[Congressional Record Volume 167, Number 67 (Monday, April 19, 2021)]
[House]
[Pages H1906-H1908]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
IMPROVING FHA SUPPORT FOR SMALL-DOLLAR MORTGAGES ACT OF 2021
Ms. PRESSLEY. Madam Speaker, I move to suspend the rules and pass the
bill (H.R. 1532) to require a review of the effects of FHA mortgage
insurance policies, practices, and products on small-dollar mortgage
lending, and for other purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
H.R. 1532
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 $70,000;
(2) according to the Urban Institute, small-dollar mortgage
loan applications in 2017 were denied by lenders at double
the rate of denial for 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,
small-dollar mortgage originations 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 FHA's mission is to serve creditworthy borrowers
who are underserved and, according to the Urban Institute,
the FHA serves 24 percent of the overall market, but only 19
percent of the small-dollar mortgage market; 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
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protecting the solvency of the Mutual Mortgage Insurance
Fund.
(b) Review.--The Secretary of Housing and Urban Development
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 $70,000 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, to remove such barriers and impediments to
providing mortgage insurance for such mortgages.
The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from
Massachusetts (Ms. Pressley) and the gentleman from North Carolina (Mr.
McHenry) each will control 20 minutes.
The Chair recognizes the gentlewoman from Massachusetts.
General Leave
Ms. PRESSLEY. Madam Speaker, I ask unanimous consent that all Members
may have five legislative days in which to revise and extend their
remarks on this legislation and to insert extraneous material thereon.
The SPEAKER pro tempore. Is there objection to the request of the
gentlewoman from Massachusetts?
There was no objection.
Ms. PRESSLEY. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, when it comes to promoting access to homeownership,
much of the focus tends to be on how high housing prices are pricing
many borrowers out of homeownership. But the landscape of homeownership
opportunities is varied, and for many communities, the lack of access
to traditional mortgage financing for small-dollar mortgages continues
to be a major barrier.
Specifically, I am talking about mortgage financing for homes that
are priced at $70,000 or less. For many rural communities, and
predominantly communities of color that are struggling to overcome the
impacts of the foreclosure crisis, there are lower-value homes that
would otherwise be ideal homeownership opportunities for first-time
home buyers and working class families, but the lack of traditional
mortgage financing options acts as a barrier to those opportunities.
{time} 1530
Data from the Urban Institute shows that these small-dollar mortgages
are denied by lenders at double the rate compared to larger loans, and
this trend cannot be explained away by differences in the
creditworthiness of applicants.
The bottom line is that lenders don't make as much money originating
these smaller loans, so they are less likely to make loans on
collateral that don't maximize their profit.
The Federal Housing Administration was designed to serve underserved
markets and could be instrumental in promoting more small-dollar
mortgage lending, but the data shows that the FHA is actually
disproportionately failing to serve this market. So this bill would
require the FHA to identify barriers to better serving the small-dollar
mortgage market and to come up with an actionable plan to reduce those
barriers.
This bill is desperately needed at a time when mortgage rates are at
historic lows and home prices continue to rise. We must support
affordable housing options for individual borrowers and their pursuit
of the American Dream of homeownership.
Madam Speaker, I reserve the balance of my time.
Mr. McHENRY. Madam Speaker, I yield myself such time as I may
consume.
Madam Speaker, I rise in support of H.R. 1532.
Some studies suggest that small-dollar mortgages, which are amounts
less than $70,000, may be disproportionately denied compared to loans
of higher amounts, even when credit profiles are similar.
If true, this could be an issue for families in my district and
across the country who are trying to buy their first home, particularly
in rural America.
H.R. 1532 is a bipartisan bill reported last Congress by the House
Financial Services Committee that seeks to understand the challenges
associated with small-dollar lending and why.
This bill asks the fundamental questions: Why not have the FHA review
its own policies? Why shouldn't the FHA look to determine whether there
are borrowers who would otherwise qualify for a mortgage and who are
being left out of the market as an unintended consequence of the FHA's
own regulations?
After all, the FHA's mission is to serve creditworthy borrowers who
are underserved by the private market. This includes serving without
bias as to how small a loan seeking insurance should be or might be.
Moreover, the FHA should understand whether its own regulations are
hurting borrowers' access to credit and remedy the problem without
affecting the health of the Mutual Mortgage Insurance Fund, which is at
issue.
Madam Speaker, I would like to thank my colleagues on the
subcommittee, in particular Mr. Cleaver and Ranking Member Stivers, for
bringing this issue to our attention and for their work on this
important bill.
H.R. 1532 is a positive example of Congress identifying a problem and
working together in a bipartisan way to understand the causes and to
identify a reasonable solution.
Madam Speaker, I urge my colleagues to support this bill, and I
reserve the balance of my time.
Ms. PRESSLEY. Madam Speaker, I would inquire through the Chair if my
colleague has any remaining speakers.
Mr. McHENRY. Madam Speaker, I do not.
Madam Speaker, I yield back the balance of my time.
Ms. PRESSLEY. Madam Speaker, I yield such time as she may consume to
the gentlewoman from Michigan (Ms. Tlaib).
Ms. TLAIB. Madam Speaker, I rise in support of my bill, the Improving
FHA Support for Small-Dollar Mortgages Act.
Housing is one of the most vital ways families have a shot at
financial stability and freedom. However, affordable homeownership
opportunities are being denied to my residents because of the lack of
financing available for home purchases under $70,000.
In fact, small-dollar mortgage loan applications in 2017 were denied
by lenders at double the rate of denial for large mortgage loans. This
is largely because the banks have decided that small-dollar mortgages
are riskier because they rely on bogus credit score thresholds and the
loans don't give them enough profit.
This impacts majority Black and Brown communities, as well as low-
income communities that are unbanked and underbanked.
Madam Speaker, in my district alone, 68,000--or nearly 50 percent--of
our owner-occupied homes are valued under $70,000. Think about that for
a second. Almost half of the homes in my district stand little chance
of getting financing from a bank.
My bill directs the Department of Housing to report on barriers to
making small-dollar mortgage insurance available for mortgages under
$70,000. It also requires HUD to report on policies, practices, and
actions that will be taken to remove such barriers, to making available
mortgage insurance for mortgages of $70,000 or less.
Madam Speaker, I urge my colleagues to please vote in support of my
bill to ensure that every family has access to homeownership.
Ms. PRESSLEY. Madam Speaker, I yield myself the balance of my time.
Madam Speaker, I thank Representative Tlaib for her work on this
important bill, as we work to improve access to affordable
homeownership. This bill is an important step that will help us better
understand and break down the barriers to obtaining traditional
mortgage financing for small-dollar mortgages.
Madam Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentlewoman from Massachusetts (Ms. Pressley) that the House suspend
the rules and pass the bill, H.R. 1532.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds
being in the affirmative, the ayes have it.
Mr. BIGGS. Madam Speaker, on that I demand the yeas and nays.
The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution
8, the yeas and nays are ordered.
[[Page H1908]]
Pursuant to clause 8 of rule XX, further proceedings on this motion
are postponed.
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