Improving FHA Support for Small-Dollar Mortgages Act of 2021
Bill: S.2131 | Sponsor: Sen. Tester, Jon (D-MT)
Policy area: Housing and Community Development

Summary:
Improving FHA Support for Small-Dollar Mortgages Act of 2021
This bill directs the Department of Housing and Urban Development (HUD) to report on barriers to making Federal Housing Administration (FHA) single-family mortgage insurance available for mortgages under $100,000. Specifically, HUD must report on policies, practices, and products used by the FHA and actions that will be taken to remove such barriers.

To require a review of the effects of FHA mortgage insurance policies, 
practices, and products on small-dollar mortgage lending, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Improving FHA Support for Small-
Dollar Mortgages Act of 2021''.

SEC. 2. REVIEW OF FHA SMALL-DOLLAR MORTGAGE PRACTICES.

    (a) Congressional Findings.--The Congress finds that--
            (1) affordable homeownership opportunities are being 
        hindered due to the lack of financing available for home 
        purchases under $100,000;
            (2) according to the Urban Institute, small-dollar mortgage 
        loan applications in 2019 were significantly more likely to be 
        denied by lenders than large mortgage loans, and this 
        difference in denial rates cannot be fully explained by 
        differences in the applicants' credit profiles;
            (3) according to data compiled by Attom Data solutions, 
        mortgage originations for loans of $70,000 or less have 
        decreased 38 percent since 2009, while there has been a 65-
        percent increase in origination of mortgages for more than 
        $150,000;
            (4) the mission of the Federal Housing Administration 
        (referred to in this section as the ``FHA'') is to serve 
        creditworthy borrowers who are underserved and 
        disproportionately serve borrowers with lower incomes, but, 
        according to the Urban Institute, the FHA serves a smaller 
        share of borrowers seeking small-dollar mortgage loans than 
        borrowers seeking larger loans at every income level; and
            (5) the causes behind these variations are not fully 
        understood but merit study that could assist in furthering the 
        Department of Housing and Urban Development's mission, 
        including meeting the housing needs of borrowers the program is 
        designed to serve and reducing barriers to homeownership, while 
        protecting the solvency of the Mutual Mortgage Insurance Fund.
    (b) Review.--The Secretary of Housing and Urban Development 
(referred to in this section as the ``Secretary'') shall conduct a 
review of its FHA single-family mortgage insurance policies, practices, 
and products to identify any barriers or impediments to supporting, 
facilitating, and making available mortgage insurance for mortgages 
having an original principal obligation of $100,000 or less. Not later 
than the expiration of the 12-month period beginning on the date of the 
enactment of this Act, the Secretary shall submit a report to the 
Congress describing the findings of such review and the actions that 
the Secretary will take, without adversely affecting the solvency of 
the Mutual Mortgage Insurance Fund.
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