Today, the House of Representatives passed S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, the most pro-growth regulatory relief legislation in a generation. This package includes two bills introduced by Congressman Andy Barr (KY-06) – H.R. 2226, the Portfolio Lending and Mortgage Access Act, and H.R. 1699, the Preserving Access to Manufactured Housing Act.
“Since enactment of the 2,300-page Dodd-Frank Act, roughly one in five Kentucky credit unions and community banks have closed its doors,” said Congressman Andy Barr. “The avalanche of red tape arising out of this financial control law has been a disaster for Kentucky consumers as they have been needlessly denied credit to purchase a home, start a business, or finance their American Dream. I am proud that over half of the provisions included in this bill originated from the House Financial Services Committee, including my Portfolio Lending and Mortgage Access Act and Preserving Access to Manufactured Housing Act. Now we must build on our success to provide additional relief from burdensome financial regulations and continue our work to unleash economic growth in our communities.”
The Portfolio Lending and Mortgage Access Act
H.R. 2226 will extend the “Qualified Mortgage” legal safe harbor to small creditors, banks and credit unions, with total consolidated assets of $10 billion or less who originate and hold residential mortgage loans in portfolio, rather than selling or securitizing them, allowing those lenders to satisfy Dodd Frank’s ability-to-repay rule. Therefore, lenders will have every incentive to make sure that a borrower can afford to repay the loan, perfectly aligning their interests with that of the borrower.
This legislation promotes affordable home financing from community financial institutions while discouraging the risky “originate to distribute” practices which led to the 2008 financial crisis and taxpayer bailouts of Fannie Mae and Freddie Mac. It has been endorsed by the Kentucky Bankers Association, the Kentucky Credit Union League, the American Bankers Association, the Independent Community Bankers, the Credit Union National Association, the National Association of Homebuilders, and the U.S. Chamber of Commerce.
The Preserving Access to Manufactured Housing Act
The definitions of “mortgage originator” and “loan originator,” established by the Dodd-Frank Act, are based on traditional mortgage market roles that do not reflect the manufactured housing market. While businesses that sell manufactured homes do not originate loans to finance them, manufactured home retailers currently run the risk of being considered mortgage loan originators.
H.R. 1699 will clarify that a manufactured home sales person is not originating a loan when helping a consumer apply for a mortgage or prepare loan information, unless they are compensated by a creditor, lender or mortgage broker.
S. 2155 passed the House of Representatives by a vote of 258 to 159 and will now head to the President’s desk, who has indicated he will sign this regulatory relief into law later this week.