July 17, 2025
Mr. Liccardo (for himself, 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, and Mr. Harder of California) introduced the following bill; which was referred to the Committee on Financial Services
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.
Section 1. 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:
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 unitmeans 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. 2. 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.