On July 11, 2026, the bipartisan 21st Century ROAD to Housing Act (act) automatically became law after President Donald Trump neither vetoed nor signed the law into effect. While the act is primarily aimed at increasing the nation’s housing supply, thereby making home ownership more affordable, it contains a number of provisions of direct consequence to financial institutions: a prohibition on large institutional investor purchases of single-family homes, brokered deposit reforms and a ban on a Federal Reserve-issued central bank digital currency.
Institutional investor purchase ban
A significant federal restriction on institutional investment in single-family housing, the act forbids any “large institutional investor” from purchasing or contracting to directly or indirectly purchase, any single-family home, unless the purchase falls within a defined statutory exception. The prohibition expressly reaches acquisitions through mergers, acquisitions, bulk purchases and construction (whether or not for cash consideration). The institutional investor provisions take effect beginning January 7, 2027, and sunset 15 years after this date.
“Large institutional investor” is defined broadly to include any for-profit entity engaged in investing in, owning, renting, managing or holding single-family homes that, alone or together with affiliated entities, has direct or indirect investment control over 350 or more single-family homes in the aggregate. Notably, the 350-home threshold excludes homes acquired through excepted purchases made after enactment. “Investment control” extends beyond direct ownership of a single-family home to include general partners, managing members, investment managers (i.e., entities that directly or indirectly control the owning entity) and entities owning more than 25% of any class of equity in the owning entity – unless that entity is a passive investor. Note that the act does not require any large institutional investor to divest homes acquired before the date of enactment, nor does it interfere with bankruptcy proceedings.
The act carves out 11 categories of “excepted purchases,” which include the following:
- Build-to-rent: New construction by a large institutional investor to be managed as a rental property.
- Renovate-to-rent: Substantial rehabilitation of homes that do not meet local building code structural or core system standards, with minimum improvements of at least 15% of the purchase price.
- Homeownership programs: Acquisitions pursuant to a program to boost homeownership that provides for positive credit reporting to consumer reporting agencies for renters (if the renter opts in), a right of first refusal and a 30-day ‘‘first look’’ period, and may entail meaningful financial support from the investor toward the purchase.
- Loss mitigation: Acquisitions by mortgage servicers and lenders solely in connection with foreclosure, deed-in-lieu of foreclosure or enforcement of a security interest – for the purpose of loss mitigation or compliance with servicing or investor obligations, and not as a long-term investment strategy.
- Transition period: Purchases from noncovered investors made within two years of the act’s effective date.
- Investor-to-investor transfers: Purchases from another large institutional investor that either owned the home at enactment or acquired it in compliance with the act.
The act also imposes a notification requirement: No later than 180 days after the date of the enactment of the act and not later than December 31 of each following year , a large institutional investor must notify the secretary of the Department of Housing and Urban Development (HUD) that it remains a large institutional investor, along with the number of and city and state of all single-family homes the large institutional investor has direct or indirect investment in, unless such large institutional investor owns 10 or fewer single-family homes in a particular city.
Violations of the purchase prohibition on large institutional investors carry civil penalties, enforced by the secretary of the Treasury or, at the secretary’s request, by the attorney general, of up to $1 million per violation or three times the purchase price of the property involved, whichever is greater.
Community bank deposit reforms
The act makes two significant changes impacting brokered deposits.
- Reciprocal deposits. The act amends the Federal Deposit Insurance Act to raise the threshold under which reciprocal deposits are treated as core rather than brokered, enabling community banks to accept more reciprocal deposits without triggering brokered deposit classification. Under prior law, reciprocal deposits could be treated as nonbrokered only up to 20% of total liabilities. The act replaces the flat cap on nonbrokered reciprocal deposits with a tiered structure: up to 50% of the first $1 billion in total liabilities; up to 40% of the portion of total liabilities between $1 billion and $10 billion; and up to 30% of the portion between $10 billion and approximately $96.3 billion.
The act also requires the FDIC, in consultation with the Federal Reserve, to carry out a study on reciprocal deposit performance since 2018 – including usage during periods of stress and an analysis of end-user depositors, such as municipalities, businesses and nonprofits – and report its findings to Congress within six months of enactment.
- Custodial deposits. The act creates a limited brokered deposit exception for certain custodial deposits held at banks with less than $10 billion in total assets, that are well-capitalized or hold a brokered deposit waiver and carry a composite CAMELS rating of 1, 2 or 3. Under the safe harbor, such deposits are not treated as brokered deposits, provided they are less than 20% of the institution’s total liabilities.
Central bank digital currency (CBDC) ban
Under an unrelated provision that was negotiated into the act, the Federal Reserve Board and any Federal Reserve bank may not issue or create a central bank digital currency (CBDC), or any digital asset substantially similar to one, directly or indirectly, through a financial institution or other intermediary.
A CBDC is defined as a digital asset that is denominated in US dollars, constitutes US currency, represents a direct liability of the Federal Reserve System and is widely available to the general public. The prohibition cross-references the definition of “digital asset” in the Guiding and Establishing National Innovation for US Stablecoins Act (GENIUS) Act. The provision sunsets on December 31, 2030, and does not foreclose future congressional authorization of a CBDC.
While the Federal Reserve was not actively developing a retail CBDC, the provision codifies existing executive policy. Trump’s January 2025 executive order had already directed his administration not to take steps toward a CBDC, which he described as something that would “threaten the stability of the financial system, individual privacy, and the sovereignty of the United States.”
Looking forward
The 21st Century ROAD to Housing Act presents compliance and strategic planning questions across multiple areas of financial services practice.
Institutional investors in the single-family housing market may consider assessing current portfolios against the 350-home threshold, map existing programs against the statutory exceptions and begin compliance planning ahead of Treasury rulemaking. The regulations must minimize market disruptions upon identifying a risk of material negative impact on the housing market, including an impact on the ability of market participants to dispose of single-family homes in an orderly fashion, and mitigate, to the extent possible, negative impacts on consumers and communities. But note that the act expressly prohibits any regulation from altering the statutory definitions, narrowing the excepted purchase categories, expanding the class of covered large institutional investors or adjusting the 350-home threshold.
Community banks may consider revisiting their deposit strategy in light of the new tiered thresholds. Finally, the CBDC ban, while temporary and largely confirmatory of existing policy, is relevant to any institution engaged in digital payments infrastructure or stablecoin-adjacent activities. The sunset date of December 31, 2030, and the accompanying rule of construction signal that the question of a US CBDC is deferred rather than resolved.