No CRS summary available for this bill.
This section revises the FHA pilot program for credit scoring models under Section 258 of the National Housing Act (12 U.S.C. 1715z–24)—originally designed to test non-traditional data sources for underwriting mortgages insured under the National Housing Act for borrowers lacking sufficient credit history—to instead use additional credit information on an opt-in basis for participating prospective mortgagors. (As background, the program aims to expand FHA mortgage access for thin-file or no-credit-history borrowers by incorporating data such as rental or utility payments into scoring models.) The section (1) establishes the pilot's goal of evaluating benefits of such models; (2) requires the Secretary of Housing and Urban Development, after consulting the Government National Mortgage Association and within one year of enactment, to select one or more commercially available models using additional data, considering Federal Housing Finance Agency criteria; (3) mandates mortgagee-provided notices to prospective mortgagors on opting in, model differences, and approved housing counseling agencies, plus comparisons of lending options under pilot versus standard models; (4) clarifies that opt-in does not preclude other underwriting methods or require proprietary information disclosure; and (5) prohibits pilot use for mortgages prepaying or paying off existing loans on the same property. The section further strikes one subsection, redesignates others, and requires the Secretary to report to Congress on the pilot's effectiveness—including participation rates, demographics, default prediction, Mutual Mortgage Insurance Fund impacts, and other metrics—not later than six months after a two-year pilot operation period and one year after a five-year period from enactment of the original authorizing act.