House Passes Landmark Tlaib Housing Bill to Improve Support for Small-Dollar Mortgages

WASHINGTON—This week, the U.S. House of Representatives passed Congresswoman Rashida Tlaib’s (MI-13) landmark Improving FHA Support for Small Dollar Mortgages Act of 2021 (H.R. 1532), which directs the Department of Housing and Urban Development (HUD) to report on barriers to making Federal Housing Administration (FHA) single-family mortgage insurance available for mortgages under $70,000. The passage of Tlaib’s bill is a huge step toward expanding homeownership opportunities hindered by the lack of financing available for home purchases under $70,000.

Specifically, the bill requires HUD to report on policies, practices, and products used by the FHA and actions that will be taken to remove such barriers or impediments to supporting, facilitating, and making available mortgage insurance for mortgages having an original principal obligation of $70,000 or less. According to the Urban Institute, small-dollar mortgage loan applications were denied by lenders at double the rate of denial for large mortgage loans in 2017—a difference in denial rates not fully explained by differences in applicants’ credit profiles. And in Congresswoman Tlaib’s congressional district alone, nearly 50% of owner-occupied homes are valued at under 70 thousand dollars. As such, the she sees the passage of this bill as an important step toward bolstering the FHA’s mission “to serve creditworthy borrowers who are underserved,” many of whom she represents.

“Homeownership is connected to access to financing and communities like the 13^th Congressional District have been robbed of access to  opportunities for it by banks who have unfairly and greedily decided that small-dollar mortgages are ‘riskier’,” Congresswoman Tlaib said. “I was proud to address this injustice by introducing this legislation last month. Today, I am even prouder of my colleagues for bringing us one step closer toward making it law and ensuring every family has access to the American Dream that is homeownership.”

Congresswoman Tlaib spoke on the House floor last evening, urging her colleagues to support H.R. 1532.

The full text of the bill, which now heads to the Senate for consideration, can be read here.