Congressman Andy Barr (KY-6) introduced legislation that would ease the regulatory requirements on home loans, so long as the mortgage lender holds the loan on its books rather than selling it into the secondary market.  H.R. 1210, the Portfolio Lending and Mortgage Access Act, would relax the overly burdensome, one size fits all Qualified Mortgage Rule imposed by the Consumer Financial Protection Bureau.  The bill promotes affordable home financing and discourages the risky practices which led to the 2008 financial crisis and the resulting taxpayer bailouts of Fannie Mae, Freddie Mac, and large systemically important financial institutions.

“The aim of this legislation is simple: banks and credit unions should be given more discretion to originate mortgages as long as they agree to retain the risk of that loan,” said Congressman Barr.  “This reform would promote responsible lending practices that would help more Kentucky homebuyers qualify for a mortgage, and protect hardworking taxpayers from future bailouts.”

The Portfolio Lending and Mortgage Access Act, provides that when a residential mortgage loan is held by the loan originator, it is considered a “Qualified Mortgage” and therefore satisfies the “ability-to-repay” requirement in Dodd-Frank.  When a mortgage lender keeps a loan in its portfolio, the lender retains the risk of a borrower’s default.  This better aligns the interest of the lender to properly underwrite the loan with the borrower’s ability to repay it.  The result is expanded access to mortgage credit without additional risk to the financial system or the taxpayer.

To date, the legislation has 17 cosponsors and has been endorsed by the American Bankers Association, the Independent Community Bankers of America, and the Kentucky Bankers Association.

What others are saying about the Portfolio Lending and Mortgage Access Act:

“At Central Bank we’ve found success by empowering our employees to provide superior service and value to our customers, shareholders, and communities.  Congressman Barr’s bill would provide needed regulatory relief, which would allow us to us to do our job and help more Kentuckians buy homes they can afford.” – Luther Deaton, Jr., Chairman, President & CEO of Central Bank

“Kentucky Bank has been operating in central Kentucky since 1851.  We know our people and we are better equipped to make business decisions on the creditworthiness of individuals and businesses in our communities than any agency in Washington, D.C.  We appreciate Representative Barr’s work on this issue, which would help us serve the needs of Kentuckians.” – Louis Prichard, President and CEO of Kentucky Bank

“ABA strongly supports the Portfolio Lending and Mortgage Access Act, legislation introduced by Rep. Andy Barr (R-Ky.) that would help expand access to mortgage credit by treating loans originated by a bank and held in portfolio as Qualified Mortgages.  It’s clear that new regulatory requirements have restrained mortgage lending, and have made it particularly difficult for some creditworthy borrowers to obtain a home loan.  This proposal is a common sense approach that will help borrowers gain access to some of the lowest risk mortgage products offered by banks.” – Frank Keating, President and CEO of the American Bankers Association