Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act
- Bill Number
- H.R. 4568
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Housing and Community Development
- Status
- Introduced
- Latest Action
- 2025-07-21: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-04-17T08:07:21Z
AI-Generated Summary
Purpose of the Legislation
The Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act aims to expand access to financing for constructing accessory dwelling units (ADUs)—smaller, secondary housing units on the same property as a primary single-family home. It does this by creating a federal insurance program for second mortgages (liens) used specifically for ADU construction, making it easier and less risky for lenders to offer these loans. This could help increase affordable housing options, such as rental units, without needing new large-scale developments.
Key Provisions
- Insurance Program for Second Liens: The Secretary of Housing and Urban Development (HUD) must establish a program within 2 years of the bill's enactment to insure second mortgages secured by a property. These loans finance ADU construction, with terms set by the Secretary. Borrowers must be property owners and submit applications with required details, including ownership certification.
- Loan Limits:
- The insured amount is capped at the lesser of:
- 30% of the Federal Housing Administration (FHA) loan limit for a one-unit home (a standard benchmark for FHA-insured mortgages).
- 100% of the property's projected value after ADU completion, including any existing loans on the property.
- The limit can increase by including 50% of expected annual rental income from the ADU.
- Premium and Fees: Insurers pay an annual premium of up to 1% of the insured loan amount.
- Reporting and Oversight:
- HUD must submit annual reports to Congress starting 1 year after enactment, detailing program activities.
- The Secretary can issue rules to implement the program.
- Definition of Accessory Dwelling Unit (ADU): An ADU is a self-contained unit with kitchen, sleeping, and bathroom facilities. It can be:
- A modular or prefabricated structure built to recent state or local building codes.
- A manufactured home (factory-built unit meeting federal standards).
- A conversion of an existing structure on the property.
- It must be added to, created within, or detached from a single-family home on the same lot.
- Purchase and Securitization by Government-Sponsored Enterprises (GSEs): Fannie Mae and Freddie Mac (key players in the mortgage market) can buy and package these insured loans into securities for investors. The Federal Housing Finance Agency (FHFA) Director can temporarily prohibit this if it poses excessive market risks, but only after notifying Congress. FHFA must report on these activities in its annual report.
Significant Changes to Existing Law
- Adds a new Section 259 to Title II of the National Housing Act (the main law governing FHA mortgage insurance), introducing insurance specifically for second liens tied to ADU construction. Previously, FHA insurance focused on primary mortgages or broader home improvements, not targeted second loans for ADUs.
- Authorizes Fannie Mae and Freddie Mac to handle these loans, expanding their role beyond traditional single-family mortgages to include ADU financing, with safeguards for market stability.
Potential Impacts
- On Government Agencies: HUD gains responsibility for program setup, insurance, and reporting, potentially increasing administrative workload and costs. FHFA oversees GSE involvement and monitors risks, which could affect housing finance stability.
- On Citizens: Homeowners may more easily afford ADU construction through insured second mortgages, enabling them to add rental units for income or house family members. This could boost housing supply in urban and suburban areas, improving affordability for renters without large new builds. Lenders face reduced risk, potentially leading to more loan availability.
- On International Relations: No direct impacts, as the bill focuses on domestic U.S. housing policy.
Main Stakeholders Affected
- Homeowners and Borrowers: Primary beneficiaries, as they can access financing for ADUs to generate rental income or expand living space.
- Lenders and Financial Institutions: Benefit from federal insurance reducing default risks on second mortgages.
- Builders and Manufacturers: Gain opportunities for ADU projects, including modular and prefabricated units.
- Government Entities: HUD (program administration), FHFA (GSE oversight), Fannie Mae, and Freddie Mac (loan purchasing).
- Renters and Local Communities: Indirectly affected through potential increases in affordable housing units.
- Congress: Receives ongoing reports to monitor program effectiveness.
Notable Legal, Constitutional, or Political Implications
- Legal: Builds on existing FHA authority without major overhauls, but introduces specific ADU definitions and rental income considerations, which could lead to litigation over loan valuations or eligibility if disputes arise. The premium cap and rulemaking flexibility give HUD broad discretion, potentially subject to administrative law challenges.
- Constitutional: No apparent issues; it aligns with Congress's power to regulate interstate commerce and promote general welfare through housing policy.
- Political: Supports bipartisan housing affordability goals by addressing supply shortages via innovative financing, but could spark debates on federal involvement in local zoning (though the bill doesn't directly address zoning). Annual reporting ensures accountability, potentially influencing future housing legislation.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Liccardo, Sam T. [D-CA-16]
Cosponsors (46)
Rep. Garbarino, Andrew R. [R-NY-2], Rep. Cleaver, Emanuel [D-MO-5], Rep. Sherman, Brad [D-CA-32], Rep. Thompson, Mike [D-CA-4], Rep. Ruiz, Raul [D-CA-25], Rep. Soto, Darren [D-FL-9], Rep. Peters, Scott H. [D-CA-50], Rep. Garamendi, John [D-CA-8], Rep. Swalwell, Eric [D-CA-14], Rep. McBride, Sarah [D-DE-At Large], Rep. Goodlander, Maggie [D-NH-2], Rep. Fields, Cleo [D-LA-6], Rep. Elfreth, Sarah [D-MD-3], Rep. Gray, Adam [D-CA-13], Rep. Cisneros, Gilbert Ray [D-CA-31], Rep. Stanton, Greg [D-AZ-4], Rep. Harder, Josh [D-CA-9], Rep. Meeks, Gregory W. [D-NY-5], Rep. Ansari, Yassamin [D-AZ-3], Rep. Foster, Bill [D-IL-11], Rep. Costa, Jim [D-CA-21], Rep. Garcia, Robert [D-CA-42], Rep. Lucas, Frank D. [R-OK-3], Rep. Salinas, Andrea [D-OR-6], Rep. Lawler, Michael [R-NY-17], Rep. Panetta, Jimmy [D-CA-19], Rep. Fitzpatrick, Brian K. [R-PA-1], Rep. Schneider, Bradley Scott [D-IL-10], Rep. Nunn, Zachary [R-IA-3], Rep. Salazar, Maria Elvira [R-FL-27], Rep. Beyer, Donald S. [D-VA-8], Rep. Beatty, Joyce [D-OH-3], Rep. Latimer, George [D-NY-16], Rep. Vindman, Eugene Simon [D-VA-7], Rep. Whitesides, George [D-CA-27], Rep. McDonald Rivet, Kristen [D-MI-8], Rep. Vasquez, Gabe [D-NM-2], Rep. Suozzi, Thomas R. [D-NY-3], Rep. Gillen, Laura [D-NY-4], Rep. Riley, Josh [D-NY-19], Rep. Kim, Young [R-CA-40], Rep. Kiley, Kevin [R-CA-3], Rep. Min, Dave [D-CA-47], Rep. Barragán, Nanette Diaz [D-CA-44], Rep. Lee, Susie [D-NV-3], Rep. Carbajal, Salud O. [D-CA-24]
Recent Actions
- 2025-07-21: Referred to the House Committee on Financial Services.
- 2025-07-21: Introduced in House
- 2025-07-21: Introduced in House
Bill Versions
- Supporting Upgraded Property Projects and Lending for Yards (SUPPLY) Act — issued 2025-07-21 — PDF (6 pages)