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Senate Bill Would Provide Compliance Relief for Community Banks

Last week, the Senate passed S.2155 – the Economic Growth, Regulatory Relief and Consumer Protection Act (“Bill”) with bi-partisan support.  The Bill, which must still be reconciled with and passed in the House, provides small but meaningful regulatory relief for community banks.  Among many other provisions, that Bill would create a new Qualified Mortgage for banks under $10 billion in assets who hold such loans in portfolio or sell such loans to covered financial institutions who hold the loans in portfolio.  Though the new Qualified Mortgage would require debt, income, and financial resources documentation, it would not be required to follow Appendix Q.  The new Qualified Mortgage would still require the loan to be within the existing points and fees test, contain no negative amortization or interest-only features, and contain no prepayment penalties.  Other consumer real estate-related relief would be seen under the Bill with respect to appraisal requirements in rural areas and escrow account requirements under TILA.

Finally, the Bill would roll back certain newly-required HMDA data points for “low volume” banks – those originating less than 500 covered closed-end mortgages or 500 covered open-end lines of credit in each of the two preceding calendar years, assuming the bank has not received a CRA rating of “needs to improve” during each of its two most recent exams or a “substantial non-compliance” rating in its most recent exam. 

There are other significant provisions in the Bill related to capital and consumer protection and we suggest banks track it for further developments, which are expected in the coming months.  

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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