This bill would exempt financial institutions from the requirement to establish escrow accounts to pay property taxes and insurance premiums for properties that secure “high-priced mortgages” with interest rates above certain thresholds if the lender has less than $25 billion in consolidated assets and holds the mortgage on its balance sheet for three years. It would also direct the Consumer Financial Protection Bureau (CFPB) to exempt mortgage servicers from requirements to administer escrow accounts if they service 30,000 or fewer mortgage loans each year.
What is House Bill H.R. 3971?
Cost of House Bill H.R. 3971
In-Depth: Sponsoring Rep. Claudia Tenney (R-NY) introduced this bill to reduce the regulatory burden on small financial institutions that offer mortgage loans. The Credit Union National Association wrote the following in support of the bill:
“We believe that the [CFPB] has the authority to make these exemptions under the existing authority which Congress conveyed to keep the regulatory burden on community financial institutions measured while the Bureau addressed its rulemaking on large banks and abusers of consumers. Unfortunately, the Bureau has not exercised this authority to the fullest extent possible, making this legislation necessary in order to ensure these rules are appropriately focused. The two changes made by this proposal would provide important regulatory relief to credit unions and help them to continue efficiently serving their members.”
Some Democrats have expressed their opposition to this bill, with some writing the following in its committee report:
“High-priced mortgage loans are essentially loans with higher interest rates that reflect riskier or subprime borrowers. H.R. 3971 would enable larger servicers, whose incentives are neither aligned with owners of the loans nor the borrowers, to potentially revive some of the abusive practices involved with predatory lending that contributed to the 2007-2009 financial crisis. Relatedly, escrow accounts are an important consumer consumer protection mechanism that ensure that homeowners have funds for recurring homeownership-related expenses, such as property taxes and insurance.”
- House Financial Services Committee Press Release
- CBO Cost Estimate
- Securities Industry & Financial Markets Association
- American Bankers Association (In Favor)
- Credit Union National Association (In Favor)
Summary by Eric Revell(Photo Credit: SARINYAPINNGAM / iStock)
Community Institution Mortgage Relief Act of 2017
To amend the Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974 to modify the requirements for community financial institutions with respect to certain rules relating to mortgage loans, and for other purposes.
- Not enactedThe President has not signed this bill
- The senate has not voted
Committee on Banking, Housing, and Urban Affairs
- senate Committees
- The house Passed December 12th, 2017Roll Call Vote 293 Yea / 129 Nay
Committee on Financial ServicesConsumer Protection and Financial InstitutionsIntroducedOctober 5th, 2017
- house Committees