US Codex
Pub. L.
Notes

Title I — Improving Consumer Access to Mortgage Credit

115th Congress · Approved May 24, 2018 · 132 Stat. 1296 · Lineage

TITLE I Improving Consumer Access to Mortgage Credit

SEC. 101. Minimum Standards for Residential Mortgage Loans.

Section 129C(b)(2) of the Truth in Lending Act (15 U.S.C. 1639c(b)(2)) is amended by adding at the end the following:

“(F) Safe harbor.—

“(i) Definitions.—In this subparagraph—

“(I) the term ‘covered institution’ means an insured depository institution or an insured credit union that, together with its affiliates, has less than $10,000,000,000 in total consolidated assets;

“(II) the term ‘insured credit union’ has the meaning given the term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752);

“(III) the term ‘insured depository institution’ has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);

“(IV) the term ‘interest-only’ means that, under the terms of the legal obligation, one or more of the periodic payments may be applied solely to accrued interest and not to loan principal; and

“(V) the term ‘negative amortization’ means payment of periodic payments that will result in an increase in the principal balance under the terms of the legal obligation.

“(ii) Safe harbor.—In this section—

“(I) the term ‘qualified mortgage’ includes any residential mortgage loan—

“(aa) that is originated and retained in portfolio by a covered institution;

“(bb) that is in compliance with the limitations with respect to prepayment penalties described in subsections (c)(1) and (c)(3);

“(cc) that is in compliance with the requirements of clause (vii) of subparagraph (A);

“(dd) that does not have negative amortization or interest-only features; and

“(ee) for which the covered institution considers and documents the debt, income, and financial resources of the consumer in accordance with clause (iv); and

“(II) a residential mortgage loan described in subclause (I) shall be deemed to meet the requirements of subsection (a).

“(iii) Exception for certain transfers.—A residential mortgage loan described in clause (ii)(I) shall not qualify for the safe harbor under clause (ii) if the legal title to the residential mortgage loan is sold, assigned, or otherwise transferred to another person unless the residential mortgage loan is sold, assigned, or otherwise transferred—

“(I) to another person by reason of the bankruptcy or failure of a covered institution;

“(II) to a covered institution so long as the loan is retained in portfolio by the covered institution to which the loan is sold, assigned, or otherwise transferred;

“(III) pursuant to a merger of a covered institution with another person or the acquisition of a covered institution by another person or of another person by a covered institution, so long as the loan is retained in portfolio by the person to whom the loan is sold, assigned, or otherwise transferred; or

“(IV) to a wholly owned subsidiary of a covered institution, provided that, after the sale, assignment, or transfer, the residential mortgage loan is considered to be an asset of the covered institution for regulatory accounting purposes.

“(iv) Consideration and documentation requirements.—The consideration and documentation requirements described in clause (ii)(I)(ee) shall—

“(I) not be construed to require compliance with, or documentation in accordance with, appendix Q to part 1026 of title 12, Code of Federal Regulations, or any successor regulation; and

“(II) be construed to permit multiple methods of documentation.”

SEC. 102. Safeguarding Access to Habitat for Humanity Homes.

Section 129E(i)(2) of the Truth in Lending Act (15 U.S.C. 1639e(i)(2)) is amended—
(1)
by redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively, and adjusting the margins accordingly;
(2)
in the matter preceding clause (i), as so redesignated, by striking “ For purposes of” and inserting the following:

“(A) In general.—For purposes of”

; and

(3)
by adding at the end the following:

“(B) Rule of construction related to appraisal donations.—If a fee appraiser voluntarily donates appraisal services to an organization eligible to receive tax-deductible charitable contributions, such voluntary donation shall be considered customary and reasonable for the purposes of paragraph (1).”

SEC. 103. Exemption from Appraisals of Real Property Located in Rural Areas.

Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.) is amended by adding at the end the following:

“SEC. 1127. EXEMPTION FROM APPRAISALS OF REAL ESTATE LOCATED IN RURAL AREAS.

“(a) Definitions.—In this section—

“(1) the term ‘mortgage originator’ has the meaning given the term in section 103 of the Truth in Lending Act (15 U.S.C. 1602); and

“(2) the term ‘transaction value’ means the amount of a loan or extension of credit, including a loan or extension of credit that is part of a pool of loans or extensions of credit.

