House Passes Reg Relief Bill; President Expected to Sign

Mike Sorohan msorohan@mba.org

May 23, 2018

The House yesterday passed a Mortgage Bankers Association-supported regulatory relief bill, marking the first substantive change to the Dodd-Frank Act since its 2010 passage.

By a 258-159 vote, with one Republican joining all Democrats in opposition, the House passed S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act (https://www.congress.gov/bill/115th-congress/senate-bill/2155). The Senate previously approved the bill on Mar. 14. The bill now goes to President Trump, who indicated he will sign it.

MBA President and CEO David Stevens, CMB, commended the House. "The bill marks years' worth of work by a group of bipartisan Senators and parallel and focused advocacy by the legislative and policy teams at MBA," he said. "I want to commend the House of Representatives for joining the Senate and passing this bill which will protect consumers and provide greater access to mortgage credit."

Senate Banking Committee Chairman Mike Crapo, R-Idaho, the bill's primary author, called the bill's passage "an important moment for small financial institutions, small businesses and families across America."

"This is a moment years in the making," Crapo said in a statement. "This step toward right-sizing regulation will allow local banks and credit unions to focus more on lending, in turn propelling economic growth and creating jobs on Main Street and in our communities."

House Financial Services Committee Chairman Jeb Hensarling, R-Texas, called S. 2155 "the most significant pro-growth financial regulatory reform package in a generation."

"For far too long, far too many people in our country have struggled to make ends meet," Hensarling said in a statement. "They've struggled to buy a car; they've struggled to buy a home; they've struggled for their version of the American Dream. Why is this happening? Because Main Street banks and credit unions that Americans depend on have been stifled by the weight, load, volume, complexity and cost of heavy Washington bureaucratic red tape which has prevented them from serving their communities. But today, that changes."

House Majority Leader Kevin McCarthy, R-Calif., echoed Hensarling's comments. "Following the financial crisis, government's response was to regulate all banks--big and small--the same," he said in a statement. "That meant that local institutions, who have close relationships to their communities and customers, had to devote their time to complying with never ending regulations, rather than providing capital and support to their customers...Passage of S. 2155 tailors regulatory standards so community banks can free up resources that support communities and small business.

Stevens cited two provisions he called "major wins" for MBA:

--SAFE Act amendments, which will provide mortgage loan officers with 120 days of transitional authority to originate when moving from a federal depository to a non-bank (or across state lines), and;

--High Volatility Commercial Real Estate (HVCRE) reform, which effectively amends the banking agencies' HVCRE rule, clarifying which acquisition, development or construction (ADC) loans are subject to a higher HVCRE risk weight, and aligns the rule with reasonable and responsible ADC lending practices.

In addition, the bill incorporates several other MBA priorities:

--Reforms to the VA Interest Rate Reduction Refinance Loan (IRRRL) program to protect veterans, service members and surviving spouses and reduce excessively fast prepays which have adversely impacted Ginnie mortgage servicing rights values and FHA/VA rates;

-- Applying Truth in Lending Act consumer protections to Property Assessed Clean Energy (PACE)/energy efficiency mortgage products.

--Modest relief for certain small lenders from the Home Mortgage Disclosure Act (500 loans per year); and

--Partial TILA-RESPA Integrated Disclosure (TRID) and Home Mortgage Disclosure Act relief. The bill asks the Bureau of Consumer Financial Protection to provide clearer, authoritative guidance on several components of the TRID Rule.

The bill also includes provisions that encourage competition in the development and usage of credit scoring models for residential mortgages, prompting a stagtement from VantageScore Solutions, Stamford, Conn., which supported the provision. "Today's models are more predictive and more inclusive and they should be put to work. We thank the members of Congress for recognizing this problem and seizing on an opportunity to create a better system," said Barrett Burns, president & CEO of VantageScore Solutions.

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