HR 4568
Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act
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Bill overview
The Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act aims to expand access to financing for the construction of accessory dwelling units (ADUs). It directs the Department of Housing and Urban Development (HUD) to establish a program that insures second mortgages secured against properties for ADU construction. The program will consider projected rental income and property value, and establish a maximum loan amount and a premium charge for the insurance. The bill also allows the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to purchase and securitize loans insured under this program, subject to potential restrictions based on market risk.
Key provisions
- Establishes a HUD program to insure second liens for ADU construction.
- Sets a maximum loan amount based on property value and projected rental income.
- Allows for a premium charge of up to 1% of the insured amount annually.
- Defines an ‘accessory dwelling unit’ with specific construction standards.
- Permits the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to purchase and securitize insured loans.
- Establishes a reporting requirement for the Secretary of HUD to Congress.
- Allows the Director of the Federal Housing Finance Agency to prohibit loan securitization if market pressures pose an excessive risk.
- Requires an application process for insurance with specific information requirements.
Who is affected
- Homeowners
- Construction companies
- Financial institutions
- Low-to-moderate income borrowers
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119th CONGRESS — 1st Session
H. R. 4568
IN THE HOUSE OF REPRESENTATIVES
A BILL
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 Act may be cited as the Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act
.
Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the following:
Except as described in paragraph (2), the Secretary may only insure a second lien under this section that has a principal obligation in an amount that is the lesser of—
30 percent of the dollar amount determined under section 203(b)(2)(A) with respect to a one-unit residence; or
when combined with any outstanding amounts owed on any other loans secured by a lien against the same property as the second lien, 100 percent of the projected value of the property after the construction of the accessory dwelling unit, as determined by the Secretary.
The borrower seeking insurance for a second lien under this section shall submit an application for insurance at such time, in such manner, and containing such information as the Secretary may require, including a certification that the borrower is the owner of the property on which an accessory dwelling unit is to be constructed.
Beginning on the date that is 1 year after the date of the enactment of this section, and annually thereafter, the Secretary shall submit to the Congress a report that describes the activities carried out under this section.
In this section, the term accessory dwelling unit
means a dwelling unit which—
is a—
manufactured unit (as such term is defined in section 102 of the Housing and Community Development Act of 1974 (42 U.S.C. 5402)); or
conversion of an existing structure on a property;
includes kitchen, sleeping, and bathroom facilities; and
is added to, created within, or detached from a single-family dwelling on a single property.
Director) shall permit the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation to purchase and securitize loans that are insured under section 259 of the National Housing Act.
if there are market pressures which would pose an excessive and unmitigable risk to the lending market for such loans, as determined by the Director; and
beginning on the date that the Director submits to the Congress a written notice with respect to such prohibition.