Improving FHA Support for Small-Dollar Mortgages Act of 2021

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.

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.

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.

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.

Madam Speaker, I would inquire through the Chair if my colleague has any remaining speakers.

Madam Speaker, I yield such time as she may consume to the gentlewoman from Michigan (Ms. Tlaib).

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.

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.

Madam Speaker, I do not.

Madam Speaker, I yield back the balance of my time.

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.

Mr. Speaker, I was unable to be present. Had I been present, I would have voted ``nay'' on rollcall No. 120, ``yea'' on rollcall No. 121, ``nay'' on rollcall No. 122, ``nay'' on rollcall No. 123, ``nay'' on rollcall No. 124, ``yea'' on rollcall No. 125, ``yea'' on rollcall No. 126, ``nay'' on rollcall No. 127, ``yea'' on rollcall No. 128, ``nay'' on rollcall No. 129, ``nay'' on rollcall No. 130, ``yea'' on rollcall No. 131, ``nay'' on rollcall No. 132, and ``yea'' on rollcall No. 133.

Madam Speaker, pursuant to section 6 of House Resolution 330, I move to suspend the rules and pass the bills: H.R. 367, H.R. 370, H.R. 396, H.R. 397, H.R. 408, H.R. 490, H.R. 965, H.R. 1251, H.R. 1395, H.R. 1491, H.R. 1528, H.R. 1532, H.R. 1565, H.R. 1602, and H.R. 2523, and agree to H. Res. 124.