Treasury issues mortgage relief proposals today as 30 year rates hit 7.4 percent

The U.S. Department of the Treasury released new administrative regulatory proposals today aimed at lowering residential homeownership costs and expanding buyer access across tight credit markets. The executive measures direct federal housing agencies to streamline underwriting fees and adjust loan guarantee structures to offset persistent borrowing pressure on primary homebuyers.

The policy intervention coincides with benchmark borrowing costs touching multi-year peaks. U.S. 30-year fixed mortgage rates rose to 7.4% today alongside 15-year rates reaching 6.71%, following data on October 21 showing nationwide pending home sales tumbling 7.3% in September.

Today’s NPRM sets forth Treasury’s proposed framework to:

Establish standards for purchases made pursuant to build-to-rent programs that promote continued investment in new housing;
Provide a safe harbor for purchases made pursuant to renovate-to-rent programs that bring neglected homes back into the housing supply and up to code;
Clarify the requirements for homeownership programs and programs to boost homeownership, including providing safe harbors for large institutional investors that provide meaningful financial support towards their renters’ purchase of a home;
Clarify that an entity is engaged “in the business of” investing in, owning, renting, managing, or holding single-family homes when it does so for the purpose of receiving income or financial gain, and not incidentally to a different business;
Define when an entity may qualify as a passive investor in another entity that owns a home because it does not share directors or officers with the other entity and does not have a property control right over the underlying homes;
Clarify certain purchases involving debts previously contracted, loss mitigation, and transfers between large institutional investors that protect the liquidity of the housing market; and
Clarify the calculation of the maximum civil penalty where a single prohibited purchase involves more than one large institutional investor.