MBA Comments on Mortgage Bills Ahead of House Committee Markup

The House Financial Services Committee yesterday began a markup session for a number of mortgage-related bills. Ahead of the session, the Mortgage Bankers Association sent a letter to committee members offering its views.

MBA Senior Vice President, Legislative & Political Affairs Bill Killmer outlined MBA support–and concerns–on two bills. He noted MBA support of H.R. 4607 (, introduced by Rep. Barry Loudermilk, R-Ga., which amends the Economic Growth and Regulatory Paperwork Reduction Act to ensure federal financial regulators perform comprehensive review of regulations to identify outdated or otherwise unnecessary regulations. Once identified, regulators must eliminate unnecessary regulations, but only to the extent the regulators believe elimination is appropriate.

“EGRPRA is an important legislative tool which helps ensure that regulations are reviewed and evaluated in light of changes in the market or the interlocking federal regulatory structure,” Killmer said. “Unlike the current state under the EGRPRA, the regulator’s responsibility will no longer end with an inventory of unnecessary regulations, but with the elimination of unnecessary regulations. In this way, H.R. 4607 would provide actual regulatory relief.”

MBA also expressed support for the broader intent of H.R. 2226, the Portfolio Lending and Mortgage Access Act ( Introduced by Rep. Andy Barr, R-Ky., the bill would treat mortgage loans that are kept on a depository institution’s balance sheet as having met the Qualified Mortgage requirements and grant them a legal safe harbor from the Dodd-Frank Act’s ability to repay requirements.

MBA had previously stated that any fix to the statutory QM framework should be done holistically, and not based on a lender’s charter type, asset size or business model. Killmer noted while MBA appreciates the intent of this legislation and has consistently viewed the current QM standard as overly restrictive, it is concerned that this change would create a distorted market for otherwise similar loans, particularly with respect to the charter of the originator.

“Today, non-bank lenders–many of which are small, community-based lenders–originate approximately half of all U.S. mortgages,” Killmer said. “Because their business model differs from that of banks and credit unions, nonbank lenders do not collect deposits or hold loans in portfolio. As such, loans originated by nonbank lenders are effectively excluded from this expansion of the QM standard.”

MBA said efforts to improve upon the QM standard should, to the greatest extent possible, be undertaken in a manner that preserves a level playing field for all types of lenders. MBA therefore recommends that–at a minimum–changes would extend QM status to loans originated by any lender, provided that they are transferred to, and subsequently held in the portfolio of, a community bank or credit union within 90 days of their origination.

“Such a revision would provide more opportunities for QM loans to be originated by various types of lenders while retaining the core objective of ultimate risk retention by small, community-based institutions,” Killmer said. “We believe the outcome would be enhanced consumer access to credit at lower costs, particularly for those consumers negatively affected by the more restrictive features of the current QM standard.”

The markup session continues today in 2128 Rayburn House Office Building, beginning at 10:00 a.m. ET. For more information about the bills and to follow the hearing online, click