“(b) Appraisal Not Required.—Except as provided in subsection (d), notwithstanding any other provision of law, an appraisal in connection with a federally related transaction involving real property or an interest in real property is not required if—

“(1) the real property or interest in real property is located in a rural area, as described in section 1026.35(b)(2)(iv)(A) of title 12, Code of Federal Regulations;

“(2) not later than 3 days after the date on which the Closing Disclosure Form, made in accordance with the final rule of the Bureau of Consumer Financial Protection entitled ‘Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)’ (78 Fed. Reg. 79730 (December 31, 2013)), relating to the federally related transaction is given to the consumer, the mortgage originator or its agent, directly or indirectly—

“(A) has contacted not fewer than 3 State certified appraisers or State licensed appraisers, as applicable, on the mortgage originator’s approved appraiser list in the market area in accordance with part 226 of title 12, Code of Federal Regulations; and

“(B) has documented that no State certified appraiser or State licensed appraiser, as applicable, was available within 5 business days beyond customary and reasonable fee and timeliness standards for comparable appraisal assignments, as documented by the mortgage originator or its agent;

“(3) the transaction value is less than $400,000; and

“(4) the mortgage originator is subject to oversight by a Federal financial institutions regulatory agency.

“(c) Sale, Assignment, or Transfer.—A mortgage originator that makes a loan without an appraisal under the terms of subsection (b) shall not sell, assign, or otherwise transfer legal title to the loan unless—

“(1) the loan is sold, assigned, or otherwise transferred to another person by reason of the bankruptcy or failure of the mortgage originator;

“(2) the loan is sold, assigned, or otherwise transferred to another person regulated by a Federal financial institutions regulatory agency, so long as the loan is retained in portfolio by the person;

“(3) the sale, assignment, or transfer is pursuant to a merger of the mortgage originator with another person or the acquisition of the mortgage originator by another person or of another person by the mortgage originator; or

“(4) the sale, loan, or transfer is to a wholly owned subsidiary of the mortgage originator, provided that, after the sale, assignment, or transfer, the loan is considered to be an asset of the mortgage originator for regulatory accounting purposes.

“(d) Exception.—Subsection (b) shall not apply if—

“(1) a Federal financial institutions regulatory agency requires an appraisal under section 225.63(c), 323.3(c), 34.43(c), or 722.3(e) of title 12, Code of Federal Regulations; or

“(2) the loan is a high-cost mortgage, as defined in section 103 of the Truth in Lending Act (15 U.S.C. 1602).

“(e) Anti-Evasion.—Each Federal financial institutions regulatory agency shall ensure that any mortgage originator that the Federal financial institutions regulatory agency oversees that makes a significant amount of loans under subsection (b) is complying with the requirements of subsection (b)(2) with respect to each loan.”

SEC. 104. Home Mortgage Disclosure Act Adjustment and Study.

(a)
In General.— Section 304 of the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2803) is amended—
(1)
by redesignating subsection (i) as paragraph (3) and adjusting the margins accordingly;
(2)
by inserting before paragraph (3), as so redesignated, the following:

“(i) Exemptions.—

“(1) Closed-end mortgage loans.—With respect to an insured depository institution or insured credit union, the requirements of paragraphs (5) and (6) of subsection (b) shall not apply with respect to closed-end mortgage loans if the insured depository institution or insured credit union originated fewer than 500 closed-end mortgage loans in each of the 2 preceding calendar years.

“(2) Open-end lines of credit.—With respect to an insured depository institution or insured credit union, the requirements of paragraphs (5) and (6) of subsection (b) shall not apply with respect to open-end lines of credit if the insured depository institution or insured credit union originated fewer than 500 open-end lines of credit in each of the 2 preceding calendar years.

“(3) Required compliance.—Notwithstanding paragraphs (1) and (2), an insured depository institution shall comply with paragraphs (5) and (6) of subsection (b) if the insured depository institution has received a rating of ‘needs to improve record of meeting community credit needs’ during each of its 2 most recent examinations or a rating of ‘substantial noncompliance in meeting community credit needs’ on its most recent examination under section 807(b)(2) of the Community Reinvestment Act of 1977 (12 U.S.C. 2906(b)(2)).”

; and

(3)
by adding at the end the following:

“(o) Definitions.—In this section—

“(1) the term ‘insured credit union’ has the meaning given the term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752); and

“(2) the term ‘insured depository institution’ has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).”

(b)
Lookback Study.—
(1)
Study.— Not earlier than 2 years after the date of enactment of this Act, the Comptroller General of the United States shall conduct a study to evaluate the impact of the amendments made by subsection (a) on the amount of data available under the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.) at the national and local level.
(2)
Report.— Not later than 3 years after the date of enactment of this Act, the Comptroller General of the United States shall submit to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives a report that includes the findings and conclusions of the Comptroller General with respect to the study required under paragraph (1).
(c)
Technical Correction.— Section 304(i)(3) of the Home Mortgage Disclosure Act of 1975, as so redesignated by subsection (a)(1), is amended by striking “ section 303(2)(A)” and inserting “ section 303(3)(A)”.

