On June 23, the House approved the 21st Century ROAD to Housing Act 358-32, clearing the bipartisan package for the president. The Senate had passed the bill 85-5 the day prior. The bill contains more than 50 provisions addressing housing supply, regulatory barriers, housing costs, and community banking regulation.

In relevant part, the bill prohibits large institutional investors — defined as entities with investment control of 350 or more single-family homes — from purchasing single-family homes (with some exceptions). The bill provides for civil penalties of up to $1 million per violation or three times the purchase price. This prohibition does not require existing investors to divest homes purchased before enactment.

Separately, the bill also provides: (i) authorization for an FHA pilot program to increase access to small-dollar mortgages with original principal balances of $100,000 or less, (ii) authorization for both the OCC and the Fed to raise the public welfare investment cap from 15 percent to 20 percent of capital and surplus, allowing banks to increase their investments in affordable housing and community development, and (iii) streamlining of environmental reviews for certain residential construction.

The legislation updates mortgage lending standards for FHA-insured manufactured housing and directs the CFPB to study and report on how loan originator compensation practices affect the availability of small-dollar mortgages and to evaluate, jointly with FHFA, the impact of existing regulations that limit points and fees that lenders can charge on qualified mortgage loans. The bill also expands FHA appraisal eligibility to include both licensed and credentialed appraisers and reauthorizes the HOME Investment Partnerships program.

The bill’s community banking title (Title IX) expands deposit access for institutions with less than $10 billion in assets by establishing that custodial deposits are not considered brokered deposits if the total amount of such deposits does not exceed 20 percent of the total liabilities of the institution, and modifying reciprocal deposit thresholds on a graduated scale. It raises the consolidated asset threshold for an 18-month examination cycle from $3 billion to $6 billion. The legislation directs Treasury to establish a mentor-protégé program pairing large financial institutions with smaller depositories and streamlines the de novo bank application process, including a two-year capital phase-in pilot for new institutions. It also requires GAO and federal banking regulators to issue reports when the FDIC invokes the systemic risk exception. The bill also prohibits the Fed from issuing a central bank digital currency through 2030.