Preserving Homes and Communities Act of 2026
Sponsored By: Senator Sen. Reed, Jack [D-RI]
Introduced
Summary
Prioritizes keeping homes in communities. This bill would set strict rules for selling distressed single-family mortgages across FHA and the housing enterprises to favor owner-occupants, nonprofits, and government buyers and to protect borrowers and tenants.
Show full summary
- Homeowners and borrowers gain stronger safeguards. Sales are barred while a loan is in forbearance or within 90 days after it ends. Servicers must exhaust loss mitigation before a sale and provide certified written notice.
- Renters face minimum affordability rules for converted properties. Rental outcomes must include at least 10-year leases and rents capped at 30 percent of household income.
- Nonprofits, local governments, and community buyers are prioritized and monitored. Purchasers must meet a 75 percent disposition standard favoring owner-occupants, nonprofits, or local governments, provide quarterly loan-level data for four years, and face penalties for noncompliance.
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Bill Overview
Analyzed Economic Effects
4 provisions identified: 4 benefits, 0 costs, 0 mixed.
Limits on large mortgage bulk sales
If enacted, Fannie Mae and Freddie Mac would be barred from running bulk auctions or group sales of single-family non-performing or re-performing loans unless they meet strict rules. Enterprises would have to exhaust loss mitigation first, not sell loans in forbearance or for 90 days after, give 90 days' written notice, and prioritize governments and approved nonprofits in sales. Purchasers would take loans subject to post-sale obligations like loss-mitigation parity, no-fee deferrals, lien preservation, and limits on contract-for-deed transfers. Enterprises would collect quarterly purchaser loan-level data for four years and report to Congress twice a year. The Enterprise regulator would issue rules to enforce these requirements.
Foreclosed home reuse and rent rules
If enacted, when a purchaser gets a home by foreclosure and home-retention help was not possible, at least 75% of those homes would have to be: sold to owner-occupants at current fair market value; sold or donated to nonprofits or local governments for owner sale or long-term affordable rental; or leased for at least 10 years to tenants who start with incomes at or below 100% of AMI and pay no more than 30% of monthly income in rent. Purchasers would have to accept many lawful income sources, including housing vouchers and Social Security. If a home is uninhabitable, purchasers would demolish it or donate it to a land bank and provide funds for demolition.
Priority buys for owner-occupants and nonprofits
If enacted, HUD would keep an exclusive "first-look" window so eligible buyers can inspect and buy certain post-foreclosure homes at or below fair market value. Owner-occupant buyers would be limited to households with income at or below 120% of AMI. Rental uses would have to start with tenants at or below 100% of AMI, keep rent at no more than 30% of monthly household income, and last at least 10 years. Nonprofit and government buyers would need pre-approval, HUD would allow inspections, and non-owner buyers would report rehab and end-use data annually until the project is complete. HUD would publish the data and issue implementing rules within 18 months.
Stronger HUD sale and borrower protections
If enacted, HUD would only be able to sell FHA-insured single-family non-performing loans after required FHA loss mitigation is exhausted and only when sale is needed to restore the insurance fund. HUD would not be allowed to sell loans while they are in a forbearance plan or for 90 days after a forbearance ends. HUD would require servicers to send at least 90 days' written notice by certified and first-class mail before listing a loan in a sale. Buyers of these loans would have to offer loss mitigation at least as favorable as FHA rules, provide a no-fee deferral like an FHA partial claim, publicly disclose post-sale options, and maintain vacant properties (including paying property taxes). Violations of post-sale rules would be a defense in foreclosure. Purchasers would report quarterly loan-level data for four years and HUD could penalize or retain loans from repeat violators.
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Sponsors & CoSponsors
Sponsor
Sen. Reed, Jack [D-RI]
RI • D
Cosponsors
Sen. Smith, Tina [D-MN]
MN • D
Sponsored 1/30/2026
Sen. Wyden, Ron [D-OR]
OR • D
Sponsored 1/30/2026
Charles Schumer
NY • D
Sponsored 1/30/2026
Sen. Merkley, Jeff [D-OR]
OR • D
Sponsored 1/30/2026
Roll Call Votes
No roll call votes available for this bill.
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