Trump Mortgage Deregulation: Credit Unions Excluded?

By Ray Birch

WASHINGTON— President Donald Trump has signed an executive order directing federal regulators to overhaul a range of mortgage lending rules, with the White House saying the move is intended to reduce compliance costs, revive community bank participation in home lending and make mortgages more accessible for creditworthy borrowers.

The order instructs the Consumer Financial Protection Bureau to tailor mortgage rules for smaller lenders, including modernizing documentation requirements and revising Home Mortgage Disclosure Act reporting to reduce compliance burdens and address borrower-privacy concerns. It also calls on federal banking regulators to shift supervisory expectations toward prudent underwriting rather than what the administration described as overly technical, process-driven reviews.

In response, the Defense Credit Union Council said it welcomes the Administration’s focus on expanding access to homeownership and reducing unnecessary barriers to responsible mortgage lending, but noted concern that the executive order appears to focus regulatory relief primarily on community banks without specifically referencing credit unions, including those serving military communities.

The White House said the order also targets broader structural barriers in mortgage finance, directing regulators to consider changes to capital and liquidity rules, expand access to longer-dated Federal Home Loan Bank advances tied to residential mortgage assets, and create targeted FHLB liquidity programs aimed at entry-level housing, owner-occupied purchase loans and small residential builders. Regulators are also told to modernize appraisal rules, including broader use of alternative valuation models and fewer appraisal requirements for lower-risk transactions.

In addition, the executive order promotes digital mortgage modernization, including wider use of electronic signatures, e-notes and remote online notarization, while also asking regulators to consider supervisory changes that would support portfolio mortgage servicing as a core community-banking function. The Administration said the broader goal is to reverse what it characterized as more than a decade of regulatory burdens that have pushed smaller lenders out of mortgage markets and reduced competition, particularly in rural, low- and moderate-income, and first-time homebuyer segments.

DCUC Shares Concerns

In a letter to Treasury Secretary Scott Bessent, DCUC President and CEO Anthony Hernandez said when regulatory relief is extended to one segment of the financial services sector while another segment serving the same communities is overlooked, the result is not neutrality—it is unequal treatment.

“At first glance, some observers may view the absence of credit unions from the Executive Order as neutral. But in practice, when regulatory relief is extended to one segment of the financial services sector while another segment serving the same communities is overlooked, the result is not neutrality—it is unequal treatment,” wrote Hernandez. “Simply put, the absence of credit unions from this initiative should not be interpreted as a victory for our movement.”

Instead, Hernandez stated, it represents another example of banks receiving preferential treatment in federal regulatory policy.

“Credit unions and community banks operate in many of the same communities and serve many of the same borrowers,” Hernandez said. “Both are local institutions focused on helping families access credit, purchase homes, and build financial stability. Both face rising compliance costs and regulatory complexity that disproportionately impact smaller institutions attempting to serve their communities. Yet credit unions operate under a number of statutory limitations that banks do not face—including caps on member business lending, field-of-membership restrictions, and a cooperative structure that requires credit unions to return earnings to members through lower rates, fewer fees, and improved services.”

Hernandez asked Treasury to clarify why credit unions were not included in this regulatory relief initiative and whether Treasury intends to ensure that credit unions receive comparable consideration as federal agencies move forward with implementing the Executive Order.

“Defense credit unions stand ready to work with Treasury, federal regulators, and the Administration to advance policies that expand responsible mortgage lending while strengthening access to affordable homeownership…We welcome the opportunity to work with the Department of the Treasury to ensure that credit unions are included in efforts to expand mortgage credit and strengthen access to homeownership for all Americans.”

CUToday.info has reached out to the NCUA regarding the apparent omission of credit unions from the executive order.