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Biden Administration Considers Rolling Back Trump-Era Rule on Housing Investors

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  //house-home.news-articles.net/content/2026/01/0 .. ng-back-trump-era-rule-on-housing-investors.html
  Published in House and Home on Wednesday, January 7th 2026 at 14:27 GMT by CBS News

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Trump-Era Rule Limiting Institutional Investors in Housing Market Faces Rollback – Here's What You Need to Know

A Trump-era rule designed to curb the rise of large institutional investors buying up single-family homes is facing potential rollback under the Biden administration, sparking debate about its impact on affordability and the housing market. The rule, implemented in early 2022 by the Federal Housing Finance Agency (FHFA), restricted Fannie Mae and Freddie Mac – government-sponsored enterprises (GSEs) crucial to the mortgage market – from purchasing mortgages backed by investment properties. Now, the FHFA is proposing to loosen those restrictions, arguing the original rule didn't achieve its intended goals and may have worsened affordability issues. Here's a breakdown of the situation, the original rule, the proposed changes, and the arguments surrounding it.

The Problem: Institutional Investors and the Housing Crunch

Over the past decade, particularly following the 2008 financial crisis and again during the COVID-19 pandemic, institutional investors – including private equity firms, hedge funds, and real estate investment trusts (REITs) – dramatically increased their purchases of single-family homes. These entities often buy homes in bulk, converting them into rentals, and operate on a scale that individual homebuyers simply can’t match.

The surge in institutional buying raised concerns about several things. Firstly, it was seen as contributing to rising home prices, especially in already competitive markets. By increasing demand, these investors drove up costs, pricing out first-time homebuyers and contributing to the housing affordability crisis. Secondly, critics worried about the reduction in homeownership opportunities, shifting more people into the rental market and creating a two-tiered system. Finally, concerns arose about the quality of rental management by these large, often remote, companies and the potential impact on neighborhoods.

Companies like Progress Residential, Invitation Homes, and Tricon Global Homes became major players, acquiring tens of thousands of properties across the country. According to a report cited by CBS News and further detailed by Harvard’s Joint Center for Housing Studies, institutional investors owned roughly 30% of all single-family homes purchased in some metro areas in 2022.

The Trump-Era Rule: FHFA’s Attempt to Slow the Trend

In December 2021, the FHFA, then led by Director Mark Calabria (appointed by Trump), announced a rule limiting Fannie Mae and Freddie Mac’s ability to purchase mortgages backed by investment properties. Specifically, it capped the percentage of mortgages these GSEs could buy that were backed by second-home buyers or investors. The goal was to disincentivize institutional investment by making it harder for them to access the cheap financing that Fannie and Freddie provide, thus reducing their competitive advantage and potentially freeing up more homes for owner-occupants.

The rule essentially defined “investment properties” broadly, including any property not intended as the buyer’s primary residence. This included properties purchased to be rented out, flipped, or used as vacation homes. The thinking was that by restricting GSE purchases of mortgages on these properties, the supply of available homes for individual buyers would increase, and prices would stabilize.

The Proposed Rollback: Why the Change of Heart?

Now, under FHFA Director Sandra Thompson (appointed by Biden), the agency is proposing to significantly loosen those restrictions. In a notice of proposed rulemaking, the FHFA argues that the original rule had unintended consequences. While it did reduce GSE purchases of investment property mortgages, it didn't necessarily translate into increased homeownership for individual buyers.

The agency claims the rule may have actually worsened affordability by reducing overall mortgage availability, particularly for first-time homebuyers and those with lower credit scores. The reduction in GSE activity led to higher interest rates on investment property loans, which ultimately trickled down and affected the broader mortgage market.

The proposed changes would narrow the definition of "investment property" and increase the percentage of mortgages that Fannie and Freddie can purchase backed by these properties. The FHFA believes this will allow more creditworthy borrowers, including individuals buying investment properties as part of a long-term financial strategy, to access affordable financing.

The Debate: Pros and Cons of the Rollback

The proposed rollback has ignited a fierce debate.

Proponents argue that the original rule was a blunt instrument that didn't address the root causes of the housing affordability crisis. They claim a more flexible approach to mortgage financing will benefit a wider range of borrowers and stimulate economic activity. Some also point out that institutional investors play a role in providing rental housing, which is necessary in many markets.

Critics, however, fear that rolling back the restrictions will simply embolden institutional investors, further exacerbating the housing shortage and driving up prices. They argue that these investors are prioritizing profits over people and are turning homeownership into an unattainable dream for many Americans. Housing advocates warn that loosening the rules will reinforce the trend of homes being treated as commodities rather than essential shelter.

The National Association of REALTORS® expressed concern over the proposed change, stating it could “further squeeze already tight housing supplies.” They advocate for policies focused on increasing housing supply overall, rather than restricting demand.

The FHFA is currently accepting public comments on the proposed rule, and a final decision is expected in the coming months. The outcome will undoubtedly have significant implications for the future of the housing market and the availability of affordable homes for years to come.

You can find more details at:

• CBS News: [ https://www.cbsnews.com/news/trump-ban-institutional-investors-single-family-homes/ ]
• FHFA Notice of Proposed Rulemaking: [ https://www.fhfa.gov/Media/News/NewsReleases/Pages/FHFA-Proposes-to-Modify-Eligibility-Requirements-for-Purchase-of-Investment-Property-Mortgages.aspx ]
• Harvard Joint Center for Housing Studies: (referenced within the CBS News article, search their website for "institutional investors" for relevant reports) [ https://www.jchs.harvard.edu/ ]