Mortgage

Senate Banking Committee introduces repeal of Dodd-Frank Act

Housing industry stands in support of bill

The Senate Banking Committee will begin its markup today of a bill that would roll back the Dodd-Frank Act.

The bill, S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act, contains policies which would roll back or eliminate key parts from the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Earlier this year, House Financial Services Committee Chairman Jeb Hensarling’s, R-Texas, Financial CHOICE Act, H.R. 10, was officially sent on its way to the Senate for a vote.

However, as it only received partisan support, the bill died on the Senate floor. 

This new act was sponsored by Banking Committee Chairman Mike Crapo, R-Idaho, with nearly 20 co-sponsors on both sides of the aisle.

The Mortgage Bankers Association said this bill will bring important regulatory relief to the housing market, and sent a letter of support to Crapo, asking committee members to approve the bill.

“We support S. 2155 and urge all members of the Senate Banking Committee to vote in favor of this legislation during the committee's markup of the bill,” said Bill Killmer, MBA senior vice president of legislative and political affairs.

The MBA’s letter assessed several key sections of the bill and breaks down their impact on the housing industry. Among these, the MBA expressed its support for section 110, which would require the Consumer Financial Protection Bureau to provide more clarity.

“This clarity is critical,” the MBA said in its letter. “The current uncertainty with respect to these issues presents a significant and unnecessary impediment to mortgage industry participants' efforts to comply with the TRID Rule.”

And the MBA isn’t the only one to point out the positive effects the bill will bring to the industry.

“As U.S. politics descends ever further into partisanship, there are still signs that old-fashioned legislating is not dead,” said John Soroushian and Justin Schardin of the Bipartisan Policy Center. “This week, the Senate Banking Committee will mark up one of the first significant pieces of financial regulatory legislation in years with real bipartisan support.”

“These are not major changes,” they said. “Yet taken together, they are constructive and should provide greater incentives to extend credit, particularly to Main Street small businesses, without undermining the progress made since the crisis in making the financial system safer.”

The Independent Community Bankers of America said the act will bring important relief.

“The markup of S. 2155 is a rare opening for real, impactful relief that will strengthen economic growth, job creation, and consumer protection,” ICBA President and CEO Camden Fine said. “It is the culmination of years of collaborative effort to achieve consensus among members of Congress across the spectrum and community bankers in their home states and districts.”

And the National Association of Home Builders also expressed its support of the bill, saying it will address the challenging credit conditions home builders and buyers face.

“On behalf of the more than 140,000 members of the National Association of Home Builders, I am writing in strong support for your efforts in S. 2155, the Economic Growth, Regulatory Relief and Consumer Protection Act to address the challenging credit conditions that home builders and home buyers continue to experience as a result of the regulatory response to the recent financial crisis,” said James Tobin, NAHB executive vice president and chief lobbyist.

But while this would roll back regulations from the industry, some experts see it as a dangerous step. The Center for Responsible Lending, the National Community Reinvestment Coalition and the National Consumer Law Center, announced opposition to the bill.

“This legislation puts out a welcome mat for the return of poisonous financial practices,” CRL Senior Legislative Counsel Yana Miles said. “This poses a threat to all Americans, especially those in low-income communities and communities of color.”

“This bill encourages the finance industry to engage in the type of reckless lending that pulled Americans into a Great Recession – just under a decade ago,” Miles said. “Among its many dangerous provisions, the bill enables poor underwriting, risky mortgages, deceptively steering consumers into overpriced loans, surprise homeowner costs that make defaults more likely and appraisal abuses.”

“It also drastically reduces data collection requirements that are essential for serving credit-worthy borrowers in underserved areas,” she said. “We’ve seen this movie before. It doesn’t end well for Main Street.”

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