Senate Unveils Sweeping Housing Package with Significant Implications for Community Banks

06/17/26

The Senate has released the 21st Century ROAD to Housing Act, a sweeping housing package designed to increase housing supply, expand homeownership opportunities, modernize federal housing programs, and address affordability challenges across the country. While much of the attention surrounding the legislation has focused on housing production and zoning reforms, the bill contains several provisions that could have a meaningful impact on community banks, mortgage lenders, and housing finance markets.

For mortgage lenders, the legislation includes a number of proposals intended to increase access to credit and encourage housing development. Among the most notable provisions is a new FHA pilot program for mortgages of $100,000 or less. The program would allow HUD to provide incentives to lenders originating small-dollar mortgages, reduce FHA-related costs, and even provide grants to borrowers for down payments, closing costs, appraisals, and title insurance. The bill also includes reforms aimed at expanding manufactured housing, increasing multifamily loan limits, encouraging adaptive reuse of vacant commercial properties into housing, and providing incentives for local governments to increase housing production. Collectively, these provisions could create new lending opportunities for banks serving rural communities, smaller markets, and first-time homebuyers.

The package also includes a significant amount of pro banking provisions the OBL has been advocating for all year. The legislation would expand the amount of reciprocal deposits that can be treated as non-brokered, create a new exception for certain custodial deposits, raise the asset threshold for certain audit and internal control requirements from $3 billion to $6 billion, and direct regulators to identify ways to reduce barriers to de novo bank formation. The bill would also establish a Treasury mentor-protégé program for smaller financial institutions and require a comprehensive study of challenges facing rural depository institutions.

The OBL has created this resource to help bankers understand the impact of the legislation. The bipartisan compromise has support from the two chairs of the Banking Committees and Leadership in the Senate, House, and White House. We expect this legislation to be passed and signed into law later this fall.