Legislation reintroduced by U.S. Rep. Andy Barr (R-KY) on Friday aims to ensure consumer access to affordable home mortgages while discouraging banking practices that led to the 2008 financial crisis.
The Portfolio Lending and Mortgage Access Act, H.R. 2226, would amend the Consumer Financial Protection Bureau (CFPB) Qualified Mortgage rule, which requires residential mortgage lenders to assess a borrower’s ability to repay a loan before awarding it.
Under the bill, banks and credit unions would be allowed to satisfy Qualified Mortgage requirements by including mortgages in their portfolios, assuming 100 percent of the risk.
“By expanding the definition of a ‘qualified mortgage’ to include mortgages that are held on portfolio, this legislation recognizes the fact that when a bank or credit union retains 100 percent of the downside risk of default on a loan, it has a strong incentive to ensure sound underwriting,” Barr said. “This, in turn, will expand access to mortgage credit and the American dream of homeownership without producing the risky originate to distribute practices that caused the financial crisis and led to taxpayer bailouts.”
Seventy-three percent of community bankers have decreased their mortgage business or stopped providing mortgage loans altogether due to compliance costs of the Qualified Mortgage rule, according to the Independent Community Bankers of America.
Barr previously introduced the bill during the 114th Congress, and it was approved with bipartisan House support on a vote of 255-174.
“We passed this bill with strong bipartisan support in the last Congress, and I am hopeful with a new administration we will now be able to get this needed reform signed into law,” Barr said.