Improving FHA Support for Small-Dollar Mortgages Act of 2021

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.

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.