CEO of States Title, the family of companies using technology to make the residential real estate closing experience instant and affordable.
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During 2020, even with all the other crises going on with the pandemic and everything else happening in America this year, the U.S. housing market has been a bright spot in the economy.
President Joe Biden’s administration is facing many challenges, but there are a few clear opportunities for the federal government to help the economy and provide much-needed support to hard-hit American consumers with some key commonsense policies. Below are a few big trends in the mortgage market that I hold out hope the Biden presidency will push in the right direction.
Make Home Mortgage Closings Safer With Digital Signings
One of the top priorities for the Biden administration is to get the pandemic under control, coordinate the efficient distribution of vaccines and support American households through the crisis. One of the simple, immediate changes that I believe the Biden administration could make is to allow the use of fully digital signings for mortgage closings.
At a time when thousands of Americans are dying every day, too many homebuyers and home mortgage refinance customers are still being forced to go to in-person meetings to sign the paperwork on their mortgage closings. This is unnecessary, costly and potentially life-threatening. No one should have to risk their life to sign paperwork for a mortgage.
So far, 29 states have passed remote online notarization laws. The government could continue this momentum at the federal level by supporting the SECURE Notarization Act of 2020, a bipartisan bill that would allow for immediate use of remote and online notarization nationwide. There is still room for debate about the details of remote online notarization to address privacy concerns and respect the states’ rights to create and manage their own state-level laws. But the SECURE Notarization Act would be a good step in a larger evolution toward approving fully digital signings on a federal level, making it possible for the mortgage process to more fully enter the digital age.
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Use Home Mortgage Refinancing As A ‘Shadow Stimulus’
As of this writing, U.S. Congress and the president have still not agreed to a stimulus package that includes extensions of eviction moratoriums and enhanced unemployment benefits. As a result, millions of Americans are at risk of foreclosure or eviction.
What can be done? Even if Congress never passes another stimulus bill, mortgage refinancing can create a significant economic stimulus effect by putting extra cash in people’s pockets and freeing up flexibility in household budgets. The U.S. is seeing record-high demand for mortgage refinancing, and refi origination is likely to stay elevated, even if winter 2020-2021 brings a downturn in home purchases.
I believe the Biden administration and the Fed should continue the fiscal and monetary policies that have helped drive demand for mortgages. The Fed has already signaled that it is likely to keep interest rates near zero through 2023. Newly confirmed Treasury Secretary Janet Yellen is widely respected in the mortgage industry and has already presided at the Fed during the recovery from the 2008 housing crisis; I expect that she will be a strong advocate to keep liquidity flowing into the financial system while we emerge from the coronavirus pandemic.
Millions of Americans need some help right now to adapt to the new realities of Covid-19 and beyond. Even after a successful vaccine is fully distributed, U.S. consumers might still be navigating a yearslong set of repercussions: jobs lost that might never come back, decreased job security, increased child care needs and more. All these factors are helping to drive demand for mortgage refinancing. People should be able to refinance their largest untapped source of household wealth at record-low interest rates.
Fight For Racial Equity In Homeownership
Along with the pandemic, 2020 and early 2021 have shined a spotlight on issues of racial inequality and social injustice. Black and Latinx individuals in America are significantly less likely to own homes. This racial disparity in homeownership also contributes to larger racial wealth gaps.
Biden has proposed a first-time homebuyer tax credit, which would help make homes more affordable to new homeowners. This form of down payment assistance could help people with lower incomes get their foot in the door of the housing market.
The president is also expected to push for stronger regulations and standards to ensure fair lending and fight racial discrimination in the mortgage market. The path to a fairer, more equitable and harmonious country — where everyone has a chance to succeed and live a comfortable life — should include that same spirit of racial justice as it applies to the housing market.
If you look at the last 50 years of U.S. housing policy, too many Americans have been racially discriminated against in trying to buy a home or get approved for a loan. They have often unfairly been shut out of opportunities to own a home, “redlined” out of prosperous neighborhoods or disproportionately assigned to risky or predatory loans. The Biden administration has signaled its intent to pursue a fair housing agenda to help correct these injustices and make homeownership more accessible to all Americans.
Last year was a difficult one of grief, crisis and systemic failures in the U.S. The federal government has the opportunity to move forward with an aggressive agenda to help America recover from the pandemic. With the right support for homeowners and smart policies to support the mortgage market in place, the U.S. housing market can be leveraged as a powerful engine for economic growth and a more inclusive society.
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