H.R. 4479 — To amend the National Housing Act to direct the Secretary of Housing and Urban Development to establish a program to insure certain second liens secured against property for the purpose of financing the construction of an accessory dwelling unit, and for other purposes.

This section establishes a Federal Housing Administration (FHA) insurance program, to be implemented by the Secretary of Housing and Urban Development not later than two years after enactment, to insure certain second liens secured by properties to finance accessory dwelling unit (ADU) construction. The maximum insurable principal amount is the lesser of (1) 30% of the dollar limit under FHA section 203(b)(2)(A) for a one-unit property or (2) 100% of the property's projected value after ADU construction (including any prior liens); this amount may increase based on 50% of projected annual ADU rental income. Insured loans require borrower applications with ownership certification, annual premiums not exceeding 1% of principal, and annual congressional reports beginning one year after enactment. An ADU is defined as a habitable unit (with kitchen, sleeping, and bathroom facilities) that is modular/prefabricated (meeting one of the three most recent state/local consensus building codes), a manufactured home (as defined in 42 U.S.C. 5402), or a converted existing structure, and that is attached to, within, or detached from a single-family dwelling on the same property. (Thus, the program supports ADU development to expand affordable housing supply while limiting FHA risk exposure on subordinate financing.)

This section requires the Director of the Federal Housing Finance Agency to permit the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) to purchase and securitize loans insured under section 259 of the National Housing Act for the construction of accessory dwelling units, except upon a determination of excessive and unmitigable market risks following written notice to Congress. The section further requires the Director to include information on such purchase and securitization activities in the agency's annual report to Congress under section 1319B(a) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.