What the New Housing Bill Means for Home Buyers, Sellers, and Owners

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Welcome and today's topic

Welcome to Mortgage Mom Radio. I'm Debbie Marcoux, the Mortgage Mom, and today we are streaming on Instagram, TikTok, Facebook, and YouTube. I have actually never streamed to all four at the same time, so bear with me a little as I try to watch the comments in all the different feeds. This is an interactive show — please put your questions into the comments, and I will read them out loud and answer them for you. The best shows are the ones where I'm answering your questions.

Today we are talking about that new housing bill: what exactly is it, what is inside of it, and what does it mean to you? I've been doing this for over 30 years, and my goal is to keep you informed — to be your place to get your information on the Fed, the economy, the real estate world, home prices, and interest rates. I went out of my way to make notes today because I wanted to hit all the pieces that mean something to you, so if it looks like I'm reading a little, bear with me. There was a lot to go through, but I'm going to keep it in simple terms.

The 21st Century Road to Housing Act: where it stands

I'm sure you've all heard about it — it's a big thing. It's called the 21st Century Road to Housing Act: what's in it, and what it means for buyers, sellers, and owners. This is actually driving the majority of people's searches today. The bill has passed both chambers with strong bipartisan margins, and it's currently awaiting signature from the president. He has 10 days from the day it passed, minus Sundays, to get it signed — so we're hoping to see it signed very soon.

What's in it for buyers: unlocking small loans

One of the things I saw that I thought was very important: right now, when you call a lender looking for a loan of around $100,000, it is very difficult for a lender to offer you a mortgage for anything less than that. The reason is APR guidelines. Many closing costs are exactly the same no matter what house you buy or what the sales price is — no matter who you are, your appraisal costs the same, your credit report costs the same, and then there are title costs and escrow costs. On a small loan, those flat fees are a much higher percentage of the loan amount, which pushes the APR too high and puts us outside federal regulation on how much we can charge to do a loan. It virtually makes doing that loan impossible when the loan amount is $100,000 or below — even $150,000 loans can start to get very difficult.

So the bill is trying to unlock that starter-home, low-cost market by making it easier for lenders to offer those lower loan balances. If you're in California you might be thinking, what in the world can I buy for $100,000? But think of it this way — we get this call all the time. Say you're selling your home. You've owned it for years, the kids have gone off to college, you've got a huge amount of equity, and you're ready to downsize and retire. You find that $600,000 property, you've got about $500,000 coming out of your sale to put down, and all you need is a $100,000 loan. This is going to help exactly that situation — and I'll be honest with you, I haven't done a loan under $100,000 in a really long time, because of how difficult the APR rules make it.

What's in it for homeowners: one standard reconsideration of value

Number two is the reconsideration of value. I even had to look it up quickly, because I thought — why is this in the bill? We do reconsiderations of value all the time. So let's talk about what that is, and then what's going to be different once this bill gets signed.

Say you're refinancing or buying. No matter what mortgage you're doing, you need an appraisal — unless you get really lucky with an appraisal waiver, which does not happen very often. The appraisal comes in lower than you expected: lower than the sales price, or lower than the value you feel your house is worth. Now it affects how much loan you can get, because the home is no longer worth what everybody anticipated at the beginning of the transaction. In that situation, you'd come to me and say, “I really think my house is worth more,” and I'd talk with you about what other homes have closed, probably call real estate agents I know who handle your market and ask them to pull listings so we can find comps that might help us argue with the appraiser about getting that value increased. That goes for purchase or refinance — we already do this process right now.

So what's different? Currently there is a different standard and a different process depending on the lender and the loan type — it's different for conventional with Fannie Mae and Freddie Mac, different for FHA, and certainly different for VA. The bill makes it one set process regardless of the type of loan, so it's more straightforward and the borrower knows exactly what's required to request a review of the value and submit the documentation to get that appraisal changed.

For example, on a VA purchase or refinance, if the appraisal is going to come in lower than expected, the appraiser reaches out to us first — it's called Tidewater — and says: I don't think I can bring your value in; do you have some comps you can provide before I finalize it? That VA process is awesome, and we don't get it with other loan products. What's not awesome is that once the VA appraiser has submitted the appraisal, it's very difficult to get the value overturned — you're dealing with the VA directly, and most of the time they're not keen on changing values. With Fannie Mae and Freddie Mac, every single lending company I've ever worked for — and I've worked for banks like Wells Fargo and several mortgage companies, including JMJ Financial, who we're with right now and love — has its own form that has to be completed by the loan officer, then the data goes internally up to the appraiser, who looks at it and responds. Just the fact that the forms and the process are different everywhere creates a different outcome every time. Making it one flat, above-board process where you understand what's required is going to be very helpful — especially for purchases, but also for refinances, where you're often trying to pull cash out and a low appraisal can make it really hard to get the loan done.

