Section 1 Short title
This Act may be cited as the “Community Mortgage Lender Regulatory Act of 2016”.
Community Mortgage Lender Regulatory Act of 2016
A BILL
To preserve competition among mortgage lenders, provide relief from unnecessary regulatory requirements on responsible community mortgage lenders, and for other purposes.
Sec. 2 Findings
Congress finds the following:
Responsible community mortgage lenders engaged in traditional mortgage lending were not responsible for the recent mortgage crisis.
Responsible community mortgage lenders provide a valuable and critical service to consumers by, among other things, fulfilling the housing finance needs of the communities they serve and providing locally based alternative sources for mortgage financing.
The activities and business practices of responsible community mortgage lenders do not pose a substantial risk to consumers, and did not pose a substantial risk to consumers when the Dodd-Frank Wall Street Reform and Consumer Protection Act was enacted.
Responsible community mortgage lenders are subject to the oversight and control of various governmental authorities and nongovernmental actors, including the Bureau of Consumer Financial Protection, the Department of Housing and Urban Development, the Federal Trade Commission, State supervisory regulators, local government supervisory regulators, mortgage loan investors, warehouse lenders, and various other authorities or entities. As a result of this oversight and control, the business practices and activities of responsible community mortgage lenders are safe, transparent to the public and the government, and do not pose a threat to consumers, the public at large, the United States financial markets, or the United States economy in general.
Responsible community mortgage lenders are unreasonably burdened by increasing regulation geared to problems that they did not create and activities that they did not and do not engage in, and therefore responsible community mortgage lenders are entitled to relief from certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act and its attendant regulations, including the regulations of the Bureau of Consumer Financial Protection.
Without relief many responsible community mortgage lenders will be driven from the market thus limiting the consumer’s ability to choose a local lender for mortgage financing and dangerously consolidating the mortgage lending market into a smaller number of lenders.
The preservation of responsible community mortgage lenders is critical to preserving competition and preventing increasing concentration in mortgage lending.
The Bureau of Consumer Financial Protection should prioritize its resources and ability to carry out examinations by creating reasonable exclusions for smaller, responsible mortgage lenders.
Sec. 3 Definitions
In general— Section 1002 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5481) is amended by adding at the end the following:
“(30) Community mortgage lender—The term community mortgage lender means a lender—
“(A) who—
“(i) in the case of a depository institution or credit union—
“(I) has assets of less than $2,000,000,000; and
“(II) originated fewer than 25,000 mortgage loans in the preceding calendar year or originated a gross mortgage loan origination volume of less than $5,000,000,000 in the preceding calendar year; or
“(ii) in the case of a person other than a depository institution—
“(I) has net worth of less than $50,000,000; and
“(II) originated fewer than 25,000 mortgage loans in the preceding calendar year or originated a gross mortgage loan origination volume of less than $5,000,000,000 in the preceding calendar year; and
“(B) had mortgage loan originations in the preceding three calendar years that consisted of 95 percent qualified mortgages when measured by either—
“(i) the number of mortgage loans originated; or
“(ii) the dollar volume of mortgage loans originated.
“(31) Responsible community mortgage lender—The term responsible community mortgage lender means a community mortgage lender who has not been found by a court of competent jurisdiction to have violated the law, or been subject to a cease and desist order, relating to its mortgage loan originations—
“(A) during the preceding two years; or
“(B) since such person began originating mortgage loans, if such period is less than two years.
“(32) Mortgage loan—The term mortgage loan means a loan secured by a first lien on a 1–4 unit family residence.
“(33) Qualified mortgage—The term qualified mortgage—
“(A) has the meaning given that term under section 129C(b)(2) of the Truth in Lending Act; and
“(B) includes loans insured, guaranteed, or administered by—
“(i) the Department of Housing and Urban Development, with regard to mortgages insured under the National Housing Act (12 U.S.C. 1707 et seq.);
“(ii) the Department of Veterans Affairs, with regard to a loan made or guaranteed by the Secretary of Veterans Affairs;
“(iii) the Department of Agriculture, with regard to loans guaranteed by the Secretary of Agriculture pursuant to section 502(h) of the Housing Act of 1949 (42 U.S.C. 1472(h)); and
“(iv) the Rural Housing Service, with regard to loans insured by the Rural Housing Service.”
Treatment of the qualified mortgage requirement during calendar year 2016— For purposes of computing mortgage loan originations under section 1002(30)(B) of the Consumer Financial Protection Act of 2010 during calendar year 2016, such computation shall be based only on the preceding two calendar years instead of the preceding three calendar years.
Sec. 4 Prioritization of Bureau examination and enforcement authority resources
In general— The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended by inserting after section 1031 the following:
“1031A. Exclusion relating to responsible community mortgage lenders
“(a) Limitations of examination of responsible community mortgage lenders—Except as permitted in subsection (b), the Bureau may not conduct any audit, examination, or investigation of, or take an enforcement against, a responsible community mortgage lender.
“(b) Referrals by other agencies—The Bureau may conduct an audit, examination, or investigation of, or take an enforcement action against, a responsible community mortgage lender if requested by—
“(1) a State or local regulator;
“(2) a Federal department or agency that guarantees mortgage loans originated, held, or serviced by such lender;
“(3) the Federal Housing Finance Agency or entities supervised by such Agency; or
“(4) any other Federal department or agency that exercises supervisory authority over such lender.
“(c) Rule of construction—Nothing in this section shall be construed as modifying, limiting, or superseding the operation of any provision of Federal or State law, or otherwise affecting the authority of any Federal or State department or agency other than the Bureau.”
Clerical amendment— The table of contents under section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended by inserting after the item relating to section 1031 the following:
Sec. 5 Streamlined vendor audits
In general— The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.), as amended by section 4(a), is further amended by inserting after section 1031A the following:
“1031B. Vendor audit requirements relating to responsible community mortgage lenders
“(a) Vendor audits—The Bureau and the appropriate Federal banking agencies may only require a responsible community mortgage lender to perform an audit of a vendor or third-party contractor of the lender if the Bureau or the appropriate Federal banking agency, as applicable, has reasonable cause to believe that such vendor or third-party contractor is performing services for the lender in a manner that is causing the lender to violate the law.”
Clerical amendment— The table of contents under section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as amended by section 4(b), is further amended by inserting after the item relating to section 1031A the following: