Section 1 Short title
This Act may be cited as the “Community Lending Enhancement and Regulatory Relief Act of 2017” or the “CLEARR Act of 2017”.
Community Lending Enhancement and Regulatory Relief Act of 2017
A BILL
To provide regulatory relief to community financial institutions, and for other purposes.
Sec. 2 Community Institution Mortgage Relief
Exemption from escrow requirements for loans held by small creditors— Section 129D(c) of the Truth in Lending Act (15 U.S.C. 1639d(c)), as added by section 1461(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is amended—
by redesignating paragraphs (1), (2), (3), and (4) as subparagraphs (A), (B), (C), and (D) (and conforming the margins accordingly);
by striking “The Board” and inserting the following:
“(1) In general—The Bureau”
by adding at the end the following new paragraph:
“(2) Treatment of loans held by smaller creditors—The Bureau shall, by regulation, exempt from the requirements of subsection (a) any loan secured by a first lien on a consumer’s principal dwelling, if such loan is held by a creditor with assets of $50,000,000,000 or less.”
Modification to exemption for small servicers of mortgage loans— Section 6 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2605) is amended by adding at the end the following:
“(n) Small Servicer Exemption—The Bureau shall, by regulation, provide exemptions to, or adjustments for, the provisions of this section for servicers that annually service 30,000 or fewer mortgage loans, in order to reduce regulatory burdens while appropriately balancing consumer protections.”
Sec. 3 Access to Affordable Mortgages
Exemption from property appraisal requirements for lower-Cost dwellings— Section 129H of the Truth in Lending Act (15 U.S.C. 1639h) is amended by adding at the end the following new subsection:
“(g) Exemption for certain mortgages—The Bureau, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, and the Federal Housing Finance Agency shall exempt, by rule, a mortgage loan of $250,000 or less from the requirements of this section if such loan appears on the balance sheet of the creditor of such loan for a period of not less than 3 years.”
Exemption from penalties for failure To report appraisers— Paragraph (1) of section 129E(k) of the Truth in Lending Act (15 U.S.C. 1639e(k)(1)) is amended by inserting after “this section” the following: “, other than subsection (e),”.
Exemption from appraisal standard requirements for lower-Cost dwellings— Section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3339) is amended—
by striking “Each Federal financial institutions regulatory agency and the Resolution Trust Corporation” and inserting the following:
“(a) Real estate appraisals in connection with federally related transactions—Each Federal financial institutions regulatory agency”
by striking “each such agency or instrumentality” and inserting “each such agency”;
in the flush left matter following paragraph (3), by striking “Each such agency or instrumentality” and inserting the following:
“(b) Additional standards—Each such agency described under subsection (a)”
by adding at the end the following new subsection:
“(c) Exemption for certain mortgage loans—Each such agency described under subsection (a) shall exempt, by rule, a real estate appraisal or evaluation conducted in connection with a mortgage loan of $250,000 or less from the standards prescribed under this section, if such loan appears on the balance sheet of the creditor of such loan for a period of not less than 3 years.”
Sec. 4 Changes required to small bank holding company policy statement on assessment of financial and managerial factors
Before the end of the 6-month period beginning on the date of the enactment of this Act, the Board of Governors of the Federal Reserve System shall revise the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix C) to raise the consolidated asset threshold under such policy statement from $1,000,000,000 (as adjusted by Public Law 113–250) to $10,000,000,000.
Sec. 5 Capital requirements for mortgage servicing assets
Repeal of Basel III regulations— Not later than the end of the 60-day period beginning on the date of the enactment of this Act, each Federal banking agency shall—
repeal all regulations issued by the agency to implement the Basel III capital requirements or the NCUA capital requirements, as applicable, on mortgage servicing assets; and
revive or restore any regulation repealed or revised by a regulation described under paragraph (1).
New regulations— Before any final regulation is issued by a Federal banking agency with respect to capital requirements on mortgage servicing assets, the Federal banking agency shall—
issue a new proposed rule for public comment;
submit to Congress a notification of the proposed rule and an explanation for the proposed rule; and
consider—
the history of the market for mortgage servicing assets, including particularly the market for such assets in the period of the financial crisis;
the impact on consumer access to mortgage lending and mortgage servicing; and
competition in the mortgage servicing market, including analysis of the role community and mid-sized financial institutions play in the mortgage servicing market.
Definitions— For purposes of this section:
Basel III capital requirements— The term Basel III capital requirements means the Global Regulatory Framework for More Resilient Banks and Banking Systems issued by the Basel Committee on Banking Supervision on December 16, 2010, as revised on June 1, 2011.
Federal banking agency— The term Federal banking agency means the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, or the National Credit Union Administration.
Mortgage servicing asset— The term mortgage servicing asset means those assets that result from contracts to service loans secured by real estate, where such loans are owned by third parties.
NCUA capital requirements— The term “NCUA capital requirements” means the final rule of the National Credit Union Administration entitled “Risk-Based Capital” (80 Fed. Reg. 66626 (Oct. 29, 2015)).
Sec. 6 Bureau Authority Over Unfair and Deceptive Acts or Practices
In general— Section 1031 of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5531) is amended—
in the heading of such section, by striking “, deceptive, or abusive” and inserting “or deceptive”;
in subsection (a)—
by striking “, deceptive, or abusive” and inserting “or deceptive”; and
by adding at the end the following: “The Bureau may not take any action described under this subsection against a covered person or service provider unless the Bureau first consults the covered person or service provider’s primary financial regulatory agency, if any.”;
in subsection (b)—
by striking “, deceptive, or abusive” and inserting “or deceptive”; and
by inserting at the end the following: “In prescribing any rule under this subsection, the Bureau shall comply with the requirements of section 18 of the Federal Trade Commission Act (15 U.S.C. 57a) applicable to the Federal Trade Commission when the Commission prescribes rules and general statements of policy under that section with respect to unfair or deceptive acts or practices in or affecting commerce.”;
by striking subsection (d); and
by redesignating subsections (e) and (f) as subsections (d) and (e), respectively.
Conforming amendments—
Consumer financial protection act of 2010— The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—
by striking “, deceptive, and abusive” each place such term appears and inserting “and deceptive”; and
by striking “, deceptive, or abusive” each place such term appears and inserting “or deceptive”.
Dodd-frank wall street reform and consumer protection act— The table of contents in section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended, in the item relating to section 1031, by striking “, deceptive, or abusive” and inserting “or deceptive”.
Omnibus appropriations act, 2009— Section 626(a)(1) of the Omnibus Appropriations Act, 2009 (15 U.S.C. 1638 note) is amended by striking “, deceptive, or abusive” and inserting “or deceptive”.
Sec. 7 Amendments to the Equal Credit Opportunity Act and the Fair Housing Act to require intent to discriminate
Amendment to Equal Credit Opportunity Act— Subsection (a) of section 701 of the Equal Credit Opportunity Act (15 U.S.C. 1691(a)) is amended by inserting “intentionally” before “discriminate”.
in section 804—
by inserting “intentionally” before “discriminate” each place such term appears;
in subsection (a), by inserting “intentionally” before “refuse”;
in subsection (c)—
by inserting “intentionally” before “make”; and
by inserting “intentionally” before “cause”;
in subsection (d), by inserting “intentionally” before “represent”; and
in subsection (e), by striking “induce or attempt” and inserting “intentionally induce or intentionally attempt”;
in section 805, by inserting “intentionally” before “discriminate”; and
in section 806, by inserting “intentionally” before “discriminate”.
Sec. 8 Amendments to the Home Mortgage Disclosure Act of 1975
Loan volume threshold— Section 304(i) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(i)) is amended to read as follows:
“(i) Exemption From Certain Disclosure Requirements
“(1) In general—The requirements of subsections (b)(4), (b)(5), and (b)(6) shall not apply with respect to any depository institution described in section 303(2)(A).
