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.
Sponsors
Legislative Progress
IntroducedMr. Liccardo (for himself, Mr. Cleaver, Mr. Sherman, Mr. Thompson …
Summary
What This Bill Does
This bill amends the National Housing Act to create a new FHA program that insures second mortgages (second liens) used specifically to finance the construction of accessory dwelling units (ADUs) on existing residential properties. It also directs Fannie Mae and Freddie Mac to purchase and securitize these FHA-insured ADU loans.
Who Benefits and How
- Homeowners: Gain access to federally-insured financing for building ADUs (granny flats, in-law units, garage conversions), which can generate rental income and increase property values
- Mortgage Lenders: New insured loan product reduces lending risk, creating a safer market for ADU financing
- Modular/Prefab Housing Manufacturers: Explicitly recognized as eligible ADU construction methods, expanding their market
- Secondary Mortgage Market: Fannie Mae and Freddie Mac can securitize these loans, increasing capital availability
- Renters: Increased ADU construction adds housing supply in existing neighborhoods
Who Bears the Burden and How
- FHA/HUD: Must establish and administer the new insurance program within 2 years, set premium rates, and submit annual reports to Congress
- Federal Housing Finance Agency (FHFA): Must permit and oversee GSE participation in the ADU loan market, with authority to halt if market risks emerge
- Taxpayers: Bear implicit risk through FHA insurance and GSE involvement, though premiums provide some offset
Key Provisions
- Maximum insured loan: 30% of FHA single-family limit OR 100% of post-ADU property value
- Loan amounts can be increased based on 50% of projected rental income
- Insurance premium capped at 1% annually
- Requires annual Congressional reporting
- ADUs defined to include modular, manufactured, or converted structures with kitchen/bath/sleeping facilities
- FHFA can prohibit GSE purchases if market risks become excessive
Evidence Chain:
This summary is derived from the structured analysis below. See "Detailed Analysis" for per-title beneficiaries/burden bearers with clause-level evidence links.
Primary Purpose
Establishes an FHA insurance program for second liens used to finance accessory dwelling unit (ADU) construction and authorizes Fannie Mae and Freddie Mac to purchase and securitize these insured loans.
Policy Domains
Legislative Strategy
"Reduce barriers to ADU construction by creating a dedicated federal insurance program and ensuring secondary market liquidity through GSE participation"
Bill Structure & Actor Mappings
Who is "The Secretary" in each section?
- "borrower"
- → Homeowner seeking ADU financing
- "The Secretary"
- → Secretary of Housing and Urban Development
- "Director"
- → Director of Federal Housing Finance Agency
- "Fannie Mae"
- → Federal National Mortgage Association
- "Freddie Mac"
- → Federal Home Loan Mortgage Corporation
Note: {'term': 'The Secretary', 'sections': ['Section 1'], 'resolution': 'Secretary of Housing and Urban Development (HUD) based on context of National Housing Act amendment'}
Key Definitions
Terms defined in this bill
We use a combination of our own taxonomy and classification in addition to large language models to assess meaning and potential beneficiaries. High confidence means strong textual evidence. Always verify with the original bill text.
Learn more about our methodology