Title: Making FHA Work for Borrowers with Student Debt Act of 2021
Policy area: Finance and Financial Sector

Summary:
Making FHA Work for Borrowers with Student Debt Act of 2021
This bill requires the Federal Housing Administration (FHA) to modify its treatment of student loan debt for purposes of determining eligibility for federally insured mortgages for single-family homes. Specifically, the FHA must calculate a borrower's student loan debt obligation as the monthly payment required in connection with the loan or, if no monthly payment is required, 0.5% of the outstanding balance of the loan. Currently, the FHA calculates a borrower's student loan debt obligation as 1% of the outstanding balance of the loan.

[Congressional Bills 117th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3861 Introduced in House (IH)]

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117th CONGRESS
  1st Session
                                H. R. 3861

 To amend the National Housing Act to revise the treatment of student 
  loan debt in the underwriting of FHA loans, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             June 14, 2021

  Mr. Meeks (for himself and Ms. Williams of Georgia) introduced the 
   following bill; which was referred to the Committee on Financial 
                                Services

_______________________________________________________________________

                                 A BILL


 
 To amend the National Housing Act to revise the treatment of student 
  loan debt in the underwriting of FHA loans, 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 ``Making FHA Work for Borrowers with 
Student Debt Act of 2021''.

SEC. 2. TREATMENT OF STUDENT LOAN DEBT BEING REPAID.

    Section 203 of the National Housing Act (12 U.S.C. 1709) is amended 
by inserting after subsection (r) the following new subsection:
    ``(s) Treatment of Student Loan Debt Being Repaid.--
            ``(1) In general.--In determining eligibility of single-
        family mortgages, and mortgagors under such mortgages, for 
        insurance under this title, for purposes of any calculation of 
        the amount of liabilities of a mortgagor, or comparison of the 
        amount of such liabilities to the income of the mortgagor, the 
        Secretary shall consider a covered educational liability to 
        be--
                    ``(A) except as provided in subparagraph (B), in 
                the same monthly amount as the amount that the 
                mortgagor is actually required to pay on a monthly 
                basis in connection with such liability; or
                    ``(B) in the case of a mortgagor whose required 
                monthly payment under such liability is $0, the amount 
                equal to 0.5 percent of the outstanding balance of the 
                loan in connection with such liability.
            ``(2) Covered educational liability.--For purposes of this 
        subsection, the term `covered educational liability' means a 
        liability--
                    ``(A) that is a student loan incurred for 
                educational purposes;
                    ``(B) that is required to be repaid through 
                payments made on a regular basis; and
                    ``(C) for which documentation has been provided 
                that is sufficient, in the determination of the 
                Secretary, to demonstrate that the liability complies 
                with the requirements under subparagraphs (A) and 
                (B).''.
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