[Congressional Record Volume 166, Number 41 (Monday, March 2, 2020)]
[House]
[Pages H1426-H1428]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      IMPROVING FHA SUPPORT FOR SMALL DOLLAR MORTGAGES ACT OF 2020

  Mr. SAN NICOLAS. Mr. Speaker, I move to suspend the rules and pass 
the bill (H.R. 5931) to require a review of the effects of FHA mortgage 
insurance policies, practices, and products on small-dollar mortgage 
lending, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 5931

       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 2020''.

     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,

[[Page H1427]]

     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 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 gentleman from 
Guam (Mr. San Nicolas) and the gentleman from Arkansas (Mr. Hill) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Guam.


                             General Leave

  Mr. SAN NICOLAS. Mr. Speaker, I ask unanimous consent that all 
Members may have 5 legislative days within which to revise and extend 
their remarks on this legislation and insert extraneous material 
thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Guam?
  There was no objection.
  Mr. SAN NICOLAS. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, when it comes to promoting access to homeownership, much 
of the focus tends to be on how high housing prices are pricing 
borrowers out of many communities.
  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 challenge. Specifically, I 
am talking about mortgages that are $70,000 or less.
  For many rural communities and communities 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 
available traditional financing acts as a barrier to those 
opportunities.
  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. In actuality, lenders don't make as 
much money originating these smaller mortgage loans, resulting in a 
reluctance to make them.
  The Federal Housing Administration was designed to support 
underserved markets and would be instrumental in supporting more small 
dollar mortgage lending, but the data shows that the FHA is actually 
disproportionately failing to serve this market.
  H.R. 5931 would require the FHA to identify barriers to better 
serving the small dollar mortgage market and to come up with a plan to 
reduce those barriers, a public service long overdue for rural America.
  Mr. Speaker, I reserve the balance of my time.
  Mr. HILL of Arkansas. Mr. Speaker, I yield myself such time as I may 
consume.
  Mr. Speaker, I rise in support of H.R. 5931, the Improving FHA 
Support for Small Dollar Mortgages Act.
  Studies suggest that borrowers of small dollar mortgages, those 
amounts under $70,000, may be disproportionately denied when compared 
to loans of higher amounts, even when the credit profiles of the 
borrowers are similar.
  Specifically, the Urban Institute reports that, in 2015, roughly 25 
percent of homes purchased for $70,000 or less were financed with a 
mortgage compared to 80 percent of houses worth between $70,000 and 
$150,000.
  If there is such a disproportionate amount of denials, this could be 
an issue for families in my district and many others who are trying to 
buy a first home, particularly in our rural communities across our 
country.
  H.R. 5931 is a bipartisan bill sponsored by Representative Clay of 
Missouri and Representative Stivers of Ohio and was reported to the 
House by the House Financial Services Committee last week. This bill 
seeks to better understand what is happening in small dollar mortgage 
lending.
  This bill asks the fundamental question: Are there borrowers who 
otherwise qualify for a mortgage who are being left out of the market 
as an unintended consequence of FHA's own rules and regulations?
  After all, the FHA mission is to serve creditworthy borrowers without 
bias, no matter what the loan size is. If FHA can identify how its own 
regulations are hurting borrowers' access to credit and remedy the 
problem without affecting the health of the Mutual Mortgage Insurance 
Fund, then they should do so.
  Mr. Speaker, I would like to thank my friends, Mr. Clay and Mr. 
Stivers, for bringing this issue to our attention and for their work on 
this bill. I would like to take the opportunity to thank my friend from 
Guam for managing this bill this afternoon.
  H.R. 5931 is a positive example of Congress identifying a problem and 
working together to understand the causes and to identify a reasonable 
solution.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAN NICOLAS. Mr. Speaker, I yield such time as he may consume to 
the gentleman from Missouri (Mr. Clay), the chairman of the Housing, 
Community Development and Insurance Subcommittee and the sponsor of 
this legislation.
  Mr. CLAY. Mr. Speaker, first, let me thank my colleague from Guam for 
yielding.
  Mr. Speaker, I rise in support of H.R. 5931, the Improving FHA 
Support for Small Dollar Mortgages Act of 2020.
  I want to start off by thanking my Financial Services Committee 
colleague, Congressman Stivers from Ohio, for working with my staff and 
me to craft a bill that will ultimately try to help close the 
affordable housing gap, and I look forward to working with him on other 
legislation and policy going forward.
  H.R. 5931, the Clay-Stivers Improving FHA Support for Small Dollar 
Mortgages Act of 2020, would require the FHA to conduct a review of its 
policy to identify any barriers to supporting mortgages under $70,000, 
or small dollar mortgages, and submit a report to Congress within a 
year with a plan for removing such barriers.
  In a recent report, the Urban Institute found that, despite having 
similar performance indicators, credit profiles, loan-to-value ratios, 
and lower debt-to-income ratios, the financing options to purchase, 
renovate, or refinance homes valued at or under $70,000 remain limited 
compared to mortgages between $70,000 and $150,000--and many of those 
homes are in our State of Missouri.
  Mr. Speaker, the Urban Institute report further revealed that FHA is 
disproportionately failing to serve this market, despite its mission to 
serve underserved borrowers. Specifically, the report found that FHA 
serves 24 percent of the overall market but only 19 percent of the 
small dollar mortgage market.

  Again, I urge my colleagues to support this bipartisan study to 
identify any barriers to supporting these small dollar mortgages and 
report to Congress within a year a plan for removing such barriers to 
financing for creditworthy borrowers.
  Mr. HILL of Arkansas. Mr. Speaker, H.R. 5931, as I say, is a good 
example of both sides in this House working together for a worthy 
purpose. I support the bill. I urge all my colleagues to support it, 
and I yield back the balance of my time.
  Mr. SAN NICOLAS. Mr. Speaker, I yield myself the balance of my time.
  Mr. Speaker, I would like to thank my colleagues, Mr. Clay and Mr. 
Stivers, for their partnership on this important bill, and my 
colleague, Mr. Hill, for his work with me today as we seek to improve 
access to affordable homeownership.

[[Page H1428]]

  This bill is an important step to better understand the barriers to 
obtaining traditional mortgage financing for small dollar mortgages and 
begin to reduce those barriers.
  Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Guam (Mr. San Nicolas) that the House suspend the rules 
and pass the bill, H.R. 5931, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

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