Trump's New Push: 50-Year Mortgages

Over the weekend, President Trump floated a controversial idea to ease the pain of sky-high home prices: Let homebuyers take out a 50-year mortgage. "It's not even a big deal," Trump told Fox News' Laura Ingraham in a Monday night interview, per Mediaite. "All it means is you pay less per month. You pay it over a longer period of time. It's not like a big factor. It might help a little bit." Not everybody is so sure about that, however. Coverage:

• In favor: Trump's federal housing director, Bill Pulte, is behind the idea. He called it "a complete game-changer" in a tweet and confirmed that the administration was working on the proposal.

• Skeptic: Fox Business anchor Charles Payne doesn't like it, reports the Hill. Yes, people would pay less money per month than if they had a standard 30-year mortgage—about $500 less monthly in his example of a typical purchase. "But, by the time you finish paying this bad boy off, the 30-year, you pay $359,000 versus a 50-year, almost $700,000, right? So, it's just a gargantuan difference just to make people feel better," he said. "That's not the way to do this, right?"
• Long haul: Analysts quoted at Politico worry about how long it would take people to build wealth through home equity—because they'd be paying so much in interest for decades. "This is more of a stopgap band-aid to address affordability," says Gennadiy Goldberg of TD Securities. Adds David Reiss of Cornell Law: "We often hear financial advice that you want to try to pay off your mortgage before the time that you retire. So that's a problem."

• On the other hand: One in the industry less skeptical is Phil Crescenzo of Nation One Mortgage Corporation, who tells CNN that it could help people who would otherwise not be able to buy a house become homeowners. And they can always refinance: "It's not like somebody would have to stay in that loan forever," he says. "It's a starting point."
• Logistics: Either way, rules would have to change, notes CNBC. The Dodd-Frank Act does not sanction 50-year mortgages, and it could take up to a year to gain congressional approval. "Fannie and Freddie could establish a secondary market for 50-year mortgages in advance of policy changes," writes Jaret Seiberg of TD Cowen, referring to the Fannie Mae and Freddie Mac programs overseen by Pulte. "They even could buy mortgages for their retained portfolios. Yet this would not alter the legal liability for lenders. It is why we believe lenders will not originate 50-year mortgages absent QM [qualified mortgage] policy changes."