[caption id="attachment_17269" align="alignright" width="150"] Sam Verma, CEO at Peoples Processing[/caption]

However, long before the elections, as the pandemic battered the economy, the housing agenda of the next presidential administration was largely put in place. The new government’s immediate concern was going to be addressing peoples’ anxieties about paying rents and mortgages.

As Joe Biden takes over as President, the housing challenges predominantly ignored by President Donald Trump are bound to be at the center. The first few issues to focus upon is that there are a lot of people who have lost their jobs, don’t have income, and who are going to have a lot of trouble paying rent and the mortgage. Another is addressing the issue of forbearance and foreclosure proceedings that were put on hold due to the pandemic.

With encouraging developments on the COVID-19 vaccine front, the world is closely monitoring how the world’s largest economy would react. Economists have warned that a vaccine will not result in an “instant stimulus” for the economy, which will need greater fiscal support.

On the employment front, there are still close to 10 million Americans that were working in January that are not working currently. And those that remain unemployed may have to wait longer to get back to full employment. Even when the vaccine is eventually rolled out, no one can be certain about how quickly life will get back to normal. It will depend on a number of factors as experts say, including the vaccine's effectiveness, how many people are willing to take it and how quickly.

Until then, it is yet to be seen when all the jobs lost will return, when people can expect to be gainfully employed and how soon they can start making payments on the mortgages they are behind on.

Interestingly, Joe Biden would be entering the presidency during an exceptional time in the housing market, a time when the industry is experiencing record-low interest rates along with a shortage of home inventory and high home prices. Undoubtedly, this environment has made it tough for middle- and low-income Americans to buy a home, and entry-level housing has become extremely competitive.

The Federal Housing Administration (FHA) is, meanwhile, putting in efforts to address this issue. Recently, it launched a new automated underwriting system through its new FHA Catalyst single-family origination module. The technology aims to provide lenders with immediate and expanded responses with regards to insurance eligibility based on FHA policy. The FHA has been working to update its legacy systems so that it can offer lenders more modernized automation, such as validation services technology.

Experts opine that Biden has an ambitious agenda to try to create opportunities for more low- and middle-income Americans to become homeowners or afford rental housing. Market watchers feel that the Biden administration would focus more housing initiatives on policies that would help those who have struggled to attain homeownership in the past.

During his run for the presidency, Biden’s campaign released a $640 billion housing plan. This included a plan called the First Down Payment Tax Credit, worth up to $15,000 for qualified homebuyers. This plan is aimed at assisting first-time homebuyers by providing them with “a down payment tax credit of up to $15,000.”

Some of the Americans who could become qualified for lower home prices, along with assistance on down payments, are teachers, first responders, and other public and national service workers. This plan could affect U.S. residential real estate in myriad ways. To begin with, it could lead to a spike in starter home demand, which gives real estate developers an opportunity to earn money.

However, there could be some limitations to this assistance. Primarily, it looks like these groups of potential home buyers might only receive this assistance if they are to purchase a home in a low-income neighborhood or a neighborhood that is more expensive and offers little affordable housing opportunities.

Besides helping homeowners, Biden has also expressed his commitment to assist struggling renters. It is possible that under the Biden administration, low-income renters could receive a tax credit which would help them to pay up to 30% of their total income on housing.

The new President has also promised to increase the housing supply by giving out $100 billion towards constructing and upgrading affordable housing. He will leverage tax incentives towards setting up of affordable housing in areas where the supply is short and will also try to limit local and state government restrictions on the amount of new construction.

There’s also news that Joe Biden intends to work with the Congress to establish a new renter’s tax credit, the aim of which will be to reduce rent and utilities to 30% of income for low-earning tenants who make too much to qualify for housing vouchers.

Housing experts are optimistic about these promises because many feel that these developments have been overdue. Most think that it is necessary since we are in the middle of a housing crisis and have affordability issues all over the country.

Another major issue that has been deliberated upon during Joe Biden’s run for the presidency is the issue of racial equity and discrimination. He has expressed his intentions to help bridge the racial housing gap, and homeownership is a key way in which racial and ethnic minorities can help build generational wealth and a brighter future.

All in all, Joe Biden's plans are more like a mixed bag for stakeholders in the real estate and mortgage industry. It is, of course, understood that once Joe Biden is President, he will not operate in isolation. He will need the support of Senate lawmakers to institute tax code changes. So, it maybe some time before his proposals see the light of the day. Besides, the pandemic-related challenges will probably be first on the Biden administration’s to-do list.

For now, it is better for real estate stakeholders to wait and watch, keeping in mind Joe Biden’s proposals, and looking out for announcements.

Sam Verma is the CEO at Peoples Processing and is a mortgage industry veteran having 25+ years of experience. She has spent over two decades originating mortgages and/or managing origination teams and is a go-to consultant that advises mortgage processors and servicers on how to work smarter to drive down costs and close loans faster.