“(2) Closed-end mortgage loans—With respect to a depository institution, the requirements of subsections (a) and (b) shall not apply with respect to closed-end mortgage loans if the depository institution originated less than 1,000 closed-end mortgage loans in each of the 2 preceding calendar years.
“(3) Open-end lines of credit—With respect to a depository institution, the requirements of subsections (a) and (b) shall not apply with respect to open-end lines of credit if the depository institution originated less than 2,000 open-end lines of credit in each of the 2 preceding calendar years.”
Data points— Section 304(b) of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803(b)) is amended—
by striking paragraphs (5) and (6);
in paragraph (3), by inserting “and” at the end; and
in paragraph (4), by striking “age.”.
Sec. 9 Repeal of small business loan collection data
Repeal— Section 704B of the Equal Credit Opportunity Act (15 U.S.C. 1691c–2) is repealed.
Clerical amendment— The table of sections for title VII of the Consumer Credit Protection Act is amended by striking the item relating to section 704B.
Sec. 10 Requirements for deposit account termination requests and orders
Termination requests or orders must be material—
In general— An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts or to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers unless—
the agency has a material reason for such request or order; and
such reason is not based solely on reputation risk.
Treatment of national security threats— If an appropriate Federal banking agency believes a specific customer or group of customers is, or is acting as a conduit for, an entity which—
poses a threat to national security;
is involved in terrorist financing;
is an agency of the government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list;
is located in, or is subject to the jurisdiction of, any country specified in subparagraph (C); or
does business with any entity described in subparagraph (C) or (D), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with any entity described in subparagraph (C) or (D),
Notice requirement—
In general— If an appropriate Federal banking agency formally or informally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall—
provide such request or order to the institution in writing; and
accompany such request or order with a written justification for why such termination is needed, including any specific laws or regulations the agency believes are being violated by the customer or group of customers, if any.
Justification requirement— A justification described under paragraph (1)(B) may not be based solely on the reputation risk to the depository institution.
Customer notice—
Notice not required— Nothing in this section shall be construed as requiring a depository institution or an appropriate Federal banking agency to inform a customer or customers of the justification for the customer’s account termination described under subsection (b).
Notice prohibited in cases of national security— If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination.
Reporting requirement— Each appropriate Federal banking agency shall issue an annual report to the Congress stating—
the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and
the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority.
Definitions— For purposes of this section:
Appropriate federal banking agency— The term appropriate Federal banking agency means—
the appropriate Federal banking agency, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
the National Credit Union Administration, in the case of an insured credit union.
Depository institution— The term depository institution means—
a depository institution, as defined under section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); and
an insured credit union.
Sec. 11 Amendments to civil penalties under FIRREA
Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833a) is amended—
in subsection (c)(2), by striking “affecting a federally insured financial institution” and inserting “against a federally insured financial institution or by a federally insured financial institution against an unaffiliated third person”; and
in subsection (g)—
in the header, by striking “Subpoenas” and inserting “Investigations”; and
by amending paragraph (1)(C) to read as follows:
“(C) summon witnesses and require the production of any books, papers, correspondence, memoranda, or other records which the Attorney General deems relevant or material to the inquiry, if the Attorney General—
“(i) requests a court order from a court of competent jurisdiction for such actions and offers specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant and material for conducting an investigation under this section; or
“(ii) either personally or through delegation no lower than the Deputy Attorney General, issues and signs a subpoena for such actions and such subpoena is supported by specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant for conducting an investigation under this section.”
Sec. 12 Waiver of waiting period
Not later than 120 days after the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue regulations establishing a process to waive the requirement relating to the timing of providing closing disclosures for mortgage loans described under section 1026.19(f)(1)(ii) of title 12, Code of Federal Regulations.
Sec. 13 Limit on Bureau Supervision
The Consumer Financial Protection Act of 2010 (12 U.S.C. 5481 et seq.) is amended—
in section 1025(a), by striking “$10,000,000,000” each place such term appears and inserting “$50,000,000,000”; and
in section 1026(a), by striking “$10,000,000,000” each place such term appears and inserting “$50,000,000,000”.
