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119-hr-8318119th CongressWALLET

Original Additional Credit FHA Pilot Program Authorization Act

Sponsored By: Representative Green, Al [D-TX-9]

Introduced

Summary

Additional credit data in FHA underwriting would be tested through a time-limited, opt-in pilot to see if commercial credit scoring models that use extra data can expand access to FHA-insured mortgages. HUD would pick models, require borrower notices, and collect public results.

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Bill Overview

Analyzed Economic Effects

4 provisions identified: 4 benefits, 0 costs, 0 mixed.

HUD must report pilot results

If enacted, HUD would be required to evaluate the pilot and send detailed reports to Congress and post them on HUD's website. Reports would include opt-in counts, approval rates, demographic breakdowns, effects on borrowers with thin or no credit, predictive effectiveness for defaults, mortgagee participation, and impacts on the Mutual Mortgage Insurance Fund and its net worth. The first evaluation would be due 6 months after the end of a two-year data period that begins when HUD starts accepting additional scores. A second report would be due 1 year after the end of the five-year period beginning at enactment. HUD would also post an up-to-date list of participating mortgagees.

HUD notice for FHA applicants

If enacted, HUD would create a standard notice that lenders must give to prospective FHA mortgagors offered the pilot. The notice would explain the ability to opt into the pilot model, how the pilot model differs from FHA's current model and the types of extra data used, and list HUD-approved housing counseling agencies. Participating mortgagees would also have to give information so applicants can compare loan results under the pilot model and the regular model.

Optional FHA credit-data pilot

If enacted, the Secretary of Housing and Urban Development would be required to set up an FHA pilot that tests commercial credit-scoring models using additional credit data. Only mortgagors who elect to join and opt into using additional credit information would be included. HUD must pick one or more models after consulting the Government National Mortgage Association and within one year of enactment. The pilot could be capped by HUD and could not be used for loans whose proceeds prepay or pay off an existing loan on the same property. Opting in would not stop a borrower from getting a separate underwriting decision using other information.

Funding for FHA credit pilot

If enacted, the bill would authorize $3,000,000 for fiscal year 2023 to establish and carry out the pilot, and $1,500,000 for each of fiscal years 2024 through 2027 to carry out the pilot. These are authorizations; Congress would still need to appropriate the funds.

Sponsors & CoSponsors

Sponsor

Green, Al [D-TX-9]

TX • D

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

No roll call votes available for this bill.

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