This bill directs the Secretary of Housing and Urban Development (HUD) to set up a program to insure certain second liens used to finance the construction of accessory dwelling units (ADUs). The Secretary must establish the program within 2 years. The bill limits insured loan size to the lesser of (A) 30 percent of the dollar amount tied to a one-unit mortgage limit or (B) when combined with other liens, 100 percent of the projected property value after the ADU is built. The Secretary may raise the limit based on 50 percent of projected annual rental income from the ADU. Borrowers must apply and certify they own the property. HUD may charge an insurance premium up to 1 percent of the insured principal each year. HUD must report annually to Congress about the program and may issue rules to implement it. The bill defines ADUs to include modular, manufactured, or converted units with kitchen, sleeping, and bathroom facilities that are added to, built within, or detached from a single-family dwelling. The Federal Housing Finance Agency (FHFA) Director is directed to allow Fannie Mae and Freddie Mac to buy and securitize loans insured under this program, but the Director may prohibit such purchases if market pressures create excessive, unmitigable risk. The Director must include information about these purchases in the agency's annual report.
If you own a single-family property, this bill could make a new type of insured second mortgage available to help pay for building an ADU. The loan amount would be limited by rules in the bill and could be increased if you expect rental income from the ADU. Lenders could face less risk because HUD insurance would back some loans, and Fannie Mae and Freddie Mac could buy or securitize those loans unless FHFA blocks that for market-safety reasons. The ADU must have basic living facilities and can be modular, manufactured, or a conversion of an existing structure.
No publicly available information on projected federal costs, savings, or budgetary effects is included in the bill text or metadata. The bill does state HUD may charge an insurance premium of no more than 1 percent of the insured principal per year, but it does not provide estimates of revenues or program costs.
No publicly available information in the bill text or metadata describes proponents' stated reasons or arguments.
No publicly available information in the bill text or metadata describes opponents' stated reasons or arguments.