I
118THCONGRESS
1
STSESSION 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
JANUARY9, 2023
Mr. G
REENof 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 Na-
tional 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 Representa-1
tives of the United States of America in Congress assembled, 2
SECTION 1. SHORT TITLE. 3
This Act may be cited as the ‘‘Alternative Data for 4
Additional Credit FHA Pilot Program Reauthorization 5
Act’’. 6
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SEC. 2. PILOT PROGRAM FOR BORROWERS WITHOUT SUF-1
FICIENT CREDIT HISTORY. 2
Section 258 of the National Housing Act (12 U.S.C. 3
1715z–24) is amended— 4
(1) in subsection (a)— 5
(A) by striking ‘‘carry out’’ and inserting 6
‘‘establish and carry out’’; 7
(B) by striking ‘‘establish, and’’; 8
(C) by inserting ‘‘who elect to participate 9
in the pilot program’’ before the second comma; 10
(D) by striking ‘‘mortgagors and’’; 11
(E) by inserting after ‘‘their creditworthi-12
ness’’ the following: ‘‘and have opted into the 13
use of additional credit information’’; and 14
(F) by striking ‘‘alternative’’ each place 15
such term appears and inserting ‘‘additional’’; 16
(2) in subsection (b), by adding after the period 17
at the end the following: ‘‘The pilot program may 18
not be carried out with respect to any mortgagor or 19
prospective mortgagor under a mortgage the pro-20
ceeds of which are used to prepay or pay off an ex-21
isting loan secured by the same property.’’; 22
(3) by striking subsection (c); 23
(4) by redesignating subsections (b) (as amend-24
ed by paragraph (2) of this subsection) and (d) as 25
subsections (c) and (k), respectively; 26
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(5) by inserting after subsection (a) the fol-1
lowing new subsection: 2
‘‘(b) G
OAL.—The goal of the pilot program under 3
this section shall be to examine and evaluate the benefits 4
of using such a credit scoring model that uses additional 5
data.’’; 6
(6) by inserting after subsection (c) (as so re-7
designated by paragraph (4) of this subsection) the 8
following: 9
‘‘(d) A
DDITIONALCREDITINFORMATION.—The Sec-10
retary shall, after consultation with the Government Na-11
tional Mortgage Association and not later than one year 12
after the date of the enactment of this subsection, select 13
one or more commercially available credit scoring models 14
that will be available under the pilot and that utilize addi-15
tional data, as the Secretary considers appropriate based 16
on the goals of the pilot program. In selecting the model 17
or models to use, the Secretary shall consider the criteria 18
under part 1254 of the regulations of the Director of the 19
Federal Housing Finance Agency (12 C.F.R. Part 1254) 20
to the extent appropriate. 21
‘‘(e) N
OTIFICATION.— 22
‘‘(1) N
OTICE OF OPTIONS.—The Secretary shall 23
develop a notice for prospective mortgagors, and re-24
quire mortgagees to provide such notice to prospec-25
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tive mortgagors, that informs prospective mortga-1
gors of— 2
‘‘(A) the ability to opt into the use of the 3
credit scoring model selected for use under the 4
pilot program; 5
‘‘(B) information on how the pilot program 6
credit scoring model differs from the FHA’s 7
current credit scoring models, including the 8
types of additional data that are included in the 9
pilot program model; and 10
‘‘(C) housing counseling agencies in the 11
area that are approved by the Department of 12
Housing and Urban Development. 13
‘‘(2) C
OMPARISON OF LENDING OPTIONS .—The 14
Secretary shall require mortgagees participating in 15
the pilot program to provide information to prospec-16
tive mortgagors sufficient to allow comparison of the 17
mortgagor’s lending options using the credit scoring 18
model under the pilot program and using the credit 19
scoring model then in effect for mortgagors not opt-20
ing into the use of the credit scoring model under 21
the pilot program. 22
‘‘(f) U
NDERWRITING OPTIONS.—This section may 23
not be construed to preclude a prospective mortgagor who 24
opts to use an approved credit scoring model under the 25
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pilot program under this subsection in connection with un-1
derwriting for a mortgage insured under this title from 2
thereafter obtaining a determination of creditworthiness 3
involved in underwriting for such mortgage using informa-4
tion other than that provided under such approved credit 5
scoring model. 6
‘‘(g) P
ROTECTION OF PROPRIETARY INFORMA-7
