Investor ban rules issued; lenders doubt supply boost
- Expert Quote: “We need real changes that make it easier for people to buy homes, and we need them now.” — Dan Snyder, CEO, Lower
- Supporting Data: 350 homes is the ownership threshold that triggers the proposed federal purchasing restrictions.
- Forward Look: The federal homebuying restrictions are set to take effect on Jan. 7, 2027.
Lenders working the entry-level purchase market may soon face fewer all-cash bids from Wall Street. But they say the Trump administration’s crackdown on large institutional investors is only a first step toward making homeownership affordable.
The U.S. Department of the Treasury on Thursday published a notice of proposed rulemaking in the Federal Register that implements part of the 21st Century
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“When a buyer is financing a home and competing against a large investor paying cash, that buyer is often at a disadvantage,” Christy Bunce, president at New American Funding, told National Mortgage News in an emailed response. “Limiting large institutional purchases of single-family homes should give more families a fair shot, especially in the entry-level segment where competition is tightest.”
The law exempts several kinds of purchases from the ban, including those made for build-to-rent, renovate-to-rent and homeownership programs. The proposed rule sets standards for those programs and clarifies definitions and penalties. It also creates nonexclusive safe harbors for several statutory requirements, including minimum rehabilitation standards for renovate-to-rent programs and minimum financial support for homeownership programs.
“Treasury is working to ensure American families and workers have a fair shot at purchasing homes in their communities by increasing housing supply and limiting large institutional investors’ role in the market, while supporting a strong, stable housing market and avoiding unnecessary disruption,” Treasury Secretary Scott Bessent said in a press release.
Skeptics question the impact
Some lenders doubt the rule will do much to ease the housing shortage.
“Institutional investors are the easy villain here, but I think we’re giving them too much credit for what’s wrong with the housing market,” Lower CEO Dan Snyder said. “They’re responsible for a relatively small share of home purchases nationwide, and these restrictions don’t change anything about the homes they already own. They only address future purchases.”
AnnieMac CEO and President Joe Panebianco said he also doesn’t expect the rule to meaningfully change the nation’s housing stock.
The Mortgage Bankers Association raised a different concern: the proposal limits the build-to-rent exception to properties bought within 18 months of receiving a certificate of occupancy. Build-to-rent units older than that, unless they qualify for another exception, would remain subject to the ban, which the MBA said would restrict owners’ ability to sell multifamily communities.
“Build-to-rent housing is an essential part of the overall housing stock, and limiting future investment in existing properties could diminish the quantity and quality of that stock, driving up housing costs,” said Jamie Woodwell, the MBA’s senior vice president of commercial/multifamily and strategic industry engagement.
“BTR communities are planned, built, financed and operated as rental housing, not as part of the single-family homeownership system the law is intended to address,” he added.
What lenders want next
Panebianco is urging policymakers to go further by:
- increasing the tax deduction for homes owned 10 years or more
- reducing state and local regulatory hurdles
- lowering appraisal and title costs
- cutting loan-level price adjustments that fund nonhousing initiatives
- modernizing home construction
Snyder hopes the notice starts a broader reform effort and wants Federal Housing Finance Agency Director Bill Pulte to move quickly. He suggested starting with a switch from tri-merge to bi-merge credit reporting and lower GSE fees.
“When the GSEs and Treasury are bringing in billions of dollars, I think it’s fair to ask whether some of those costs could be reduced for buyers,” Snyder said. “And we can’t forget about supply. That’s not just a federal problem. Cities need to step up, too, by rethinking zoning restrictions and allowing smaller homes on smaller lots. We need real changes that make it easier for people to buy homes, and we need them now.”
