Tax code tweak lets nonprofits buy more Fannie Mae and Freddie Mac stock
S. 1603 — Preserving Rural Housing Investments Act · Filed by Jerry Moran (R-KS) · 3 cosponsors · Introduced May 6, 2025 · Referred to committee
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What it does
This bill amends the tax code to clarify that when determining whether a tax-exempt organization controls a government-sponsored enterprise (specifically Fannie Mae and Freddie Mac), the U.S. government and its agencies do not count as 'tax-exempt entities' for purposes of that control test. The practical effect is to narrow the scope of entities whose ownership of Fannie Mae or Freddie Mac stock would trigger tax-exempt entity control rules, potentially allowing tax-exempt organizations to hold larger stakes in these mortgage companies without triggering adverse tax consequences.
Why we flagged it
The bill is a narrow, technical amendment to the Internal Revenue Code's controlled-entity rules. It does not create new policy but clarifies the application of an existing tax rule to two named government-sponsored enterprises. The amendment is straightforward in its mechanism, though its downstream effects on housing finance and tax-exempt investment are material.
What the text implies
- Tax-exempt organizations (nonprofits, foundations, endowments) may now accumulate larger ownership stakes in Fannie Mae and Freddie Mac without triggering the tax-exempt controlled-entity restrictions that would otherwise limit their influence over these systemically important mortgage companies.
- The effective date (July 30, 2008) is retroactive by 16+ years, suggesting the amendment is intended to clarify or validate past transactions or holdings by tax-exempt entities in these GSEs rather than prospectively change behavior.
- By excluding the U.S. government from the 'tax-exempt entity' definition, the bill may affect how Treasury's ownership stake in Fannie Mae and Freddie Mac (held since the 2008 conservatorship) interacts with the control rules, though the practical significance depends on Treasury's current ownership percentage and intent.
Section numbers refer to the bill text the analysis read — linked under Primary records below.
Who it affects
The bill may benefit rural housing finance by allowing tax-exempt entities (nonprofits, foundations, community development organizations) to invest more freely in Fannie Mae and Freddie Mac, potentially supporting mortgage availability in underserved areas. However, the bill also reduces regulatory oversight of tax-exempt entity concentration in these systemically important mortgage companies, creating potential financial-stability and governance risks if tax-exempt entities accumulate large sta
Who stands to gain
- Tax-exempt organizations (nonprofits, foundations, community development entities)
- Fannie Mae and Freddie Mac (reduced regulatory friction on tax-exempt ownership)
Named in the bill
Federal Home Loan Mortgage Corporation (Freddie Mac), Federal National Mortgage Association (Fannie Mae), Internal Revenue Service (IRS), U.S. Department of Treasury, Tax-exempt entities (nonprofits, foundations)
Where it stands
3 cosponsors: 2 Democrats, 1 Republicans.
- May 6, 2025 — Introduced · Congress.gov: “Introduced in Senate”
- May 6, 2025 — Referred to Senate Committee on Finance · Congress.gov: “Read twice and referred to the Committee on Finance”
Dates and quoted wording are Congress.gov's action record; the timeline shows status changes, not every procedural step.
Money around this bill
2 lobbying clients named this bill on 3 disclosure filings across 2 quarters, Dec 2025 to Jun 2026. Those filings disclosed $1,300,000 in lobbying spend. A filing names 4 bills on average, so that figure is what each filing reported, not a share belonging to this bill.
More lobbying clients named this bill than 41% of bills with at least one filing.
Jerry Moran, the sponsor, reported $396,550 in PAC receipts in the 2026 cycle.
- Mortgage Bankers Association — $1,220,000 on 1 filing
- Midwest Housing Equity Group, Inc. — $80,000 on 2 filings
Lobbying Disclosure Act filings through Jul 20, 2026. A filing shows who paid to lobby on a bill it names, not what changed.
How this was measured
Analysis — Quorum's AI read the bill text published by Congress.gov (717 characters) on Jun 3, 2026. Section numbers in the findings refer to that text, linked below; transparency and hidden-provision scores are compared against the median of 16,222 analysed bills.
Status and sponsors — Congress.gov's bill record — actions, committee referrals and cosponsors — loaded nightly. The timeline shows status changes, not every procedural action.
Money — Senate Lobbying Disclosure Act filings whose specific-issue field names this bill for quarters ending Dec 2025 to Jun 2026. A filing's amount is reported whole beside the median number of bills a filing names; it is never divided across them. PAC receipts are FEC-reported contributions to the sponsor's candidate committee in the 2026 cycle.
As of — lobbying records through Jul 20, 2026 · page rendered 2026-10-20.
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