Sec. 14 Limited exception for reciprocal deposits
In general— Section 29 of the Federal Deposit Insurance Act (12 U.S.C. 1831f) is amended by adding at the end the following new subsection:
“(a) Limited exception for reciprocal deposits
“(1) In general—Reciprocal deposits of an insured depository institution shall not be considered to be funds obtained, directly or indirectly, by or through a deposit broker if—
“(A) when the institution was most recently examined, its composite condition was found to be outstanding or good; or
“(B) the total amount of such reciprocal deposits does not exceed the lesser of—
“(i) $10,000,000,000; or
“(ii) an amount equal to 20 percent of the total liabilities of the insured depository institution.
“(2) Rule of construction—Nothing in this subsection shall be construed to limit the authority of the Corporation to require, on a case-by-case basis, that an agent institution that is less than adequately capitalized (as defined in section 38(b)(1)(B)) not accept particular types of deposits upon finding that the acceptance of such deposits constitutes an unsafe or unsound practice with respect to such institution.
“(3) Definitions—In this subsection:
“(A) Agent institution—The term agent institution means an insured depository institution that places a covered deposit through a deposit placement network at other insured depository institutions in amounts that are less than or equal to the standard maximum deposit insurance amount, specifying the interest rate to be paid for such amounts, where the agent institution—
“(i) is well capitalized (as defined in section 38(b)(1)(A)) or has obtained a waiver pursuant to subsection (c) of this section; or
“(ii) does not receive an amount of reciprocal deposits that causes the total amount of reciprocal deposits held by the agent institution to be greater than the average of the total amount of reciprocal deposits held by the agent institution on the last day of each of the 4 calendar quarters preceding the calendar quarter in which the agent institution was determined to be not well capitalized.
“(B) Covered deposit—The term covered deposit means a deposit that—
“(i) is submitted for placement through a deposit placement network by an agent institution; and
“(ii) does not consist of funds that were obtained for the agent institution, directly or indirectly, by or through a deposit broker before submission for placement through a deposit placement network.
“(C) Deposit placement network—The term deposit placement network means a network in which an insured depository institution participates, together with other insured depository institutions, for the processing and receipt of reciprocal deposits.
“(D) Network member bank—The term network member bank means an insured depository institution that is a member of a deposit placement network.
“(E) Reciprocal deposits—The term reciprocal deposits means deposits received by an agent institution through a deposit placement network with the same maturity (if any) and in the same aggregate amount as covered deposits placed by the agent institution in other network member banks.”
Applicability— Nothing in this Act shall be construed to limit the application of any provision of the Federal Deposit Insurance Act, other than section 29 of such Act (12 U.S.C. 1831f), to an insured depository institution (as defined in section 3(c) of such Act (12 U.S.C. 1813(c))).
Sec. 15 Safe harbor for certain loans held on portfolio
In general— Section 129C of the Truth in Lending Act (15 U.S.C. 1639c) is amended by adding at the end the following:
“(j) Safe harbor for certain loans held on portfolio
“(1) Safe harbor for creditors that are depository institutions
“(A) In general—A creditor that is a depository institution shall not be subject to suit for failure to comply with subsection (a), (c)(1), or (f)(2) of this section or section 129H with respect to a residential mortgage loan, and the banking regulators shall treat such loan as a qualified mortgage, if—
“(i) the creditor has, since the origination of the loan, held the loan on the balance sheet of the creditor; and
“(ii) all prepayment penalties with respect to the loan comply with the limitations described under subsection (c)(3).
“(B) Exception for certain transfers—In the case of a depository institution that transfers a loan originated by that institution to another depository institution by reason of the bankruptcy or failure of the originating depository institution or the purchase of the originating depository institution, the depository institution transferring such loan shall be deemed to have complied with the requirement under subparagraph (A)(i).
