The purpose of this executive order is to reduce the compliance costs of mortgage origination and servicing, which has contributed to a significant decline in bank participation in mortgage lending. In particular, this executive order is designed to help community banks (assets less than $30 billion) and smaller banks (assets less than $100 million) participate in mortgage loans. It proposes to amend regulations by exempting small mortgage loans from caps on the total dollar amount of points and fees that may be charged by a creditor for a loan to be a qualified mortgage loan; reducing mortgage closing delays; modernizing the right of rescission for mortgage lending by enabling increased secure electronic and digital forms and processes.  

The executive order also directs the Consumer Financial Protection Bureau (CFPB) to consider modernizing appraisal regulations and guidance to expand the use of alternative evaluation models, desktop and hybrid appraisals, and artificial intelligence evaluation tools, and to simplify appraiser qualification requirements and reducing appraisal requirements for low-risk transactions, including low loan to value refinancing and small balance loans.  It also directs the director of the Federal Reserve, the director of the CFBP, the chairman of the National Credit Union Association (NCUA), the chairman of the board of directors of the FDIC and the Comptroller of Currency to consider revising supervisory guidance both to exclude one to four family development and construction lending from commercial real estate concentration guidance and to ensure supervisory expectations support responsible construction lending by community banks.

Finally, the executive order directs federal financial institution regulators to consider requiring examiners to evaluate mortgage lending based on the effectiveness of the lender’s policies regarding a consumer’s ability to repay and prudent underwriting rather than the existing focus on process and technical compliance.