TION.—This section may not be construed to require the 8
disclosure or sharing of any proprietary information. 9
‘‘(h) R
EPORTING.— 10
‘‘(1) I
N GENERAL.—The Secretary shall submit 11
reports to the Congress in accordance with para-12
graph (2) that provide a detailed evaluation of the 13
effectiveness of the pilot, including data that 14
shows— 15
‘‘(A) the number of mortgagors who had 16
the option to opt into using additional credit in-17
formation and the number of mortgagors who 18
opted into using additional credit information; 19
‘‘(B) the total number and percent of 20
mortgagors who opted into the pilot and were 21
subsequently approved for a mortgage; 22
‘‘(C) demographic information about mort-23
gagors who opt into using additional credit in-24
formation, compared to demographic informa-25
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tion about mortgagors generally, which shall in-1
clude race, ethnicity, marital status, sex or gen-2
der, geographic location regarding mortgaged 3
properties, and any other information the Sec-4
retary deems appropriate; 5
‘‘(D) whether or not mortgagors with no or 6
thin credit files benefitted from having this op-7
tion and how; 8
‘‘(E) whether or not other borrowers who 9
did not have thin or no credit files benefitted 10
from this option and how; 11
‘‘(F) the effectiveness of the additional 12
credit information in predicting mortgage loan 13
default; 14
‘‘(G) the rate of participation of mortga-15
gees in the pilot program; 16
‘‘(H) whether or not the pilot program had 17
an impact on the Mutual Mortgage Insurance 18
Fund, in general, and specifically whether it 19
had an impact on the economic net worth ratio 20
of the Fund; 21
‘‘(I) whether or not there was sufficient in-22
come from the pilot program to offset the risk 23
posed to such Fund by the pilot program; 24
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‘‘(J) whether the pilot program had an im-1
pact on the ability of other borrowers not par-2
ticipating in the program to obtain the products 3
and services of the FHA; and 4
‘‘(K) any other information the Secretary 5
determines relevant. 6
‘‘(2) S
UBMISSION.—The Secretary shall submit 7
a report described in paragraph (1)— 8
‘‘(A) not later than 6 months after the 9
conclusion of the 2-year period beginning on the 10
date on which the Secretary begins accepting 11
the additional credit scores through the pilot 12
program established by the Secretary pursuant 13
to this section; and 14
‘‘(B) not later than 1 year after the con-15
clusion of the 5-year period beginning on the 16
date of the enactment of the Alternative Data 17
for Additional Credit FHA Pilot Program Re-18
authorization Act. 19
‘‘(3) R
EPORT ON SELECTION OF ADDITIONAL 20
CREDIT MODEL.—Not later than the conclusion of 21
the 6-month period that begins upon the conclusion 22
of the 1-year period under subsection (d), the Sec-23
retary shall submit to the Congress a report explain-24
ing why the additional credit scoring model or mod-25
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els selected pursuant to subsection (d) were selected 1
in lieu of other commercially available credit scoring 2
models. 3
‘‘(4) P
UBLIC AVAILABILITY OF INFORMATION .— 4
The Secretary shall make publicly available in an 5
easily accessible location on the website of the De-6
partment— 7
‘‘(A) each report submitted to the Con-8
gress pursuant to this subsection; and 9
‘‘(B) information about the pilot program, 10
which shall include an up-to-date listing of 11
mortgagees participating in the pilot program. 12
‘‘(i) A
UTHORITYTOLIMITPARTICIPATION.—The 13
Secretary may establish a limitation to cap participation 14
in the pilot program under this section. 15
‘‘(j) A
UTHORIZATION OF APPROPRIATIONS.—There 16
is authorized to be appropriated— 17
‘‘(1) $3,000,000 for fiscal year 2023 for estab-18
lishing and carrying out the pilot program under 19
this section; and 20
‘‘(2) $1,500,000 for each of fiscal years 2024 21
through 2027 for carrying out the pilot program 22
under this section.’’; and 23
(7) in subsection (k), as so redesignated by 24
paragraph (4), by striking ‘‘5-year period beginning 25
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on the date of the enactment of the Building Amer-1
ican Homeownership Act of 2008’’ and inserting ‘‘5- 2
year period beginning on the date of the enactment 3
of the Alternative Data for Additional Credit FHA 4
Pilot Program Reauthorization Act’’. 5
Æ
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