Relieves Community Banks, Credit Unions, Mortgage Lenders from Excessive Regulations
Washington, DC – March 5, 2015 – (RealEstateRama) — U.S. Representative Randy Hultgren (IL-14) has cosponsored H.R. 1210, the Portfolio Lending and Mortgage Access Act, which relieves mortgage lenders like community banks and credit unions from senseless regulations which increase costs and reduce the availability of home mortgages for consumers.
“Homeownership advances the American dream and encourages responsible citizenship, encouraging deep community involvement. We should encourage this key investment for the average American as a primary way that they build their net worth,” said Rep. Hultgren. “Unfortunately, Dodd-Frank regulations restrict home loans by forcing banks, especially community banks and credit unions, into a regulatory straightjacket. Dodd-Frank regulations micromanage what mortgages lenders can safely offer, undermining the innovative ways that lenders tailor-make loans to help the particular needs of their customers. The Portfolio Lending and Mortgage Access Act sensibly reduces these regulations without undermining consumer protection.
“With more mortgages on lending institutions’ portfolios, each has a stake in the success and fiscal soundness of the loans they make. These lenders do not need federal bureaucrats to dictate precisely how to evaluate customers. Because they lose money if their customer falls behind on their loan, these lenders have every incentive to get it right.”
The Dodd-Frank Act exempts “Qualified Mortgages” (“QM”) from the law’s “ability to repay” requirement, exposing mortgage lenders to legal liability unless they comply with costly regulations that dictate how to evaluate if their customers can afford a mortgage. H.R. 1210 exempts lenders from this “ability to repay” requirement for every residential mortgage loan that they hold on their lending portfolio.
Specifically, the Portfolio Lending and Mortgage Access Act:
•Provides that residential mortgages satisfies Dodd-Frank’s “ability to repay” requirement if the original creditor holds the loan on their portfolio.
•Treats these loans as a “Qualified Mortgage” for the purpose of all other relevant regulations.
•Excludes loans that are later securitized and moved off portfolio from this protection.