The corporate landlord cap

Now this was a big one that a lot of people have talked about, and I think it's a big win — though I wish the number were smaller, and I'll tell you about that. This is the corporate landlord piece. A hot topic for many people is the fact that giant corporate companies own tons and tons of single-family rental homes, and these properties get snatched up very quickly, especially in the lower price ranges where the market is most competitive. Part of this bill tries to stop that so there are more homes available for first-time buyers and for individuals like you and me.

The bill restricts firms from owning more than 350 single-family homes and from acquiring more — they can't hold more than 350 in their entire portfolio. My first question, because I can be a little cynical: what stops these big companies from just diversifying — opening a new LLC and starting a whole new portfolio of another 350 homes? Here's the explanation I found, and I liked it, so I'll read it: to prevent corporations from bypassing the 350-home cap by opening new subsidiaries, the act restricts ownership “alone or in concert with other entities” and relies on strict direct-or-indirect investment control rules. There are equity and control triggers: if an entity holds more than a 25% equity stake or voting interest in another owner — unless it's defined as a passive investor — those properties count toward the controlling entity's limit.

It gets a lot more specific from there, but the general overview: if I own 25% or more of a company, I can't go open another company and put another 350 homes in it. Now, that doesn't necessarily stop a big pool of people each owning 1 or 2% of many, many companies — so I do think this will have to get dialed in further over time. I also read that the cap was originally smaller, and raising it was one of the things negotiated to get the bill passed with bipartisanship. But I'll take the win. They're finally trying to do something to slow these corporations down from buying up all this inventory. How does it help you? More properties on the market, and more opportunity to find a home before it gets snatched up by a huge corporation paying all cash while you had no chance to get your offer accepted because you were getting financing.

The last piece: I think the bipartisanship itself was a really big win. The fact that we could get common sense out of both sides of the Senate and the House to come together on a bill like this shows there's a chance the two parties could start working together for the benefit of Americans. Instead of stopping things from passing, it seemed like everybody was on board with something that was going to help people.

In a nutshell, those were the most important pieces. It's obviously a very big bill and I would be talking forever if I took you through the entire thing, but these are the pieces I thought you should know about and how they benefit you once this gets signed and put into place.

Listener question: condo review changes

I have a question from Amy — I told you at the beginning of the show that Amy is my processor, so if you've worked with me recently on a loan, you've probably worked with her, and she's amazing. She asks: “This may be a whole show topic — what do you think about the upcoming changes for condo reviews?”

That is going to be an entire show topic, and a really great one — I'd be happy to make it next week's show. If you're a borrower who owns a condominium, you should jump on next week's show for sure, because this is going to change how condo lending happens and could make a pretty big impact on the condo market. If you're a real estate agent who sells condos, absolutely jump on as well. There are some big guideline changes coming, and some things that are going to make some complexes non-warrantable, where lending is going to become very difficult to get. Thank you for bringing that up, Amy — that will be next week's show.

The Fed: nine members now project a hike

Let's jump into the Fed, because I have a lot of people who ask me all the time: are interest rates going to come down? I have clients who three or four months ago could have locked in a lower rate than what they have on their loan. They decided not to — got a little greedy, thought rates would keep getting better, wanted to wait a little longer — and they've now missed the boat. And we've got people who have been sitting on the fence for the last three or four years, not buying because they've been waiting for rates to come back down to that sub-4% level. Before I even jump into the details: that sub-4 level is not going to happen in the near future. The rates we have today are here to stay in this range, and there is a very good chance they are going to get worse.

So let me start with a headline, because these are headlines all over the place: the Warsh Fed just flipped the script — nine members now project a rate hike, not a cut. As of last year, and the year before that, we all felt we were going to keep seeing rate cuts come, and we did see some. Nobody believed we'd see hikes. For all of 2026 the expectation was maybe two rate cuts, with more when we got into 2027. Now nine members under the new Fed chair, Kevin Warsh — and it's so hard for me to get used to saying Warsh instead of Powell — are saying they expect a rate hike, not a cut. To give you some context, that's nine of the 18 people who sit on the committee — 50% right now saying we're probably going to see a hike.

On June 17, the Fed had its last meeting. They decided to leave rates steady — watch and see — but they were choosy with their words: if things get worse as we're expecting them to, things could change. Then on June 25, PCE came in at 4.1% year-over-year — the highest inflation reading we have had since 2023. Think about all the work we've all put in — the higher costs on everything because interest rates were higher — trying to get inflation down to that 2% level. We were in the 3s, even the high 2s: literally 3.1, 3.2, 2.9, depending on who you asked. We were getting there. Now all of a sudden we are back at 4.1 as of June 25. Energy prices from the overseas conflict — let's just call it Iran — are the main driver of inflation going from where we were to where we are today. So we've gone from expecting rate cuts to not expecting cuts and possibly expecting a rate hike.

