[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 123 Introduced in House (IH)]
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118th CONGRESS
1st Session
H. R. 123
To authorize a pilot program under section 258 of the National Housing
Act to establish an automated process for providing additional credit
rating information for mortgagors and prospective mortgagors under
certain mortgages.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 9, 2023
Mr. Green of Texas introduced the following bill; which was referred to
the Committee on Financial Services
_______________________________________________________________________
A BILL
To authorize a pilot program under section 258 of the National Housing
Act to establish an automated process for providing additional credit
rating information for mortgagors and prospective mortgagors under
certain mortgages.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Alternative Data for Additional
Credit FHA Pilot Program Reauthorization Act''.
SEC. 2. PILOT PROGRAM FOR BORROWERS WITHOUT SUFFICIENT CREDIT HISTORY.
Section 258 of the National Housing Act (12 U.S.C. 1715z-24) is
amended--
(1) in subsection (a)--
(A) by striking ``carry out'' and inserting
``establish and carry out'';
(B) by striking ``establish, and'';
(C) by inserting ``who elect to participate in the
pilot program'' before the second comma;
(D) by striking ``mortgagors and'';
(E) by inserting after ``their creditworthiness''
the following: ``and have opted into the use of
additional credit information''; and
(F) by striking ``alternative'' each place such
term appears and inserting ``additional'';
(2) in subsection (b), by adding after the period at the
end the following: ``The pilot program may not be carried out
with respect to any mortgagor or prospective mortgagor under a
mortgage the proceeds of which are used to prepay or pay off an
existing loan secured by the same property.'';
(3) by striking subsection (c);
(4) by redesignating subsections (b) (as amended by
paragraph (2) of this subsection) and (d) as subsections (c)
and (k), respectively;
(5) by inserting after subsection (a) the following new
subsection:
``(b) Goal.--The goal of the pilot program under this section shall
be to examine and evaluate the benefits of using such a credit scoring
model that uses additional data.'';
(6) by inserting after subsection (c) (as so redesignated
by paragraph (4) of this subsection) the following:
``(d) Additional Credit Information.--The Secretary shall, after
consultation with the Government National Mortgage Association and not
later than one year after the date of the enactment of this subsection,
select one or more commercially available credit scoring models that
will be available under the pilot and that utilize additional data, as
the Secretary considers appropriate based on the goals of the pilot
program. In selecting the model or models to use, the Secretary shall
consider the criteria under part 1254 of the regulations of the
Director of the Federal Housing Finance Agency (12 C.F.R. Part 1254) to
the extent appropriate.
``(e) Notification.--
``(1) Notice of options.--The Secretary shall develop a
notice for prospective mortgagors, and require mortgagees to
provide such notice to prospective mortgagors, that informs
prospective mortgagors of--
``(A) the ability to opt into the use of the credit
scoring model selected for use under the pilot program;
``(B) information on how the pilot program credit
scoring model differs from the FHA's current credit
scoring models, including the types of additional data
that are included in the pilot program model; and
``(C) housing counseling agencies in the area that
are approved by the Department of Housing and Urban
Development.
``(2) Comparison of lending options.--The Secretary shall
require mortgagees participating in the pilot program to
provide information to prospective mortgagors sufficient to
allow comparison of the mortgagor's lending options using the
credit scoring model under the pilot program and using the
credit scoring model then in effect for mortgagors not opting
into the use of the credit scoring model under the pilot
program.
``(f) Underwriting Options.--This section may not be construed to
preclude a prospective mortgagor who opts to use an approved credit
scoring model under the pilot program under this subsection in
connection with underwriting for a mortgage insured under this title
from thereafter obtaining a determination of creditworthiness involved
in underwriting for such mortgage using information other than that
provided under such approved credit scoring model.
``(g) Protection of Proprietary Information.--This section may not
be construed to require the disclosure or sharing of any proprietary
information.
``(h) Reporting.--
``(1) In general.--The Secretary shall submit reports to
the Congress in accordance with paragraph (2) that provide a
detailed evaluation of the effectiveness of the pilot,
including data that shows--
``(A) the number of mortgagors who had the option
to opt into using additional credit information and the
number of mortgagors who opted into using additional
credit information;
``(B) the total number and percent of mortgagors
who opted into the pilot and were subsequently approved
for a mortgage;
``(C) demographic information about mortgagors who
opt into using additional credit information, compared
to demographic information about mortgagors generally,
which shall include race, ethnicity, marital status,
sex or gender, geographic location regarding mortgaged
properties, and any other information the Secretary
deems appropriate;
``(D) whether or not mortgagors with no or thin
credit files benefitted from having this option and
how;
``(E) whether or not other borrowers who did not
have thin or no credit files benefitted from this
option and how;
``(F) the effectiveness of the additional credit
information in predicting mortgage loan default;
``(G) the rate of participation of mortgagees in
the pilot program;
``(H) whether or not the pilot program had an
impact on the Mutual Mortgage Insurance Fund, in
general, and specifically whether it had an impact on
the economic net worth ratio of the Fund;
``(I) whether or not there was sufficient income
from the pilot program to offset the risk posed to such
Fund by the pilot program;
``(J) whether the pilot program had an impact on
the ability of other borrowers not participating in the
program to obtain the products and services of the FHA;
and
``(K) any other information the Secretary
determines relevant.
``(2) Submission.--The Secretary shall submit a report
described in paragraph (1)--
``(A) not later than 6 months after the conclusion
of the 2-year period beginning on the date on which the
Secretary begins accepting the additional credit scores
through the pilot program established by the Secretary
pursuant to this section; and
``(B) not later than 1 year after the conclusion of
the 5-year period beginning on the date of the
enactment of the Alternative Data for Additional Credit
FHA Pilot Program Reauthorization Act.
``(3) Report on selection of additional credit model.--Not
later than the conclusion of the 6-month period that begins
upon the conclusion of the 1-year period under subsection (d),
the Secretary shall submit to the Congress a report explaining
why the additional credit scoring model or models selected
pursuant to subsection (d) were selected in lieu of other
commercially available credit scoring models.
``(4) Public availability of information.--The Secretary
shall make publicly available in an easily accessible location
on the website of the Department--
``(A) each report submitted to the Congress
pursuant to this subsection; and
``(B) information about the pilot program, which
shall include an up-to-date listing of mortgagees
participating in the pilot program.
``(i) Authority To Limit Participation.--The Secretary may
establish a limitation to cap participation in the pilot program under
this section.
``(j) Authorization of Appropriations.--There is authorized to be
appropriated--
``(1) $3,000,000 for fiscal year 2023 for establishing and
carrying out the pilot program under this section; and
``(2) $1,500,000 for each of fiscal years 2024 through 2027
for carrying out the pilot program under this section.''; and
(7) in subsection (k), as so redesignated by paragraph (4),
by striking ``5-year period beginning on the date of the
enactment of the Building American Homeownership Act of 2008''
and inserting ``5-year period beginning on the date of the
enactment of the Alternative Data for Additional Credit FHA
Pilot Program Reauthorization Act''.
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