[StBernard] Summary of House-passed Provisions Included in Senate Wall Street Reform Base Text

[Westley Annis]

Summary of House-passed Provisions Included in Senate Wall Street Reform
Base Text 

Below is a summary of the House-passed H.R. 4173 provisions that have been
included in the Senate Wall Street Reform and Consumer Protection Act base
text:

 

ACCESS ISSUES

Provisions from House bill accepted using House language or with technical
changes

*	Financial Services Oversight Council/ Systemic Risk Determination -
makes additions that emphasize consideration of impact of regulatory
policies and practices on low-income, minority or underserved communities. 
*	Regulatory considerations by the Federal Insurance Office expanded
to include access to affordable insurance products by minorities, low- and
moderate-income persons and underserved communities.   
*	Several Consumer Financial Protection Board additions that address
challenges faced by minorities and traditionally underserved communities. 
*	Mortgage Reform Bill provisions (see separate listing), including
language to extend the sunset provision for the federal law protecting
tenants in foreclosed properties from December 2012 to December 2014. 

 

Provisions from House Bill Modified.

*	Offices of Minorities and Women Inclusion. Base text adopts House
provisions with certain changes, particularly regarding Presidentially
appointed and Senate confirmed directors, assessments of diversity efforts
as part of an examination process of regulated entities, written assurances
from contractors concerning diversity efforts, and termination of contracts.
Offices provision moved from Title I of the bill to Title III, and no longer
applies to the Federal Insurance Office. 
*	Specify that membership of the Consumer Advisory Board includes
experts in civil rights, representatives of depository institutions that
primarily serve underserved communities that have been significantly
impacted by higher priced mortgage loans. Base text only specifies
representatives of depository institutions that primarily serve underserved
communities that have been significantly impacted by higher priced mortgage
loans. 
*	Regulator mitigatory action required before systemic dissolution to
avoid potential adverse effects that the default of the financial company
would have on low-income, minority or underserved communities. Base text
does not require mitgatory action but allows the above considerations as
part of the FDIC's Orderly Liquidation Plan. 

 

 

 

MORTGAGE LENDING

Provisions from House Bill Accepted.  The following provisions from House
bill are included in base text as passed or with technical changes -

*
Ability to Repay underwriting standard

*
Net tangible benefit underwriting standard

*
Requirement that the consumer agency issue anti-steering regulations for
mortgage originators

*
HOEPA provisions

*
Prepayment Penalties

*
Housing Counseling

*
Multifamily Mortgage Program

*
Appraisals and mortgage servicing  

Provisions from House Bill Modified. The following provisions from the House
bill have been revised in base text: 

*                    Duty of Care.  A narrower provision than the House bill
provides that mortgage originators (i.e., brokers and loan officers) be
appropriately registered when selling mortgages and mark mortgages with
unique mortgage registry identifiers.  

*
Mortgage Originator Compensation/YSP Restrictions.  The Base Text merges the
approaches of the House and Senate bills:

o
Clarifies that mortgage compensation can only be financed if all originator
compensation is paid by the borrower (not third parties) and the borrower
pays the entire fee by financing it.  

o
Permits compensation through rate for all mortgages as long as they meet the
above standard (House bill only allowed this for Qualified Mortgages).

*                                                        Qualified Mortgage
Safeharbor.  Base Text makes two changes to House definition of Qualified
Mortgage-

o                   Allows higher interest rate loans into safe harbor; and

o                   Raises the points and fees limit in the safe harbor from
2% to 3% of the total loan amount and makes other changes to how points and
fees are calculated.

*                                HUD/VA/AG/RHS/FHFA.  CFPB will have sole
authority to define Qualified Mortgage and it must consult with HUD, VA, AG
and RHS when issuing rules relating to the loans they guarantee and
securitize.  Under House bill, these agencies plus FHFA (for Fannie and
Freddie loans) had discretion to define qualified mortgage for these loans.

*                    Assignee/Securitizer Liability.  Base text strikes
House assignee/securitizer liability provisions, instead modifying the House
defense to foreclosure provision along the lines of the Senate bill, to
allow damages incurred for the violations of the ability to repay and YSP
standards to be set off in a foreclosure.  

*                    Liability for Creditors and Mortgage Originators.  

o                               Creditors.  Creditors are subject to HOEPA
damages, which include all interest charges and fees paid by the consumer
for violating the ability to repay and YSP provisions.  They are liable for
normal TILA damages (actual costs plus $400-$4000 for individual actions/1%
class action) for violations of net tangible benefit, duties of care and
anti-steering.  Deletes the House bill's right of rescission.

o                               Mortgage Originators.  Mortgage originators
(i.e., individual mortgage brokers and loan officers) are subject to damages
for violations of the compensation restrictions, duties of care and
anti-steering provisions to no more than 3 times originator compensation.

 

 

THRIFT PROVISIONS

 

Provisions from House Bill Accepted. The following House provisions were
adopted as Base Text, some modified as noted:  

*        Preserving the thrift charter (uses Senate approach of HOLA instead
of BHC Act to regulate S&LHC's (House bill used BHC Act);

*        Grandfathering OTS treatment of Mutual Holding Company dividends
previously waived  

*        Exempting limited purpose trust thrifts from holding company
supervision;

*        Establishing a Deputy Comptroller for thrifts (House initial
language created Division of Thrift Supervision and a senior deputy
comptroller); 

*        Strengthening the QTL test (dividend restrictions and fact that
non-compliance may be enforced like other compliance violations; did not
accept forcing thrift to convert to bank); 

*        Including thrifts in 10% deposit cap;

*        Clarification of branching authority of thrifts that convert to
banks (a amendment filed but not offered in the Senate)  

*        House employee protections (with some modifications) are included
in Base Text

 

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