarely resolved by temporary liquidity injections.

When the bond-buying plan was announced earlier this year, mortgage rates briefly fell below 6%. Then they slowly ascended again. Observing that increase, it appears that markets are reacting more to obstinate inflation and Fed policy than to one-time actions. It appears that investors think long-term affordability calls for more than just tactical fixes.

Simultaneously, the manufactured housing market is undergoing another reform. According to research from The Pew Charitable Trusts, manufactured homes are frequently classified as personal property rather than real estate under antiquated state titling laws. On paper, that distinction seems almost bureaucratic, but over the course of a loan, it can cost borrowers tens of thousands of dollars.

You can see the impact when you drive through parts of eastern Texas or rural Georgia. Modern manufactured homes look exactly like site-built homes, complete with flower beds, front porches, and clean siding. However, because their homes are titled like cars rather than houses, many buyers finance them with more expensive “home-only” loans. The subtle injustice in that is difficult to ignore.

Between 2018 and 2024, an estimated 88,000 borrowers may have been eligible for mortgages because they owned the land beneath their homes, but instead they chose more costly financing. For many of these buyers, monthly payments could be reduced by about 10% if titling laws were updated. It’s an administrative adjustment, not a radical reform. However, 10% counts for households juggling rising utility costs, groceries, and childcare.

Everything is complicated by the political layer. From introducing 50-year mortgages to prohibiting institutional investors from purchasing single-family homes, President Donald Trump has put forth a number of proposals. Longer loans appear to have lower monthly payments. They actually extend interest expenses well into retirement.

These suggestions have a tension that is inherent to them. Trump has maintained that while preserving the value of existing properties, lower mortgage rates can make homes more affordable. Policy analysts argue that you can’t maintain high valuations and cut acquisition costs at the same time without something giving. It’s fundamental economics. Prices typically increase when purchasing a home becomes easier.

Nonetheless, it makes sense that homeowners, who make up the majority of voters, would be cautious of measures that might lower the value of their homes. Observing town hall meetings in suburban Ohio or Nevada reveals two distinct concerns: older owners protecting the equity that serves as the foundation for their retirement plans and younger families in dire need of entry points.

History also casts a shadow over the housing finance overhaul debate. What happens when underwriting standards are too relaxed and complex securities outgrow regulation was made clear by the 2008 financial crisis. The more strictly regulated system of today may be safer. However, some contend that it is too centralized and slower.

Economists are not entirely convinced that radical changes are even possible in a congressionally divided body. Legislators’ intentions to deepen or decrease government involvement in mortgage markets in order to stabilize affordability are still unknown. The response has significant ramifications for availability, rates, and credit availability.

After figuring out the lifetime interest cost of their mortgage, a young couple recently backed out of a purchase outside a modest ranch home in suburban Atlanta. They said, “We’ll wait.” Waiting has evolved into a tactic in and of itself. Reforms that significantly reduce rates may cause demand to spike once more, which would raise prices. If they don’t work, stagnation might continue.

The paradox is that.

By lowering interest rates, increasing access to manufactured home loans, or defining investor responsibilities, a housing finance reform could benefit millions of borrowers. Additionally, it might result in unforeseen distortions that favor some areas while squeezing others. Policymakers are perceived as straddling a fine line between stability and stimulus.

With their windows reflecting the desert sun and their lawns mowed, Phoenix’s beige homes are still for sale. Beneath them, the multi-layered, politicized, and changing system that supports those mortgages keeps changing. Millions of borrowers are keeping a close eye on the overhaul, making real-time calculations against their own front doors to see if it streamlines the path to homeownership or just rearranges its obstacles.