Measure Designed To Promote More Affordable Home Financing Options
Last week the House in a bipartisan 255 to 174 vote passed HR 1210, the Portfolio Lending and Mortgage Access Act. The measure, introduced by Rep. Andy Barr (R-KY) “promotes affordable home financing and discourages the practice of securitizing and selling of mortgages that led to the 2008 financial crisis and the resulting taxpayer bailouts of Fannie Mae, Freddie Mac, and large systemically important financial institutions,” according to the Richmond (KY) Register. The legislation does so by retooling the Qualified Mortgage rule the Consumer Financial Protection Bureau imposed in order to let credit unions and banks “hold mortgages in portfolio, therefore retaining 100 percent of the risk, to satisfy the requirements of the rule.” In a statement, Barr said, “The one-size-fits-all, top-down Qualified Mortgage rule is preventing creditworthy Americans from the dream of homeownership, holding our economy back, and contributing to consolidation and closures among community banks and credit unions. My bill would expand access to credit as long as banks and credit unions do not sell the mortgages as securities. This reform would have the dual benefit of promoting responsible lending practices which will prevent future crises and bailouts, while encouraging economic growth through expanded homeownership.” The Hill reported that the measure “extends a federal exemption meant for small and rural banks to all banking institutions.” This measure allows lenders a so-called “safe harbor” protection “from federal penalties and lawsuits brought by borrowers who have defaulted on their loans.” Despite receiving support among many in the House, there are some opposed to the bill who argue it “will open the door to the reckless lending practices of the past.” Still, House Financial Services Committee Chair Jeb Hensarling (R-TX) said, “The aim of H.R. 1210 is simple: Banks and credit unions should be free to originate mortgages as long as they keep them on their books. As long as they keep the risk. This is responsible lending.”
What This Means For Small Businesses
The housing sector has been slow to recover compared to other components of the US economy following the recession. Enabling consumers to gain additional access to mortgages through financial institutions, particularly smaller banks and credit unions that struggled with the prohibitive regulatory costs of keeping mortgage loans due to post-recession rules, may help the housing market regain some ground. This in turn could boost the overall US economy.
Additional Reading
Inside Mortgage Finance and National Mortgage Professional also covered the story.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.
