Bipartisan Housing Reform Advances in the Senate

Last week, the Senate Banking Committee unanimously passed the ROAD to Housing Act of 2025. The legislation, designed to address affordability concerns and supply shortages in the housing market, is the first bipartisan housing bill considered by the Committee in over a decade. It now heads to the Senate floor with the strong bipartisan support of all 24 senators on the Banking Committee.

This comprehensive legislation is more than 300 pages long and includes provisions on, among other things: zoning, permitting, and land use; US Department of Housing and Urban Development (HUD) funding; Federal Housing Administration (FHA) lending; private investment in affordable housing; veterans and rural housing; and opportunity zones. We’ve highlighted several of the provisions below.

Zoning, Permitting, and Land Use

In the findings section of the legislation, the bill’s authors lay out state and local regulatory barriers that inhibit housing development. To address these impediments, the legislation directs HUD to devise a best-practice framework for zoning and land-use policies to assist communities in overcoming barriers to development. In addition, the bill directs HUD to establish a task force that includes architects, developers, manufactured housing, community experts and other industry experts to consult in the drafting of guidelines.

The legislation also seeks to streamline the National Environmental Protection Act review process by deeming certain HUD-funded housing projects subject to more pragmatic and tailored environmental reviews. Additionally, the bill seeks to revitalize existing neighborhoods and increase housing density by removing roadblocks that, among other things, inhibit the rehabilitation of existing homes, the conversion of vacant office space to residential housing, and the building of infill housing.

Low- and Moderate-Income Loans and Community Funding

The legislation establishes a five-year pilot program at HUD that will offer grants and forgivable loans to low- and moderate-income homeowners and small landlords to address home repair needs and health hazards.

The legislation also authorizes an Innovation Fund that will create competitive and highly flexible funding for communities to build additional housing supply and improve community infrastructure, including water and sewer facilities.

Manufactured Housing

To help expand the supply of affordable housing, the bill updates the mortgage-lending standards for manufactured housing and it expands access to financing for modular housing. Additionally, the bill requires FHA to assess barriers to FHA-insured lending for modular housing. One impact of the bill is that consumer loans currently considered chattel loans would likely be treated as real estate-secured loans, and thus originated in accordance with federal mortgage loans laws and regulations.

Housing Affordability, Appraisals, and Financing

Among its major provisions, the bill seeks to increase private investment in affordable housing and other community-development projects across the country by increasing a statutory cap limiting banks’ investments in community-development projects. In particular, the bill increases the Public Welfare Investment cap for the Office of Comptroller of the Currency and the Federal Reserve from 15% to 20%. By doing this, the bill’s authors hope to enhance banks’ capacity to invest in affordable housing and unlock billions in capital for affordable housing, small businesses, and other economic development needs in marginalized communities. The legislation also requires FHA to study multifamily loan limits, and grants HUD the authority to adjust those limits to better match cost and affordability realities.

The legislation also seeks to implement a review process for HUD-approved housing counseling agencies. Under current consumer-protection laws, all consumers that apply for a residential real estate-secured loan must be provided with a list of approved housing counseling agencies in their area. In addition, all senior adults that apply for reverse-mortgage loans are required to complete housing counseling through a HUD-approved counseling agency. If enacted, the proposed legislation should create accountability among housing-counseling agencies and help to ensure consumers receive helpful assistance. The legislation also provides for delinquent government-insured/guaranteed borrowers to have access to counseling, with the fees for that counseling paid for out of the Mutual Mortgage Insurance Fund if certain portions of the National Housing Act are satisfied.

The bill would amend the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 to explicitly permit a state-credentialed appraiser trainee or unlicensed trainee to assist a state-certified appraiser in the appraisal review for a federal mortgage transaction, when such reviews are required to be conducted by a certified appraiser. The purpose of this change is to provide more immediate manpower to the appraisal industry as new entrants into the industry learn the craft.

Also related to appraisals, the bill would amend the Truth in Lending Act to give consumers the right to request a reconsideration of value (i.e., obtain a second appraisal). Lenders would be required to establish a process and provide consumers with a disclosure informing them of the process to request a reconsideration of value. Lenders also would be required to order a second appraisal at their own expense if they suspect appraisal-discrimination, report the suspected discrimination to the appropriate authorities (including a copy of the appraisal report), and seek reimbursement for the cost of the second appraisal from the first appraiser upon a final determination of discrimination by the appropriate authority.

Additional changes to the Truth in Lending Act could have significant impacts on loan origination compensation requirements for small-dollar loans. For background, today many loan originators are compensated based on a fixed percentage of the loan amount, regardless of the size of the loan, which means loan originators make more on larger loan amounts. The bill seeks to address this issue by directing the Consumer Financial Protection Bureau (CFPB) to study the various factors related to loan-originator compensation and to promulgate rules that would enhance the loan-originator compensation on small-dollar loans.

Additionally, the bill requires the CFPB and the Federal Housing Finance Administration (FHFA) to evaluate the impact of existing regulations that limit the points and fees that lenders can charge on qualified mortgage loans and make any necessary changes to encourage additional lending for small-dollar mortgages.

Veterans and Rural Housing

The legislation provides a five-year authorization for the Rural Housing Service (RHS) at the US Department of Agriculture (USDA), which in turn authorizes new staff and information technology to support RHS programs. An enhanced RHS program could make RHS loans more attractive to consumers purchasing homes in rural areas. The bill also would allow rental income from accessory dwelling units to be considered in RHS lending guidelines, and supports the assumption of USDA-guaranteed loans.

Related to mortgage financing and veterans, the bill requires the uniform residential-loan application to include specific information regarding the availability of financing for veterans via the Department of Veterans Affairs’ loan program, which appears intended to ensure veterans are aware of—and ultimately take advantage of—this home loan benefit.

Opportunity Zones

The legislation enables HUD to give added weight to competitive HUD grants for applicants that are located in, or primarily service, Opportunity Zones to support housing preservation and construction.