H.R. 8318 — Original Additional Credit FHA Pilot Program Authorization Act

This section revises the pilot program under section 258 of the National Housing Act for Federal Housing Administration (FHA)-insured single-family mortgages for prospective mortgagors without sufficient credit history by (1) requiring them to elect participation and opt into using additional credit information (replacing prior "alternative" credit references); (2) prohibiting use for mortgages to prepay or pay off existing loans on the same property; (3) establishing the goal of evaluating benefits of credit scoring models using such additional data; (4) directing the Secretary of Housing and Urban Development (HUD), after consulting the Government National Mortgage Association (Ginnie Mae) and within one year of enactment, to select one or more commercially available models using additional data, considering Federal Housing Finance Agency evaluation criteria; (5) requiring mortgagees to provide notices to prospective mortgagors on opt-in options, model differences, housing counseling, and comparisons of lending outcomes under pilot versus standard models; (6) clarifying that pilot use does not preclude other underwriting methods or require proprietary data disclosure; and (7) mandating HUD reports to Congress evaluating pilot effectiveness—including participation rates, demographics, default prediction, impacts on thin-file and other borrowers, mortgagee participation, and Mutual Mortgage Insurance Fund health—submitted six months after a two-year pilot operation period and one year after a five-year period from enactment of the underlying authorization act. (As background, the program aids FHA underwriting for borrowers with thin or no traditional credit files, such as immigrants or unbanked individuals, by incorporating additional data like rent or utility payments.)