“(2) Safe harbor for mortgage originators—A mortgage originator shall not be subject to suit for a violation of section 129B(c)(3)(B) for steering a consumer to a residential mortgage loan if—
“(A) the creditor of such loan is a depository institution and has informed the mortgage originator that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan; and
“(B) the mortgage originator informs the consumer that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan.
“(3) Definitions—For purposes of this subsection:
“(A) Banking regulators—The term banking regulators means the Federal banking agencies, the Bureau, and the National Credit Union Administration.
“(B) Depository institution—The term depository institution has the meaning given that term under section 19(b)(1) of the Federal Reserve Act (12 U.S.C. 505(b)(1)).
“(C) Federal banking agencies—The term Federal banking agencies has the meaning given that term under section 3 of the Federal Deposit Insurance Act.”
Rule of construction— Nothing in the amendment made by this Act may be construed as preventing a balloon loan from qualifying for the safe harbor provided under section 129C(j) of the Truth in Lending Act if the balloon loan otherwise meets all of the requirements under such subsection (j), regardless of whether the balloon loan meets the requirements described under clauses (i) through (iv) of section 129C(b)(2)(E) of such Act.
Sec. 16 Amendments to ability to pay requirements for mortgage loans
Section 129C(b)(3) of the Truth in Lending Act (15 U.S.C. 1639C(b)(3)) is amended—
by amending subparagraph (A) to read as follows:
“(A) In general
“(i) Bureau regulations—The Bureau shall prescribe regulations to carry out the purposes of this subsection, except that the Bureau may not prescribe any regulation that addresses modifies any provision of paragraph (2)(A)(iii), or that addresses modifies any rule promulgated by the Federal Housing Finance Agency pursuant to subparagraph (B)(i). Any existing regulation of the Bureau that addresses modifies paragraph (2)(A)(iii) shall have no force or effect as of the date the Federal Housing Finance Agency prescribes a rule pursuant to subparagraph (B)(i)(II).
“(ii) Federal Housing Finance Agency regulations—The Federal Housing Finance Agency shall only prescribe regulations to carry out the purposes of paragraph (2)(A)(iii). The Federal Housing Finance Agency may not prescribe any regulation that addresses modifies any requirement under clause (i), (ii), (iv), (v), (vi), (vii), (viii), or (ix) of paragraph (2)(A), or that addresses modifies any rule promulgated by the Bureau pursuant to clause (i) or subparagraph (B)(i)(I).”
in subparagraph (B)—
by striking “The Board may” and inserting
“(I) Bureau regulations—The Bureau may”
in subclause (I), as designated by subparagraph (A), by striking “compliance with such actions” and inserting “, except that the Bureau may not prescribe any regulation that violates the provisions of subparagraph (A). The Bureau may not eliminate any requirement or add any new requirement under clause (i), (ii), (iv), (v), (vi), (vii), (viii), or (ix) of paragraph (2)(A) unless it does so by prescribing a rule enacted pursuant to the procedures set forth in section 553 of title 5, United States Code”;
in clause (i), by adding at the end the following new subclause:
“(II) Federal Housing Finance Agency regulations—Not later than 180 days after the date of the enactment of this subclause, the Federal Housing Finance Agency shall prescribe regulations to carry out the requirements of paragraph (2)(A)(iii). Notwithstanding the procedures set forth in section 553 of title 5, United States Code, the Federal Housing Finance Agency shall review its promulgated standards under such paragraph at least annually, and shall publish any proposed adjustments to such standards in the Federal Register. The Federal Housing Finance Agency may not eliminate any requirement or add any new requirement under paragraph (2)(A)(iii) unless it does so by prescribing a rule enacted pursuant to the procedures set forth in section 553 of title 5, United States Code.”
in clause (ii), by striking “with the Board” and inserting “with the Bureau with respect to the requirements under clauses (i), (ii), (iv), (v), (vi), (vii), (viii), and (ix) of paragraph (2)(A), and in consultation with the Federal Housing Finance Agency with respect to the requirement under paragraph (2)(A)(iii)”.