Among the many provisions in the Senate's extensive regulatory relief bill are a number of changes that will directly affect mortgage lenders and servicers.
The Senate is racing toward a final vote on S.2155, which includes several items that address the mortgage industry's calls for regulatory relief, as well as other calls for relief from post-crisis Dodd-Frank Act restrictions in adjacent financial-services businesses, like credit scoring.
Some of the proposed changes in the legislation sponsored by Banking Committee Chairman Mike Crapo, R-Idaho, target rules that drew broad-based complaints from the mortgage industry. But others address narrower concerns from specific sub-sets of the business, and at least one is not a relief measure, but rather restores an expired post-crisis servicing restriction.
The regulatory relief that the Crapo bill offers is aimed primarily at loosening restrictions on lenders rather than servicers, particularly if they are smaller and are nonbanks or credit unions.
That may be in part to appease Democrats that might otherwise oppose the bill. Some progressive Democrats are challenging the proposed legislation on the grounds it could mark a return to dangerous pre-crisis financial services practices.
But former Rep. Barney Frank, one of the Dodd-Frank Act's co-authors, is rejecting such concerns on the grounds that the bill does not threaten "prohibitions about making shaky loans to people with weak credit and then packing them into a security."
From HMDA and TRID to restoring the Protecting Tenants at Foreclosure Act, here's a look at 10 mortgage and housing provisions in the Senate's regulatory reform bill.
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HMDA exemption for small banks
Banks and credit unions that originate less than 500 open-ended and 500 closed-end mortgages would be exempt from a CFPB rule that requires lenders to provide additional data under the Home Mortgage Disclosure Act.
The provision, which does not apply to nonbanks, would not exempt institutions from HMDA reporting altogether, but is limited to new requirements initially mandated by the Dodd-Frank Act of 2010.
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Transitional loan officer licensing
Bank loan officers wouldn't need additional licensing when they went to work for nonbanks under a provision found in both the House and Senate versions of the banking bill.
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TRID rules will get looser and clearer
The TRID waiting period would be waived when mortgage rates fell, the Consumer Financial Protection Bureau would need to clarify how TRID applies to mortgage assumption transactions and construction-to-permanent home loans, and the bureau will also have to clarify certain liabilities related to model disclosure use.
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Restoring the Protecting Tenants at Foreclosure Act
Mortgage servicers would have to honor bona fide leases and let tenants stay even when their landlords defaulted under a provision restoring the Protecting Tenants at Foreclosure Act. The act expired in 2015 and left servicers to deal with a patchwork of state-level regulations.
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Appraisal waivers for small rural mortgages
Certain transactions valued at less than $400,000 in rural areas would not need an appraisal. The provision addresses concerns about the shortage of appraisers "available in a reasonable amount of time."
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Manufactured housing sellers can weigh in on financing
A provision in the Senate's regulatory relief bill that would give manufactured housing retailers more leeway to make financing recommendations has consumer advocates concerned about potential lending abuses, but the industry contends it simply levels the playing field with real estate agents and homebuilders.
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Eliminate mandatory escrow accounts for high-cost mortgages
Lenders with less than $10 billion in assets would no longer be required to put an escrow account in place when they made high-cost mortgages.
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Large portfolio lenders won't have to worry about QM
Banks with total assets of up to $10 billion would have an exemption from ability to repay liability for their portfolios, and would no longer have to make qualified mortgages that give them a safe harbor from that liability.
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Expanded loan options for credit unions
A restriction requiring credit union member business loans to be secured by a primary residence would be removed. This would allow credit unions to make loans on other types of one-to-four family dwellings, including construction-to-permanent loans.
The agency’s final rule modernizing the Fair Debt Collection Practice Act limits calls to seven per week, but collectors won stronger protections from liability claims and other key changes to the original proposal.