S 3753: Preserving Homes and Communities Act of 2026

Summary

The Preserving Homes and Communities Act of 2026 would establish new requirements for the bulk sale of non-performing single family mortgage loans insured by the Federal Housing Administration (FHA). The key provisions of the bill include:

Purpose and Intent

• Ensure that sales of non-performing FHA loans are done in a way that preserves affordable housing and promotes neighborhood stabilization.
• Prioritize sales to federal, state, local, or tribal governments and nonprofit organizations that have the capacity to service and resolve these loans.

Key Provisions

• Require loss mitigation options for eligible borrowers that are at least as favorable as FHA guidelines, including affordable loan modifications and partial claim deferral programs.
• Mandate public disclosure of post-sale loss mitigation options and prohibit certain predatory practices like lease-to-own contracts.
• Stipulate that 75% of acquired properties must be:
  • Sold at fair market value to owner-occupants
  • Sold or donated to nonprofits/governments for affordable housing
  • Leased long-term to tenants with incomes ≤100% of area median, with rents ≤30% of income

Affected Parties

• Homeowners with non-performing FHA-insured mortgages
• FHA, as the insurer of these loans
• Nonprofit organizations, local governments, and other entities that may purchase these loan portfolios
• Tenants who may rent properties acquired through these sales

Timeline and Procedure

• The bill would amend the National Housing Act to add these new requirements for the sale of non-performing FHA single family mortgage loans.
• The Secretary of Housing and Urban Development would be responsible for implementing the provisions and overseeing compliance.
• The bill does not specify a timeline for implementation, but the requirements would apply to future FHA loan sales.

Overall, the Preserving Homes and Communities Act is intended to ensure that the disposition of non-performing FHA mortgages prioritizes affordable housing preservation and neighborhood stability over pure financial returns.