Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act

The "Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act" amends the National Housing Act to create a new program. This program mandates the Secretary of Housing and Urban Development (HUD) to establish, within two years, a system for insuring certain second liens secured against properties to finance the construction of accessory dwelling units (ADUs). The maximum insured loan amount is capped at the lesser of 30 percent of a one-unit residence's FHA loan limit or 100 percent of the property's projected value after ADU construction, with potential increases based on projected rental income. The bill defines an ADU as a modular, prefabricated, or manufactured unit, or a conversion of an existing structure, that includes kitchen, sleeping, and bathroom facilities and is added to or detached from a single-family dwelling. Furthermore, the Director of the Federal Housing Finance Agency (FHFA) must permit Fannie Mae and Freddie Mac to purchase and securitize these insured loans, though the Director can prohibit this under specific market risk conditions after notifying Congress. Both HUD and the FHFA are required to submit annual reports to Congress detailing the program's activities.