Bill Summary
The "Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act" aims to enhance housing options by facilitating the construction of accessory dwelling units (ADUs). This legislation amends the National Housing Act to empower the Secretary of Housing and Urban Development to create a program that insures second liens on properties specifically for financing ADUs.
Key provisions include:
1. **Insurance Program Establishment**: The Secretary is required to establish an insurance program for second liens within two years of the bill's enactment.
2. **Loan Limits**: The program allows for second liens up to 30% of a specified loan limit or up to the projected value of the property post-construction, whichever is lower. Increased limits are possible based on anticipated rental income from the ADU.
3. **Application Process**: Borrowers must submit applications to the Secretary, confirming property ownership and detailing project specifics.
4. **Premiums**: The Secretary will set a premium for the insurance, capped at 1% of the insured amount annually.
5. **Annual Reporting**: The Secretary is tasked with reporting to Congress annually on the program's activities.
6. **Definition of ADUs**: The legislation provides a specific definition for accessory dwelling units, which includes various construction types and facilities.
7. **Securitization of Loans**: The Federal Housing Finance Agency will permit the purchase and securitization of loans insured under this act, with certain exceptions based on market conditions.
Overall, the SUPPLY Act seeks to promote the development of ADUs as a means to address housing shortages and encourage property upgrades.
Possible Impacts
The "SUPPLY Act" proposed in the legislation can affect people in several significant ways. Here are three examples:
1. **Increased Housing Options for Families**: By allowing homeowners to finance the construction of accessory dwelling units (ADUs) with insured second liens, the legislation enables families to create additional living spaces on their properties. This could provide more affordable housing options for family members, such as aging parents or young adults, helping families to stay close together while maintaining their independence.
2. **Potential for Additional Income**: Homeowners who construct ADUs may be able to generate rental income, as the legislation allows for increased loan amounts based on projected rental income. This could provide financial relief for homeowners by supplementing their income, making it easier to cover mortgage payments or other expenses. This could be particularly beneficial in areas with high rental demand, where ADUs could serve as a viable source of income.
3. **Stimulus for Local Economies**: The construction of ADUs can stimulate local economies by creating demand for construction services, materials, and labor. As homeowners invest in building these units, it could lead to job creation in the construction sector and related industries. Furthermore, increased housing availability may help alleviate housing shortages in certain areas, potentially stabilizing or lowering housing costs for the broader community.
Overall, the legislation aims to enhance housing flexibility and affordability while also contributing to economic growth.
[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4568 Introduced in House (IH)]
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119th CONGRESS
1st Session
H. R. 4568
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.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
July 21, 2025
Mr. Liccardo (for himself, Mr. Garbarino, Mr. Cleaver, Mr. Sherman, Mr.
Thompson of California, Mr. Ruiz, Mr. Soto, Mr. Peters, Mr. Garamendi,
Mr. Swalwell, Ms. McBride, Ms. Goodlander, Mr. Fields, Ms. Elfreth, Mr.
Gray, Mr. Cisneros, Mr. Stanton, Mr. Harder of California, Mr. Meeks,
Ms. Ansari, Mr. Foster, and Mr. Costa) introduced the following bill;
which was referred to the Committee on Financial Services
_______________________________________________________________________
A BILL
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.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Supporting Upgraded Property
Projects and Lending for Yards (SUPPLY) Act''.
SEC. 2. INSURANCE WITH RESPECT TO THE FINANCING OF THE CONSTRUCTION OF
ACCESSORY DWELLING UNITS.
Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is
amended by adding at the end the following:
``SEC. 259. ACCESSORY DWELLING UNIT CONSTRUCTION INSURANCE.
``(a) In General.--Not later than 2 years after the date of the
enactment of this section, the Secretary shall establish a program to
insure, in the discretion of the Secretary and under such terms and
conditions as the Secretary may prescribe, certain second liens that
are secured against properties for the purpose of financing the
construction of accessory dwelling units.
``(b) Maximum Loan Amount.--
``(1) In general.--Except as described in paragraph (2),
the Secretary may only insure a second lien under this section
that has a principal obligation in an amount that is the lesser
of--
``(A) 30 percent of the dollar amount determined
under section 203(b)(2)(A) with respect to a one-unit
residence; or
``(B) when combined with any outstanding amounts
owed on any other loans secured by a lien against the
same property as the second lien, 100 percent of the
projected value of the property after the construction
of the accessory dwelling unit, as determined by the
Secretary.
``(2) Rental income.--The Secretary may increase the amount
described in paragraph (1) based on 50 percent of any projected
rental income expected annually from an accessory dwelling unit
to be financed using the second lien to be insured under this
section.
``(c) Application.--The borrower seeking insurance for a second
lien under this section shall submit an application for insurance at
such time, in such manner, and containing such information as the
Secretary may require, including a certification that the borrower is
the owner of the property on which an accessory dwelling unit is to be
constructed.
``(d) Premium.--The Secretary shall fix a premium charge for
insurance provided under this section in an amount that may not exceed,
for each year, 1 percent of the principal amount insured under this
section.
``(e) Report.--Beginning on the date that is 1 year after the date
of the enactment of this section, and annually thereafter, the
Secretary shall submit to the Congress a report that describes the
activities carried out under this section.
``(f) Rulemaking.--The Secretary may issue such rules as the
Secretary determines appropriate to carry out this section.
``(g) Accessory Dwelling Unit Defined.--In this section, the term
`accessory dwelling unit' means a dwelling unit which--
``(1) is a--
``(A) modular or prefabricated unit constructed to
at least 1 of the 3 most recent editions of a
consensus-based building code adopted by the State,
local jurisdiction, territory, or tribal entity;
``(B) manufactured unit (as such term is defined in
section 102 of the Housing and Community Development
Act of 1974 (42 U.S.C. 5402)); or
``(C) conversion of an existing structure on a
property;
``(2) includes kitchen, sleeping, and bathroom facilities;
and
``(3) is added to, created within, or detached from a
single-family dwelling on a single property.''.
SEC. 3. PURCHASE AND SECURITIZATION OF INSURED LOANS FOR THE
CONSTRUCTION OF ACCESSORY DWELLING UNITS.
(a) In General.--Except as provided in subsection (b), the Director
of the Federal Housing Finance Agency (hereafter referred to as the
``Director'') shall permit the Federal National Mortgage Association
and the Federal Home Loan Mortgage Corporation to purchase and
securitize loans that are insured under section 259 of the National
Housing Act.
(b) Exception.--The Director may prohibit the purchase and
securitization of loans that are insured under section 259 of the
National Housing Act--
(1) if there are market pressures which would pose an
excessive and unmitigable risk to the lending market for such
loans, as determined by the Director; and
(2) beginning on the date that the Director submits to the
Congress a written notice with respect to such prohibition.
(c) Report.--The Director shall include in the annual report
required under section 1319B(a) of the Federal Housing Enterprises
Financial Safety and Soundness Act of 1992 (12 U.S.C. 4521(a))
information with respect to the purchase and securitization of loans
that are insured under section 259 of the National Housing Act.
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