SEC. 105. Credit Union Residential Loans.

(a)
Removal From Member Business Loan Limitation.— Section 107A(c)(1)(B)(i) of the Federal Credit Union Act (12 U.S.C. 1757a(c)(1)(B)(i)) is amended by striking “ that is the primary residence of a member”.
(b)
Rule of Construction.— Nothing in this section or the amendment made by this section shall preclude the National Credit Union Administration from treating an extension of credit that is fully secured by a lien on a 1- to 4-family dwelling that is not the primary residence of a member as a member business loan for purposes other than the member business loan limitation requirements under section 107A of the Federal Credit Union Act (12 U.S.C. 1757a).

SEC. 106. Eliminating Barriers to Jobs for Loan Originators.

(a)
In General.— The S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5101 et seq.) is amended by adding at the end the following:

“SEC. 1518. EMPLOYMENT TRANSITION OF LOAN ORIGINATORS.

“(a) Definitions.—In this section:

“(1) Application state.—The term ‘application State’ means a State in which a registered loan originator or a State-licensed loan originator seeks to be licensed.

“(2) State-licensed mortgage company.—The term ‘State-licensed mortgage company’ means an entity that is licensed or registered under the law of any State to engage in residential mortgage loan origination and processing activities.

“(b) Temporary Authority To Originate Loans for Loan Originators Moving From a Depository Institution to a Non-Depository Institution.—

“(1) In general.—Upon becoming employed by a State-licensed mortgage company, an individual who is a registered loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period described in paragraph (2) if the individual—

“(A) has not had—

“(i) an application for a loan originator license denied; or

“(ii) a loan originator license revoked or suspended in any governmental jurisdiction;

“(B) has not been subject to, or served with, a cease and desist order—

“(i) in any governmental jurisdiction; or

“(ii) under section 1514(c);

“(C) has not been convicted of a misdemeanor or felony that would preclude licensure under the law of the application State;

“(D) has submitted an application to be a State-licensed loan originator in the application State; and

“(E) was registered in the Nationwide Mortgage Licensing System and Registry as a loan originator during the 1-year period preceding the date on which the information required under section 1505(a) is submitted.

“(2) Period.—The period described in this paragraph shall begin on the date on which an individual described in paragraph (1) submits the information required under section 1505(a) and shall end on the earliest of the date—

“(A) on which the individual withdraws the application to be a State-licensed loan originator in the application State;

“(B) on which the application State denies, or issues a notice of intent to deny, the application;

“(C) on which the application State grants a State license; or

“(D) that is 120 days after the date on which the individual submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.

“(c) Temporary Authority To Originate Loans for State-Licensed Loan Originators Moving Interstate.—

“(1) In general.—A State-licensed loan originator shall be deemed to have temporary authority to act as a loan originator in an application State for the period described in paragraph (2) if the State-licensed loan originator—

“(A) meets the requirements of subparagraphs (A), (B), (C), and (D) of subsection (b)(1);

“(B) is employed by a State-licensed mortgage company in the application State; and

“(C) was licensed in a State that is not the application State during the 30-day period preceding the date on which the information required under section 1505(a) was submitted in connection with the application submitted to the application State.

“(2) Period.—The period described in this paragraph shall begin on the date on which the State-licensed loan originator submits the information required under section 1505(a) in connection with the application submitted to the application State and end on the earliest of the date—

“(A) on which the State-licensed loan originator withdraws the application to be a State-licensed loan originator in the application State;

“(B) on which the application State denies, or issues a notice of intent to deny, the application;

“(C) on which the application State grants a State license; or

“(D) that is 120 days after the date on which the State-licensed loan originator submits the application, if the application is listed on the Nationwide Mortgage Licensing System and Registry as incomplete.

“(d) Applicability.—

“(1) Employer of loan originators.—Any person employing an individual who is deemed to have temporary authority to act as a loan originator in an application State under this section shall be subject to the requirements of this title and to applicable State law to the same extent as if that individual was a State-licensed loan originator licensed by the application State.

“(2) Engaging in mortgage loan activities.—Any individual who is deemed to have temporary authority to act as a loan originator in an application State under this section and who engages in residential mortgage loan origination activities shall be subject to the requirements of this title and to applicable State law to the same extent as if that individual was a State-licensed loan originator licensed by the application State.”

(b)
Table of Contents Amendment.— Section 1(b) of the Housing and Economic Recovery Act of 2008 (42 U.S.C. 4501 note) is amended by inserting after the item relating to section 1517 the following:

“Sec. 1518. Employment transition of loan originators.”.

