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Bipartisan Regulatory Relief Bill Passes House
Posted by on December 12, 2017

The House passed bipartisan legislation on Tuesday that provides important regulatory relief for small banks and credit unions and protects consumer access to mortgage credit.

The CFPB’s expansion of escrow requirements and guidance on escrow and mortgage servicing requirements are prime examples of the regulatory burden placed on community financial institutions.

With the smaller staff and resources of community institutions, existing escrow rules are financially and technically prohibitive.  Many community banks and credit unions lack the resources to create and maintain escrow accounts in house, and outsourcing the work is, for the most part, cost prohibitive.  The burdensome and expensive escrow requirements force small lenders to increase costs for consumers or out of the mortgage market altogether.

The Community Institution Mortgage Relief Act would relieve certain smaller banks and credit unions – those with consolidated assets of $10 billion or less and who hold the mortgage on their balance sheet for three years, and those that service 20,000 or fewer mortgage loans annually – from this onerous regulation and allow them to do what they do best: serve the financial needs of the local economy through relationship banking.

“H.R. 3971 is a narrowly focused, modest effort to resolve concerns related to the CFPB's rules implementing Dodd-Frank Act provisions on escrows and mortgage servicing. These important fixes will give smaller credit unions and community banks greater flexibility to ensure that more of their members and customers can get a loan to buy a home and stay in their homes,” said House Financial Services Committee Chairman Jeb Hensarling (R-TX). “I thank Representative Tenney, a member of the Financial Services Committee, for introducing this legislation and for leading Congressional efforts to help provide regulatory relief for small banks and credit unions from rules that are unfairly restricting consumers’ access to mortgage credit.”

The bill’s sponsor, Rep. Claudia Tenney (R-NY), said “This bipartisan bill is a step in the right direction to rollback harmful regulations that have crippled our community financial institutions. Mandating one-size-fits-all regulations places costly and unmanageable burdens on our small financial institutions. This shows just how out-of-touch Washington bureaucrats are with our local communities. The Community Institution Mortgage Relief Act works to reverse this problem by lowering the cost of credit for low-income borrowers and rolling back onerous escrow regulations that continue to drive community institutions out of the mortgage lending market. I’m grateful to Chairman Hensarling for his leadership in working to pass this important bill, and I look forward to continuing to work alongside the Financial Services Committee to roll back onerous regulations and get our economy moving again.”

The bill passed the House with bipartisan support 294-129.