Improving FHA Support for Small-Dollar Mortgages Act of 2021

II 117TH CONGRESS 1ST SESSION S. 2131 To require a review of the effects of FHA mortgage insurance policies, practices, and products on small-dollar mortgage lending, and for other purposes. IN THE SENATE OF THE UNITED STATES JUNE 17, 2021 Mr. TESTER (for himself and Ms. LUMMIS) introduced the following bill; which was read twice and referred to the Committee on Banking, Hous- ing, and Urban Affairs A BILL To require a review of the effects of FHA mortgage insur- ance policies, practices, and products on small-dollar mortgage lending, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Improving FHA Sup- 4 port for Small-Dollar Mortgages Act of 2021’’. 5 SEC. 2. REVIEW OF FHA SMALL-DOLLAR MORTGAGE PRAC- 6 TICES. 7 (a) CONGRESSIONAL FINDINGS.—The Congress finds 8 that— 9 VerDate Sep 11 2014 06:34 Jul 07, 2021 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 pbinns on DSKJLVW7X2PROD with BILLS 2 •S 2131 IS (1) affordable homeownership opportunities are 1 being hindered due to the lack of financing available 2 for home purchases under $100,000; 3 (2) according to the Urban Institute, small-dol- 4 lar mortgage loan applications in 2019 were signifi- 5 cantly more likely to be denied by lenders than large 6 mortgage loans, and this difference in denial rates 7 cannot be fully explained by differences in the appli- 8 cants’ credit profiles; 9 (3) according to data compiled by Attom Data 10 solutions, mortgage originations for loans of $70,000 11 or less have decreased 38 percent since 2009, while 12 there has been a 65-percent increase in origination 13 of mortgages for more than $150,000; 14 (4) the mission of the Federal Housing Admin- 15 istration (referred to in this section as the ‘‘FHA’’) 16 is to serve creditworthy borrowers who are under- 17 served and disproportionately serve borrowers with 18 lower incomes, but, according to the Urban Insti- 19 tute, the FHA serves a smaller share of borrowers 20 seeking small-dollar mortgage loans than borrowers 21 seeking larger loans at every income level; and 22 (5) the causes behind these variations are not 23 fully understood but merit study that could assist in 24 furthering the Department of Housing and Urban 25 VerDate Sep 11 2014 06:34 Jul 07, 2021 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2131.IS S2131 pbinns on DSKJLVW7X2PROD with BILLS 3 •S 2131 IS Development’s mission, including meeting the hous- 1 ing needs of borrowers the program is designed to 2 serve and reducing barriers to homeownership, while 3 protecting the solvency of the Mutual Mortgage In- 4 surance Fund. 5 (b) REVIEW.—The Secretary of Housing and Urban 6 Development (referred to in this section as the ‘‘Sec- 7 retary’’) shall conduct a review of its FHA single-family 8 mortgage insurance policies, practices, and products to 9 identify any barriers or impediments to supporting, facili- 10 tating, and making available mortgage insurance for mort- 11 gages having an original principal obligation of $100,000 12 or less. Not later than the expiration of the 12-month pe- 13 riod beginning on the date of the enactment of this Act, 14 the Secretary shall submit a report to the Congress de- 15 scribing the findings of such review and the actions that 16 the Secretary will take, without adversely affecting the sol- 17 vency of the Mutual Mortgage Insurance Fund. 18 Æ VerDate Sep 11 2014 06:34 Jul 07, 2021 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6301 E:\BILLS\S2131.IS S2131 pbinns on DSKJLVW7X2PROD with BILLS