Here's the fuller picture from my notes: the new Fed chair took over and immediately held rates at 3.5–3.75% on a 12–0 vote. The FOMC statement was stripped down to 130 words, all forward guidance removed, and the dot plot revealed nine of 18 members now project a rate hike before year-end — a complete reversal from March's cut projection. Then the June 25 PCE reading hit 4.1% year-over-year, the highest in three years. And Bankrate found 40% of consumers still expect rates to drop this year. They're not. I'm just going to come right out and tell you: in my opinion as the Mortgage Mom — no crystal ball, I cannot predict the future — from what I am seeing and reading, I am not anticipating a big rate drop this year.

What it means for your rate strategy

So what does this mean for you? If you were waiting to buy or refinance hoping for a big rate drop, that is totally out the door. That is not happening.

As of June 25, the average interest rate on a conventional loan — and I'm not going to get into everything that changes your rate; we all know loan-to-value, credit score, property type, investment versus owner-occupied, single-family versus condo all matter, so this is not a rate quote and not the rate you get if you call my office — was about 6.5%. Some websites showed me 6.49%, some 6.54%. Call it six and a half on average. As of today we're still hovering in that range; it hasn't moved a lot since that inflation reading. The government loans — the VAs and FHAs — run a little lower than conventional, maybe 6.25 to 6.5, again depending on your credit score.

So get comfortable, get cozy, get happy with interest rates in the mid-6s. That number is not moving, and if anything, we might get a rate hike before year-end and it could go up. If you have been thinking about buying a home: buy a home. Just make sure you're buying a home you can afford. These are the new average rates — this is our new life, and it's been here for three years. It was actually worse in 2023, when we were in the 8s. A lot of you called then and said, no way am I buying at eight and a quarter. The people who did buy three years ago? They're happy. They've got equity, we've already refinanced them, they're around six and a half now, and they've already saved money on their monthly payment.

The bottom line: these are the new rates. You've got to get comfortable with them, buy within your affordability, and buy what you can handle. Don't buy something assuming rates are going to fall right away and you'll quickly refinance and drop the payment — stretching beyond what you're comfortable with because you think it's a short period before the rate cuts come. Do not expect that. Do not anticipate that. Budget for where rates are today, expect them to stay there, and be pleasantly surprised when they go down.

Q&A: are high condo HOA fees worth it?

Michelle jumps on with a question before we shut down: “I never like the huge condo fees. How can people not afford larger mortgages, yet they are willing to pay such additional high fees monthly but owe nothing more in return?”

That's a great question. In all honesty, the HOA dues are high, but most of the time they're covering water, trash, homeowners insurance, and maintenance — things like roof repairs and balcony repairs. Number one, some people just prefer a condo for the ease of not having to maintain a home and a backyard and be responsible for the many things that go wrong that the complex covers with that HOA fee.

Number two, the HOA fee has to be quite significantly high before it actually translates into much more buying power. I'll give you an example — and don't quote me on this, because I ran this number about a month and a half ago and I'm going off memory. I ran this scenario for a client: he was looking at condominiums around $600,000 with a $500-a-month HOA, and he qualified for $600,000 with that HOA. Then he asked, how much single-family home could I buy without the $500-a-month HOA dues? It only changed the sales price to about $675,000. He was only able to go up $75,000 in price from condo to single-family. Think about that: $500 a month in HOA is about $75,000 in loan amount, and you don't get a whole lot more house for an extra $75,000. It really didn't benefit him to look at single-family homes — the condominiums were in his price range, and buying one got him into a property, made him a homeowner, and got him into the market. There are upsides and downsides to condominiums; it's a fit for some and not for others, depending on your own personal situation.

Wrap-up

Before that, a couple of things. I am working on a revamp of my website — the new site should be fully up and running within the next two to three weeks. When it comes, you'll be able to watch the show live on it, run your calculators — your DTI calculators — sign up for newsletters, and do all kinds of things. The current site at mortgagemomradio.com is there and functioning in the meantime; it's just the same website I've had for the last seven or eight years, and it's time for a revamp.

If you want to jump into that condo show next week — which I think was a great idea from Amy — text the word LIVE to 844-935-3634. That's 844-WE-LEND-4. You'll get a text with the link when I go live and what the show is about, so you can decide whether to jump on, and you'll never miss a show. That's also the number to call if you'd like to speak with me or my team.

Thank you everybody for watching and joining. I'm learning the four-stream setup — I'm so sorry, TikTok, if you jumped on with questions I didn't see; by next week I'll be able to see all the questions from everywhere in one place. If you have friends or family, are a real estate agent, or you've been thinking about buying or selling a condo, next week's show will be a very big one to tune into. I think I've decided 3 p.m. is the good time, so I'll be back again next week at 3 p.m. Pacific. If that changes, I'll let you know in advance. We'll talk to you all real soon. Bye-bye.