Three bills emerged from the U.S. House Financial Services Committee last week with the potential to strengthen and secure the U.S. housing industry, according to the National Association of Realtors® (NAR), which says it backs the measures.
Earlier this month, NAR sent a letter to Chairwoman Maxine Waters (D-Calif.), Ranking Member Patrick McHenry (R-N.C.), and the members of the U.S. House Committee on Financial Services urging passage of H.R. 123, H.R. 4328, and H.R. 4067.
NAR President John Smaby believes each piece of legislation will help expand opportunities to those who have long been underserved by traditional credit models or harmed by inaccurate reporting.
H.R. 123 would create a pilot program for the Federal Housing Administration (FHA) to include alternative credit data when evaluating prospective homebuyers.
Millions of Americans, particularly minorities, immigrants, and people with modest incomes, may come from backgrounds that avoid debt, leading many with little to no credit history. If new, fairer credit scoring models are adopted, many of these “thin file” individuals would be able to obtain credit and enter the housing market.
The bill, introduced by Rep. Gene Green (D-Texas), will ensure that positive factors like on-time rental, utility and telecommunications payments are no longer ignored, which NAR and others within the industry contend remain critical indicators of a borrower’s ability to pay.
H.R. 4328 amends the Fair Credit Reporting Act to protect federal and D.C. government employees and contractors from pay stoppages caused by a shutdown of the federal government.
Unfortunately, these individuals are currently at risk of incurring negative reporting in the event of a shutdown, meaning their credit scores would not serve as an accurate predictor of a borrower’s capacity and willingness to repay mortgage debt.
H.R. 4067 directs the Consumer Financial Protection Bureau to undertake research on those who don’t have bank accounts or other banking relationships. Introduced by Rep. Austin Scott (R-Ga.), the bill encourages the development of strategies designed to increase financial education and participation in the banking system. NAR is strongly supportive of these policies, particularly as an educated banking relationship represents a critical first step toward obtaining a mortgage, building long-term wealth, and entering the middle class.
Each of these bills offers families and individuals the resources and support needed to increase access to homeownership, particularly in communities that have been underserved or harmed by past policies of lenders and government agencies.
NAR is optimistic the bills will be considered on the House floor in the coming weeks and will continue to push members of Congress to adopt the commonsense measures.
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