(c)
Civil Liability.— Section 1513 of the S.A.F.E. Mortgage Licensing Act of 2008 (12 U.S.C. 5112) is amended by striking “ persons who are loan originators or are applying for licensing or registration as loan originators.” and inserting

“(1) have applied, are applying, or are licensed or registered through the Nationwide Mortgage Licensing System and Registry; and

“(2) work in an industry with respect to which persons were licensed or registered through the Nationwide Mortgage Licensing System and Registry on the date of enactment of the Economic Growth, Regulatory Relief, and Consumer Protection Act.”

(d)
Effective Date.— This section and the amendments made by this section shall take effect on the date that is 18 months after the date of enactment of this Act.

SEC. 107. Protecting Access to Manufactured Homes.

Section 103 of the Truth in Lending Act (15 U.S.C. 1602) is amended—
(1)
by redesignating the second subsection (cc) (relating to definitions relating to mortgage origination and residential mortgage loans) and subsection (dd) as subsections (dd) and (ee), respectively; and
(2)
in paragraph (2) of subsection (dd), as so redesignated, by striking subparagraph (C) and inserting the following:

“(C) does not include any person who is—

“(i) not otherwise described in subparagraph (A) or (B) and who performs purely administrative or clerical tasks on behalf of a person who is described in any such subparagraph; or

“(ii) a retailer of manufactured or modular homes or an employee of the retailer if the retailer or employee, as applicable—

“(I) does not receive compensation or gain for engaging in activities described in subparagraph (A) that is in excess of any compensation or gain received in a comparable cash transaction;

“(II) discloses to the consumer—

“(aa) in writing any corporate affiliation with any creditor; and

“(bb) if the retailer has a corporate affiliation with any creditor, at least 1 unaffiliated creditor; and

“(III) does not directly negotiate with the consumer or lender on loan terms (including rates, fees, and other costs).”

SEC. 108. Escrow Requirements Relating to Certain Consumer Credit Transactions.

Section 129D of the Truth in Lending Act (15 U.S.C. 1639d) is amended—
(1)
in subsection (c)—
(A)
by redesignating paragraphs (1) through (4) as subparagraphs (A) through (D), respectively, and adjusting the margins accordingly;
(B)
in the matter preceding subparagraph (A), as so redesignated, by striking “ The Board” and inserting the following:

“(1) In general.—The Bureau”

(C)
in paragraph (1), as so redesignated, by striking “ the Board” each place that term appears and inserting “ the Bureau”; and
(D)
by adding at the end the following:

“(2) Treatment of loans held by smaller institutions.—The Bureau shall, by regulation, exempt from the requirements of subsection (a) any loan made by an insured depository institution or an insured credit union secured by a first lien on the principal dwelling of a consumer if—

“(A) the insured depository institution or insured credit union has assets of $10,000,000,000 or less;

“(B) during the preceding calendar year, the insured depository institution or insured credit union and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling; and

“(C) the transaction satisfies the criteria in sections 1026.35(b)(2)(iii)(A), 1026.35(b)(2)(iii)(D), and 1026.35(b)(2)(v) of title 12, Code of Federal Regulations, or any successor regulation.”

; and

(2)
in subsection (i), by adding at the end the following:

“(3) Insured credit union.—The term ‘insured credit union’ has the meaning given the term in section 101 of the Federal Credit Union Act (12 U.S.C. 1752).

“(4) Insured depository institution.—The term ‘insured depository institution’ has the meaning given the term in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813).”

SEC. 109. No Wait for Lower Mortgage Rates.

(a)
In General.— Section 129(b) of the Truth in Lending Act (15 U.S.C. 1639(b)) is amended—
(1)
by redesignating paragraph (3) as paragraph (4); and
(2)
by inserting after paragraph (2) the following:

“(3) No wait for lower rate.—If a creditor extends to a consumer a second offer of credit with a lower annual percentage rate, the transaction may be consummated without regard to the period specified in paragraph (1) with respect to the second offer.”

(b)
Sense of Congress.— It is the sense of Congress that, whereas the Bureau of Consumer Financial Protection issued a final rule entitled “Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)” (78 Fed. Reg. 79730 (December 31, 2013)) (in this subsection referred to as the “TRID Rule”) to combine the disclosures a consumer receives in connection with applying for and closing on a mortgage loan, the Bureau of Consumer Financial Protection should endeavor to provide clearer, authoritative guidance on—
(1)
the applicability of the TRID Rule to mortgage assumption transactions;
(2)
the applicability of the TRID Rule to construction-to-permanent home loans, and the conditions under which those loans can be properly originated; and
(3)
the extent to which lenders can rely on model disclosures published by the Bureau of Consumer Financial Protection without liability if recent changes to regulations are not reflected in the sample TRID Rule forms published by the Bureau of Consumer Financial Protection.