Housing Policy In Flux: Federal Cuts Spur State Actions

The Trump administration’s overhaul of federal policy is reshaping compliance operations across the housing sphere.

At HousingWire’s 2026 Housing Economic Summit, industry leaders said federal oversight changes — including personnel cuts at the Consumer Financial Protection Bureau (CFPB) — have not simplified the regulatory landscape.

Instead, it has further emphasized the interplay between federal agencies and state legislatures, with implications for housing affordability, artificial intelligence (AI) oversight and long-term housing finance reform.

Courtenay Dunn, senior director of government affairs at Intercontinental Exchange (ICE), said regulatory shifts must be translated into operational reality long before they take effect.

“At our company, we have a little bit different view on some of the policy issues that others are watching,” Dunn said. “For example, we want to understand how to operationalize any type of regulatory change or policy changes at the federal, state and local level before it happens, so that our customers who either want to or are required to comply with the law can do so on day one.”

That approach has become more critical amid CFPB staffing reductions and policy reversals.

Dunn noted that federal benchmarks often serve as anchors for federal and state statutes, meaning any disruption can cascade outward.

“Some of the things (the CFPB) does, they’re not just examinations,” she said. “They also set benchmarks like the average prime offer rate. APOR is baked into not only Dodd-Frank as a safe harbor against litigation — which many lenders want to comply with and use for their business and pricing and risk — but also there are a litany of 40 other statutes that are tied to APOR as it’s described in Dodd Frank, over 27 states.”

Lenders frequently move ahead of formal rulemaking, Dunn added.

“You don’t have to wait for the regulation to comply either,” she said. “From our perspective, we believe that technology transparency in markets, the ability of folks to hedge their risk and even internally — to do their own (quality control) — based on different benchmarks or tools to have healthy corporate governance inside a company, it can help them discover opportunities that they may not know they have.”

California steps in

As the CFPB pulls back, states like California are asserting themselves more aggressively.

Paul Gigliotti, CEO of the California Mortgage Bankers Association, said that lawmakers in Sacramento are layering additional protections atop existing federal rules.

“What’s happening now in the state of California, because the CFPB is starting to pull back, is it seems kind of odd,” he told attendees. “It’s almost the opposite of what you would imagine to have happened. But you have a lot of legislation, state-level law, that’s coming to the table, and those laws are being put in place to protect the consumer.”

The state, he said, already operates under a strong regulatory framework, bolstered by Senate Bill 825, which broadens powers belonging to the California Department of Financial Protection and Innovation (DFPI).

“What that bill does is it gives the authority to the DFPI, our regulator, where any organization that provides financial services or products, the DFPI has authority over them,” Gigliotti said. (S.B. 825) has been rolling since the beginning of January, but you saw legislators coming in and trying to not necessarily change what the DFPI has the ability to have authority over, but overlay it.”

The result, he said, has been occasional confusion for lenders in navigating federal rules, state statutes and new legislative proposals.

Affordability and bipartisan reform

Beyond compliance, housing leaders are watching bipartisan congressional efforts such as the ROAD to Housing Act and the Housing for the 21st Century Act — both of which aim to address supply and affordability constraints.

Dunn said the bipartisan momentum is notable in an otherwise compressed election-year calendar.

“(It’s) really exciting to see such bipartisan interest in getting this done, from all corners of this government administration, and that’ll take a lot of time,” she said. “It doesn’t leave a whole lot of time for the rest of this year to get some type of bipartisan agreement on something as complex as some of the other issues that other speakers have talked about. Affordability remains central to the debate, of course.”

Gigliotti echoed that sentiment but said a proper balance must be found.

“Affordability is absolutely top of mind,” Gigliotti said. “We have places where we can level up in supporting first-time homebuyers. But then we also have to make absolutely sure that the consumer is protected.”

Could state AI regulations be blocked?

AI has emerged as another battleground between federal and state policymakers.

Gigliotti pointed to a California proposal aimed at oversight of “automated decision underwriting.”

“What it’s trying to do is ensure that the algorithm is written without bias,” he said. “If you have any sense of technology — it doesn’t even have to be a deep sense — you understand that in technology and the algorithms, there’s no bias. They’re not looking at the ethnicity of the borrower. They’re calculating the borrower’s ability to repay this loan under program.

“We supported the author (of the legislation) last year and kind of narrowing the scope down, and we’re going to be added again.”

At the federal level, lawmakers have debated whether to preempt state AI restrictions.

In December, President Donald Trump signed an executive order to create a unified federal regulatory framework for AI that supersedes state authority.

“Companies have to comply with a 50-state patchwork of laws to sort of build things to the Michelin standard,” Dunn said “Then they’re hoping everything sort of falls into lockstep behind it. But that’s not always the case in California. Some people want to do it differently.”

Still, she emphasized that as it stands, states retain wide authority over their AI regulatory framework.

“States have all the control in the world,” Dunn said. “They can really determine what type of environment they want to make for the people who live there and how to attract people accordingly.”

For lenders seeking certainty in a complex market, clarity remains a key component — whether it comes from federal or state officials.