U.S. Rep. Tom Emmer’s (R-MN) bipartisan Home Mortgage Disclosure Adjustment Act, H. R. 2954, a bill to reduce regulatory overreach so that Main Street lenders can help expand home and business ownership, passed the U.S. House of Representatives on Jan. 18 by a vote of 243-184.
“I consistently hear from Minnesota’s small community banks and credit unions who are struggling to keep up with burdensome compliance costs. Some have significantly reduced the amount of mortgages or loans they originate, or even stopped offering mortgages altogether,” said Rep. Emmer, who introduced the bill on June 20, 2017. It is the House version of the Senate’s Home Mortgage Disclosure Adjustment Act, S. 1310, introduced by U.S. Sen. Mike Rounds (R-SD) on June 7, 2017.
“Americans want the opportunity to achieve the American dream — to own a home, buy a car, or start a business. I am proud the House passed the Home Mortgage Disclosure Adjustment Act to provide relief for these institutions to help make that happen,” said Emmer, a member of the House Financial Services Committee.
The 1975 Home Mortgage Disclosure Act (HMDA) “has expanded away from its original intent” of ending discriminatory lending, Emmer tweeted on Jan. 18. He added in the tweet that a Consumer Financial Protection Bureau (CFPB) rule effective this month moved the law even further from that intent by requiring more than twice the initial amount of data to be reported than before the CFPB was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was signed into law in 2010.
If enacted, Emmer’s office said that H.R. 2954 would provide relief and stick to the initial intent of the 1975 law by exempting “from the CFPB’s reporting and disclosure requirements institutions that have originated in each of the two preceding calendar years: fewer than 500 closed-end mortgage loan, and fewer than 500 open-end lines of credit.”
Rep. Emmer said on the House floor before the vote on the bill that larger lenders have been able to adapt and remain in the business, but the increased cost of complying with the double-the-data rule — estimated by Emmer at $326 million — forced many small banks in Minnesota to reconsider their ability to continue to make mortgages and other covered loans. “This unintended result is something each of us has heard over and over again in our home districts,” the congressman said.
U.S. Reps. Frank Lucas (R-OK) and French Hill (R-AR), who are Emmer’s colleagues on the House Financial Services Committee, also spoke on the House floor in support of H.R. 2954.
Rep. Lucas noted that recent surveys of financial institutions have reported on the “alarming inability of those entities to meet” the CFPB reporting requirements. “In fact, in my meetings with small banks and credit unions from Oklahoma, all of them have raised these specific rules and requirements as being costly enough to affect their business decisions, such as how many mortgages they could feasibly originate,” Lucas said.
For that reason, Lucas called Emmer’s legislation “not only timely, but immensely necessary.”
Rep. Hill said the bill’s “modest change” to regulation would “help community banks allocate capital and make more mortgage loans.”
As a former community banker and a previous Deputy Assistant Secretary of the Treasury for Corporate Finance at the U.S. Department of the Treasury, Hill said H.R. 2954 would continue protecting justice and prohibit discriminatory lending, while retaining data reporting “to make sure that we, in fact, in this country, have fair lending.”