The House passed the Portfolio Lending and Mortgage Access Act (H.R. 1210) on Nov. 18 with a 255-174 vote. The bill would amend the Truth in Lending Act (TILA) to provide a safe harbor for residential mortgage loans held on an originating bank’s portfolio for the purposes of the Qualified Mortgage (QM) and Ability-to-Repay (ATR) rules.
The bill had been introduced by Rep. Andy Barr (R-Ky.) in March and had 54 co-sponsors.
Specifically, the bill would add the following safe harbor language for “creditors that are depository institutions” and “mortgage originators” to Section 129C of TILA:
- “A creditor that is a depository institution shall not be subject to suit for failure to comply with subsection (a), (c)(1), or (f)(2) of this section or section 129H with respect to a residential mortgage loan, and the banking regulators shall treat such loan as a qualified mortgage, if — (i) the creditor has, since the origination of the loan, held the loan on the balance sheet of the creditor; and (ii) all prepayment penalties with respect to the loan comply with the limitations described under subsection (c)(3).”
- A mortgage originator shall not be subject to suit for a violation of section 129B(c)(3)(B) for steering a consumer to a residential mortgage loan if — (A) the creditor of such loan is a depository institution and has informed the mortgage originator that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan; and (B) the mortgage originator informs the consumer that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan.
The bill would provide an exception for certain transfers under the banker safe harbor: “In the case of a depository institution that transfers a loan originated by that institution to another depository institution by reason of the bankruptcy or failure of the originating depository institution or the purchase of the originating depository institution, the depository institution transferring such loan shall be deemed to have complied with the requirement under subparagraph (A)(i) [‘the creditor has, since the origination of the loan, held the loan on the balance sheet of the creditor’].”
The American Bankers Association (ABA) has strongly supported the bill’s passage.
“It’s clear that new regulatory requirements have restrained mortgage lending, and have made it particularly difficult for some creditworthy borrowers to obtain a home loan. This legislation is a common-sense approach that will help borrowers gain access to some of the lowest risk mortgage products offered by banks. Loans held in portfolio are well underwritten and conservative by their very nature — banks hold only the safest loans in portfolio. There is no need to create additional barriers for creditworthy borrowers for loans held in a bank’s portfolio,” ABA Executive Vice President James Ballentine said.
H.R. 1210 was referred to the Senate Banking Committee on Nov. 19.