US election: latest results and what they mean for mortgages

by David Kitai04 Nov 2020

After a long night of vote counting and analysis, the US presidential election hangs on a knife’s edge. A few key swing states will decide between President Donald Trump and former Vice President Joe Biden and their starkly different policy platforms.

As of 9am ET/7am MT, the presidential, Senate, and House races stand as follows according to ABC News:

  • Biden currently leads in the electoral college with 225 votes to Trump’s 213. 270 electoral college votes are needed to win and 100 votes are, as yet, uncalled.
  • Democrats have secured 44 senate seats, Republicans have held 47.
  • Democrats are projected to retain control of the house.

Mortgage professionals across the country are watching the election closely. Their personal politics aside, the industry knows that the winner of this election will have far-ranging impacts on the shape of American housing, commercial real estate, and the mortgage business for the next four years.

The current uncertainty around who has won the election has some key short-term impacts. Due to the pandemic and a higher percentage of mail-in votes, analysts have predicted we may not know the final result for days, or even weeks. A number of nonbank lenders have made IPOs in the past few months. If uncertainty around the result persists for many days, we could see those lenders buffeted by resulting volatility on public markets.

Key stimulus hangs in the balance, too, with the CARES act currently waiting to be passed. The longer that stimulus waits, the more likely we are to see a liquidity issue rise among debt payors. If uncertainty around the election result, a contested result, or increased political infighting delays the CARES act further, it could prove problematic for the industry.

“We have no issue bringing capital into the MSR asset, the biggest issue is speed,” said Matt Maurer of SitusAMC at the IMN MSR conference in New York.

A potential Biden win could see a change in construction regulation. The Trump administration has removed a number of barriers to construction nationwide. A Biden administration could see new regulations imposed, including higher wage standards for construction workers as promised in his platform.

If Trump is re-elected, Fannie Mae and Freddie Mac’s conservatorship is likely to end. Trump’s appointed director of the Federal Housing Finance Agency (FHFA) is Mark Calabria, a long-time critic of the FHGA who has stated his “mission” to privatize Fannie Mae and Freddie Mac, according to a report by National Mortgage News.

Biden, on the other hand, has not stated a position on GSE reform, and may very well continue the planned privatization. He has promised, however, to reinstate consumer protections and regulations that had been eliminated by Trump.

One area of the US housing market that looks set to benefit whoever wins is Opportunity Zones (OZs). In an op-ed on GlobeSt.com Reid Thomas, Chief Revenue Officer and Managing Director at NES Financial, a JTC Company, argued that both candidates offer attractive policies for OZs. Trump has signed an executive order directing future federal offices to be built in OZs. Biden has suggested improvements to OZs, including incentivizing community partnerships, ensuring tax incentives provide distinct benefits, and creating a detailed disclosure system for developers. Thomas is convinced that whoever wins the elections, OZs will benefit.

Uncertainty remains the watchword for the industry until more votes are counted and clearer winners are declared. It appears we will have to wait even longer to see exactly how this election will shape the mortgage industry.