Th U.S. Senate overwhelmingly approved S.2651, the 21st Century Road to Housing Act on March 12, closely mirroring a version the House previously passed. Although reconciliation is still required, the legislation has broad bipartisan support.

What the Bill Would Do

Section 901 of the bill, titled “Homeownership for Main Street America; Homes Are for People, Not Corporations,” would prohibit large institutional investors from purchasing single-family homes. Under the bill, a large institutional investor is any business entity engaged in investing in single-family homes that owns or controls 350 or more such properties after the act’s effective date. That threshold extends to affiliates and subsidiaries, not just a single entity. A single-family home is defined as a one- to two-unit residential structure.

The Treasury Department is authorized to refine these definitions through regulation, though the statutory thresholds themselves are not subject to change.

Several exceptions would allow large institutional investors to continue acquisitions. Permitted activity includes new construction or substantial renovation, build-to-rent or renovate-to-rent programs subject to minimum renovation standards, rent-to-own programs, and REO acquisitions tied to foreclosure or workout agreements.

In some, though not all, of these scenarios, the investor must divest the property to an individual homeowner within seven years.

What It Means for Private Lenders

Based on current language, AAPL members and their customers are unlikely to be materially affected. The 350 property threshold, combined with the broad exceptions, places most private lenders and their investor-borrowers well outside the scope of the restrictions.

AAPL and its Government Relations Committee have not taken an official position on this legislation given its limited impact on membership. The association remains attentive, however, to the broader implications of federal involvement in residential property ownership. Similar policies could emerge at the state level with significantly lower thresholds, which may warrant future engagement.

AAPL will continue monitoring developments and will update members should further action become necessary. Questions regarding the legislation or the Government Relations Committee may be directed to grc@aaplonline.com.