H.R. 4479: 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.

This bill proposes amendments to the National Housing Act to create a federal program under the Department of Housing and Urban Development (HUD) aimed at facilitating the construction of accessory dwelling units (ADUs). The key features of the bill include:

Insurance for Second Liens

The Secretary of HUD will establish a program to insure certain second liens on real estate. These second liens would be primarily used to finance the construction of accessory dwelling units.

Loan Amounts

The bill specifies conditions for the maximum amounts that can be insured:

• The insurance will cover second liens that are either:
• Up to 30% of a specified dollar amount related to a one-unit residence.
• Combined with any existing liens not exceeding the projected value of the property after the construction of the ADU.
• Additionally, the maximum insured amount can be increased by 50% of projected annual rental income from the finished accessory dwelling unit.

Application Process

Homeowners seeking this insurance must submit an application to HUD, demonstrating ownership of the property where the ADU will be built and following any requirements set by the Secretary.

Premium Charges

The Secretary will assess a premium charge not exceeding 1% of the insured amount annually for the insurance provided through this program.

Reporting Requirements

The Secretary is required to send annual reports to Congress describing the program's activities, starting one year after the enactment of the bill.

Definition of Accessory Dwelling Unit

An “accessory dwelling unit” is defined as:

• A modular or prefabricated unit constructed to applicable building codes.
• A manufactured unit as defined by previous housing legislation.
• A conversion of an existing structure on a property.
• It must also include basic living facilities such as kitchen, sleeping, and bathroom amenities.

Purchase and Securitization of Loans

The bill allows the Federal Housing Finance Agency (FHFA) to permit federal mortgage agencies (such as Fannie Mae and Freddie Mac) to purchase and securitize loans insured under this new program. However, there are provisions allowing the FHFA to prohibit these purchases under certain market conditions that are deemed risky.

Annual Reporting by the FHFA

The FHFA will also include information about the purchase and securitization of these insured loans in its annual reports to Congress.

Relevant Companies

• FNMA - Federal National Mortgage Association (Fannie Mae) may see changes in its operations regarding the purchase and securitization of loans under this new program.
• FMCC - Federal Home Loan Mortgage Corporation (Freddie Mac) could also be impacted similarly by the provisions allowing for loan purchases and securitization.