Sustainable Homeownership Act

Bill Number

H.R. 9460

Origin Chamber

House

Congress

119th Congress, Session 2

Policy Area

Housing and Community Development

Status

Introduced

Latest Action

2026-06-25: Referred to the House Committee on Financial Services.

Last Updated

2026-07-09T22:17:39Z

AI-Generated Summary

Sustainable Homeownership Act (H.R. 9460)

Purpose

This legislation amends the Federal Home Loan Mortgage Corporation Act and the Federal National Mortgage Association Charter Act. It establishes requirements for the ownership of certain mortgage assets by the Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae). The changes aim to limit high loan-to-value (LTV) mortgage purchases, mandate credit risk transfers, adjust capital frameworks, and outline a process for ending conservatorship.

Key Provisions

• Limits on High LTV Mortgages: Requires private mortgage insurance or guarantees on portions of unpaid principal balances exceeding 80% of property value. Coverage percentages vary by LTV band (e.g., 12% for 80-85% LTV; 35% for 95-97% LTV), with reduced rates for short-term fixed-rate mortgages. Exceptions exist for state agencies, certain programs, low-income borrowers (household income ≤80% area median), and qualifying refinances that reduce payments, shorten terms, or convert to fixed rates.
• Asset Holding Limits: Caps covered assets (mortgages, mortgage-backed securities, etc.) at 8% of total assets or a Treasury/FHFA-determined amount for securitization and liquidity needs.
• Pricing and Purchase Rules: Prohibits varying terms based on seller size or volume; requires equivalent cash offers for eligible mortgages; bans purchases with simultaneous subordinate liens exceeding 80% combined LTV via home equity lines.
• Qualified Insurer Standards: Insurers must comply with state laws, meet FHFA-approved eligibility criteria after public comment, and operate as private enterprises.
• Risk Transfer Mandate: Requires GSEs to transfer the majority of single-family credit risk starting at the first dollar after expected losses using structures like CIRT, ACIS, CAS, or STACR within two years, with annual targets and congressional reports.
• Capital and Return Framework: Maintains Treasury lines of credit as backstops; sets a 9-13% return on equity (ROE) range (adjustable every five years); imposes commitment fees, earnings retention below the range, and remittance of excess earnings above the range; restricts dividends if capital falls below minimums.
• Conservatorship Exit: Allows Treasury to convert senior preferred stock to common equity, exercise warrants, sell shares within two years, and establish capital standards for termination, including stock sales if needed.
• Other Changes: Adjusts maximum loan limits using median household income or housing price index (lower of the two); extends FHFA product approval comment periods to 60 days with public disclosure; expands core capital definition for safety and transparency.

Significant Changes to Existing Law

• Introduces tiered insurance requirements and first-loss protections for high LTV mortgages, replacing prior 10% down payment rules.
• Mandates broad credit risk transfer, altering prior capital treatment to encourage risk sharing with private investors.
• Establishes ROE bands and remittance rules tied to Treasury support, modifying Senior Preferred Stock Purchase Agreements.
• Changes loan limit adjustments from prior methods to tie them to income or price indices.
• Strengthens FHFA oversight of new products and capital components.

Potential Impacts

• Government Agencies: Increases FHFA authority over product approvals, risk transfers, and capital rules; involves Treasury in fee setting, stock conversions, and conservatorship termination.
• Citizens/Borrowers: May restrict access to high LTV mortgages without insurance, potentially affecting first-time or low-income buyers, while exceptions and risk transfer could support affordability through private market involvement.
• GSEs and Market: Limits asset concentration, promotes risk sharing, and sets path for exiting conservatorship, which could affect mortgage-backed securities markets and liquidity.

Main Stakeholders

• Fannie Mae and Freddie Mac (GSEs).
• Federal Housing Finance Agency (FHFA) and Department of the Treasury.
• Mortgage sellers, servicers, and private insurers.
• Homebuyers, particularly those seeking high LTV or low-income loans.
• Congress (via reporting requirements).

Notable Legal, Constitutional, or Political Implications

The bill expands regulatory powers of FHFA without altering core constitutional structures. It builds on post-2008 conservatorship framework by outlining a structured exit process and risk-sharing mechanisms. No direct international relations impacts are specified.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Rep. Fitzgerald, Scott [R-WI-5]

Recent Actions

• 2026-06-25: Referred to the House Committee on Financial Services.
• 2026-06-25: Introduced in House
• 2026-06-25: Introduced in House

Bill Versions

• Sustainable Homeownership Act — issued 2026-06-25 — PDF (43 pages)