On March 15, 2018, the U.S. Senate passed the Economic Growth, Regulatory Relief and Consumer Protection Act (S-2155)–a bipartisan bill that LenderLaw Watch reported on as a piece of legislation to watch back in December. In general, the bill seeks to reduce compliance obligations for smaller financial institutions while maintaining the general integrity of the financial system. It passed with a 67-31 vote.
The bill addresses consumer access to mortgage credit; regulatory relief and consumer access to credit; protections for veterans, consumers and homeowners; regulations for bank holding companies; capital formation; and student lending protections. Some highlights include:
- Deeming mortgage loans originated and retained by insured depository institutions or credit unions with less than $10 billion in assets to be qualified mortgages under the Truth in Lending Act (TILA);
- Excluding from TILA’s definition of “mortgage originator” employees of manufactured or modular home retailers who do not receive income from loan applications;
- Exempting from TILA escrow requirements loans made by insured depository institutions or insured credit unions with less than $10 billion in assets;
- Exempting from appraisal requirements certain mortgage loans valued at less than $400,000 and located in rural areas;
- Exempting from certain disclosure requirements small depository institutions that originated less than 500 closed-end mortgage loans or open-end lines of credits within the past two years;
- Exempting from the definition of a member business loan under the Federal Credit Union Act one to four family properties that are not the primary residences of credit union members;
- Permitting individuals to temporarily serve as loan originators for 120 days under certain circumstances;
- Removing TILA/RESPA three-day waiting requirement disclosures if the creditor offers a second credit offer with a lower annual percentage rate;
- Deeming banks with less than $10 billion in assets to be in compliance with capital and leverage requirements;
- Exempting community banks with less than $10 billion in assets and with total trading assets and liability not more than 5% of consolidated assets from the Volcker Rule;
- Requiring budget transparency for the National Credit Union Administration by requiring it to conduct a hearing on a draft budget before submission;
- Requiring Treasury to report to Congress the risks of cyber security threats against financial institutions and markets;
- Requiring credit bureaus to provide free credit freezes and removals;
- Permanently extending the time period a valid foreclosure can be conducted on a servicemember’s property to one year after military service concludes;
- Raising the threshold for application of enhanced prudential standards from $50 billion to $250 billion;
- Exempting bank holding companies from enhanced prudential standards with assets between $50 billion and $100 billion;
- Exempting bank holding companies from enhanced prudential standards with assets between $100 billion and $250 billion after 18 months of the effective date of the Act;
- Raising the threshold for stress tests from $50 billion to $250 billion;
- Releasing co-signers of private student loans from obligations upon the borrower’s death; and
- Permitting a student loan borrower to request removal of a reported default if the student participates in a rehabilitaion program.
As Senate Banking Committee Chairman Mike Crapo (R-ID) commented, “The majority of us in this body recognize that our community financial institutions have been struggling to keep up with the regulatory demands coming out of Washington, and that it was time to revisit current law and make changes where necessary. … When this bill is signed into law, it will right-size regulation for financial institutions, including community banks and credit unions, making it easier for consumers to get mortgages and obtain credit. … Absent excessive regulatory burden, local banks and credit unions will be able to focus more on lending, in turn propelling economic growth and creating jobs.”
The bill will now proceed to House, where Financial Services Committee Chairman Jeb Hensarling (R-TX) has already remarked that he “look[s] forward to combining” it with House banking bills to send it “to the President’s desk.” LenderLaw Watch will continue to report on developments including the bill’s progress through the House.