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Two New Bills Seek TILA Changes

Phil Hall
Feb 03, 2015

A new bipartisan effort has emerged in the House of Representatives as two bills were introduced to redefine the language of the Truth-in-Lending Act (TILA).

The first bill, which was put forward Tuesday, is a reintroduced version of the Mortgage Choice Act, which was presented in 2013 to the 113th Congress by Rep. Bill Huizenga (R-MI), chairman of the House Monetary Policy & Trade Subcommittee. That bill sought to amend TILA by redefining the manner in which points and fees were considered in connection with mortgage transactions. Rep. Huizenga positioned this bill as being a means to accommodate low- and moderate-income borrowers in achieving the goal of homeownership. The bill passed the House of Representatives in 2014 with bipartisan support, but was never put forward for a vote in the Senate.

“Hardworking families across the nation should not be denied access to a qualified mortgage because of technicalities that are largely out of their control,” said Rep. Huizenga in a statement released exclusively to National Mortgage Professional Magazine. “The goal of The Mortgage Choice Act of 2015 is to help low and middle income borrowers, as well as prospective first-time homeowners, realize a portion of the American Dream by owning their own home. This legislation is narrowly tailored to promote access to affordable mortgage credit without overturning the important consumer protections and sound underwriting requirements specified by Dodd-Frank's 'ability to repay' provision. I am glad to see strong support on this important issue from both Democrats and Republicans.”

The second bill, which was introduced Monday, is HR 650, which carries the somewhat lengthy moniker, “To amend the Truth-in-Lending Act to modify the definitions of a mortgage originator and a high-cost mortgage.” The text of the bill has not yet been made available for review and was introduced by Rep. Stephen Fincher (R-TN). HR 650 is co-sponsored by one Republican (Kentucky’s Andy Barr) and two Democrats (Alabama’s Terri A. Sewell and Arizona’s Kyrsten Sinema).

Since the 114th Congress was sworn in last month, more than a dozen bills have been introduced in the House of Representatives by members of both parties. Other pieces of legislation include a proposal by Rep. David Schweikert (R-AZ) to amend TILA to allow certain loans that are not fully amortizing to be used in seller carryback financing on residential mortgage loans; three proposals by Rep. Al Green (D-TX) relating to the Federal Housing Administration’s servicing and alternative credit processes and to the U.S. Department of Housing & Urban Development’s (HUD) monitoring of abuses relating to the Fair Housing Act; and two proposals by Rep. Alan Grayson (D-FL) concerning foreclosures that impact military personnel.

One piece of mortgage-related legislation that was announced last week, but has not yet been formally submitted through the congressional legislative procedure, is the Pay Back the Taxpayers Act of 2015, created by Rep. Ed Royce (R-CA), that prohibits Fannie Mae and Freddie Mac from diverting funds to the Housing Trust Fund and the Capital Magnet Fund, in accordance with the Federal Housing Finance Agency’s (FHFA) interpretation of the Housing and Economic Recovery Act of 2008. This bill would effectively block an action announced by FHFA Director Mel Watt on revising the government-sponsored enterprises’ (GSEs) financing of these federal fund programs, which was halted in 2008 when they were placed in conservatorship under the FHFA’s regulatory watch.

“The Pay Back the Taxpayers Act will preempt payments from the GSEs to housing advocacy groups and instead reroutes them where they belong … with the taxpayers,” said Rep. Royce.

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