I remember being a youngster, watching Saturday morning cartoons, and seeing the Schoolhouse RocksTM cartoon with the animated "Bill" singing about his struggle to become a law. "Bill" sings:
"I'm just a bill, yes I'm only a bill and I got as far as Capitol Hill. Well, now I'm stuck in committee and I'll sit here and wait. While a few key Congressmen discuss and debate whether they should let me be a law..."
Unfortunately, that sums it up all too well for so many of the regulatory relief bills these days, but let's take a look at what has been proposed and the current status of those proposals.
On March 14, 2018, the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155). This is the "big one" that we are all waiting for. Among other things, S. 2155:
- Amends the Truth in Lending Act by creating a new QM category to allow institutions with less than $10 billion in assets to waive ability-to-repay requirements for certain residential-mortgage loans.
- Amends FIRREA to exclude a loan from the FIRREA requirement to obtain an appraisal if the property is located in a rural area; the transaction value is less than $400,000; the institution does not sell the loan (with a few exceptions), and; not later than three days after the Closing Disclosure is provided, the mortgage originator has contacted not fewer than three state-licensed or state-certified appraisers and documented that no such appraiser was available within five business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments; and
- Amends HMDA to exempt institutions which originated fewer than 500 closed-end mortgage loans or fewer than 500 HELOCs in each of the preceding two calendar years from the new reporting categories. Keep in mind, this is NOT an exemption from HMDA altogether, as these institutions would still be subject to the "old rules" in effect prior to January 1, 2018.
This bill is currently being debated in the Senate's Committee on Banking, Housing, and Urban Affairs, with the last action taking place on March 22. How it looks when it comes out of the House is anybody's guess at this point.
On March 6, 2018, the House of Representatives passed "The Portfolio Lending and Mortgage Access Act" (H.R. 2226). It would provide a "qualified mortgage" safe harbor for all loans held in portfolio.
On February 14, 2018 the House approved two bipartisan regulatory reform bills:
- H.R. 3299 (The Protecting Consumers' Access to Credit Act of 2017) - This Act seeks to codify the "valid-when-made" doctrine, thus clearing up confusion left after the Madden v. Midland Funding decision. There are some potential legal issues with this one so it should be interesting to see how it plays out.
- The House also approved H.R. 3978 (the TRID Improvement Act of 2017), which would require the CFPB to allow the accurate disclosure of title insurance premiums and any potential available discounts to homebuyers as part of TRID. This should clear up the issues with inconsistencies in mortgage documents; thus eliminating much of the consumer confusion.
On February 8, 2018, H.R.1153, aka "Mortgage Choice Act of 2017," was approved by the House. This bill amends the Truth in Lending Act to specify that neither escrow charges for insurance nor affiliated title charges shall be considered "points and fees" in the "high cost mortgage" determination.
On January 18, 2018, the House approved H.R.2954 (The Home Mortgage Disclosure Adjustment Act). This bill amends HMDA to exempt a depository institution from certain records and disclosure requirements if the depository institution originated fewer than 1,000 closed-end mortgage loans or 2,000 open-end lines of credit in each of the two preceding years. In addition, the bill lessens requirements for depository institutions to itemize and disclose specified mortgage loan data.
After passing in the House, all five bills have moved to the Senate and currently are sitting in the Committee on Banking, Housing, and Urban Affairs.
Worth noting, H.R. 4861 was passed by the House Financial Services Committee on March 21, 2018. This bill is a piece of the plan the House Republicans have to provide greater regulatory relief to banks than the relief provided by S. 2155. Rep. Hensarling is expected to include this bill in his final banking bill. H.R. 4861:
- Will nullify certain guidance on deposit advance products;
- Require the Federal banking agencies to establish standards for short-term, small-dollar loans made by insured depository institutions; and
- Exempts insured depository institutions and credit unions from the CFPB's payday lending rule.
"Bill" continues to sing:
"And if they vote for me on Capitol Hill, Well then I'm off to the White House Where I'll wait in a line with a lot of other bills for the President to sign and if he signs me, then I'll be a law."
Yes, even if these bills made it through Congress, President Trump still has the power to veto them or make changes. So, the best we can do is sit here and wait, just like "Bill." Stay tuned for future updates should Congress take action in the coming weeks.