H.R. 6774 — FHA Small-Dollar Mortgages Act

This section authorizes the Secretary of Housing and Urban Development, through the Federal Housing Commissioner, to establish not later than one year after enactment a four-year pilot program to increase access to small-dollar mortgages (i.e., those with an original principal balance of $100,000 or less secured by a one- to four-unit owner-occupied property). The pilot may include (1) direct payments to mortgagees to incentivize origination; (2) adjustments to Federal Housing Administration (FHA) terms and costs; (3) direct grants to mortgagors for down payments, closing costs, appraisals, and title insurance; (4) outreach to potential mortgagors; and (5) technical assistance to originating mortgagees. (As background, FHA mortgage insurance facilitates homeownership for lower-income and first-time buyers by protecting lenders against default; small-dollar mortgages are often uneconomical for lenders due to fixed origination costs.) The section further requires annual reports to Congress, beginning one year after establishment and continuing until one year after sunset, evaluating program outcomes and risks to the Mutual Mortgage Insurance Fund (i.e., FHA's primary insurance fund); historical data on small-dollar mortgages over the prior 10 years (including federally insured, guaranteed, and private loans, with principal balances, mortgagor demographics, and lender types); fixed-cost impacts on lender returns; and regional analyses identifying areas of greatest need (e.g., rural regions). Authority to newly establish such pilots expires three years after enactment.