Ahead of House Votes, MBA Asks Support for Mortgage Provisions in Bills Package

Ahead of House votes this week, the Mortgage Bankers Association sent letters urging Representatives to support bills that would spur job creation; enhance credit access and data reporting; and improve the manner in which the mortgage industry is regulated.

The House this week is scheduled to take up S. 488, the JOBS and Investor Confidence Act of 2018 (https://policy.house.gov/legislative/bills/house-amendment-s-488-jobs-and-investor-confidence-act-2018); and H.R. 6147, the Department of the Interior, Environment and Related Agencies Appropriations Act of 2018 (https://www.congress.gov/bill/115th-congress/house-bill/6147). S.488, which passed the Senate in 2017, includes a package of 32 bills principally designed to spur entrepreneurship by reinvigorating business startups and initial public offerings. S. 6147 provides funding for, among other departments, the Mortgage Choice Act, which contains MBA-supported changes to the Truth in Lending Act.

In the first letter, MBA expressed support for inclusion of two individual bills in the broader package: H.R. 435, the “Credit Access and Inclusion Act of 2017,” introduced by Reps. Keith Ellison, D-Minn., and Robert Pittenger, R-N.C.; and H.R. 5953, the “Building Up Independent Lives and Dreams Act,” introduced by Reps. Barry Loudermilk, R-Ga., and Brad Sherman, D-Calif.

H.R. 435 promotes use of rental, utility and telecommunications data to supplement traditional data that is provided to consumer reporting agencies, which would support the ability of underserved borrowers who have sparser credit histories and, accordingly, have difficulty qualifying for loans.

“As MBA noted in a March 2018 letter to the Federal Housing Finance Agency, ‘there is great potential for alternative data to improve access to credit for consumers that are historically underserved, such as low-income or minority households,'” wrote MBA Senior Vice President of Legislative and Political Affairs Bill Killmer. “The responsible use of alternative data, such as rental, utility and telecommunications payments, could add valuable information to many consumers’ credit histories, which in turn could safely expand access to credit.”

H.R. 5953 would provide regulatory relief to all affiliates of charitable organizations who make zero percent housing loans, such as Habitat for Humanity. “If passed, such entities would be able to utilize a comprehensive series of loan documents that carries a substantially lower operational burden than the nearly 1,200 page TRID forms, which include sections that may be applicable to traditional mortgage lenders but are not relevant to such charitable organizations,” Killmer said. “This TRID relief would be identical to that which currently applies to mortgage lenders making five or fewer loans a year.”

In the second letter, MBA urged support of the Financial Services and General Government appropriations language for Fiscal Year 2019 packaged within H.R. 6147. Specifically, MBA expressed support for Subtitle D, section 906, which would make two adjustments to the Truth in Lending Act definition of points and fees to ensure greater consumer choice in mortgage and settlement services under the Ability to Repay/Qualified Mortgage rule.

Killmer told lawmakers the QM rule sets the standard for consumer mortgages by providing significant compliance certainty to loans that do not have risky features and meet strict federal requirements. A key requirement is that points and fees for a QM may not exceed 3 percent of the loan amount. The problem arises that, under current law and rules, what constitutes a “fee” or a “point” towards the points and fees cap varies greatly depending upon who is making the loan and what arrangements are made by consumers to obtain title insurance. “MBA believes this legislation will ensure consumers more choices in credit providers and settlement service options,” he said.

MBA also expressed support for Subtitle U, section 936, as it would amend the Real Estate Settlement Procedures Act to require the Bureau of Consumer Financial Protection/Consumer Financial Protection Bureau) to allow accurate disclosure of title insurance premiums and any potential available discounts to homebuyers.

“Under current regulations, the BCFP does not permit title insurance companies to disclose available discounts for lender’s title insurance on the government-mandated disclosure forms,” Killmer said. “This creates inconsistencies in mortgage documents and causes confusion for consumers. This section would minimize that confusion by allowing title insurance companies to disclose available discounts and accurate title insurance premiums to consumers across the country.”

MBA also supports the intent behind Subtitle X, Section 943 of the bill. This legislation would bring the Bureau into the regular appropriations process, a provision that MBA has long supported as an appropriate check and balance of the regulator’s existing authority.