Original Alternative Data for Additional Credit FHA Pilot Program Reauthorization Act

This bill, titled the "Original Alternative Data for Additional Credit FHA Pilot Program Reauthorization Act," reauthorizes and significantly amends a pilot program under Section 258 of the National Housing Act. The primary goal of this program is to examine and evaluate the benefits of using credit scoring models that incorporate additional data beyond traditional credit reports for FHA-insured mortgages.

The Secretary of Housing and Urban Development is tasked with selecting one or more commercially available credit scoring models that utilize this additional data, after consulting with the Government National Mortgage Association. Mortgagees participating in the pilot program will be required to provide prospective mortgagors with a notice detailing the option to opt into this new credit scoring model, explaining how it differs from current FHA models, and offering a comparison of lending options.

Participation in the pilot program is strictly voluntary, allowing mortgagors to opt-in to have their creditworthiness assessed using these new models. However, the program explicitly states that it cannot be used for mortgages where proceeds are intended to prepay or pay off an existing loan secured by the same property.

The bill mandates comprehensive reporting to Congress, including data on the number of participants, approval rates, and demographic information. Reports will also assess the effectiveness of additional credit information in predicting mortgage loan default, the program's impact on the Mutual Mortgage Insurance Fund, and whether it benefits borrowers with thin or no credit files. The Secretary must also explain the selection of specific credit models.

The legislation authorizes appropriations of $3,000,000 for fiscal year 2023 to establish and carry out the program, with an additional $1,500,000 for each of fiscal years 2024 through 2027. The pilot program's reauthorization extends for a 5-year period beginning on the date of the enactment of this Act, ensuring continued evaluation of these innovative credit assessment methods.