[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

[[Page H1907]]

     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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