On May 22, 2018, the U.S. House of Representatives passed S. 2155, titled The Economic Growth Regulatory Relief and Consumer Protection Act (“Act”). This was the penultimate legislative hurdle for the Act, which now only requires the President’s signature to become law. The President is expected to sign the Act into law in the very near future.
The Act has a number of important regulatory relief provisions governing the lending and banking industry including:
- Reduces the level of regulatory oversight by the Financial Stability Oversight Counsel (FSOC) for banks with between $50-$250 billion.
- Adds a requirement the Federal Reserve to take the size of banks into account when crafting regulations, rather than using a “one size fits all” regulatory approach.
- Amends TILA to address problems with TRID which will eliminate CD re-disclosure when rates go down. Directs the CFPB (now known as the BCFP) to provide written guidance in other areas of confusion and uncertainty.
- Amends TILA to specify that a retailer of manufactured housing that meets certain requirements is generally not a “mortgage originator” subject to requirements under that Act.
- HMDA relief for small lenders (500 loans per year).
- Amends the SAFE Act, and provides mortgage loan officers with 120 days of a transitional authority to originate when moving from a federal depository to a non-bank (or across state lines).
Other changes in the Act increased consumer protections in important areas:
- Amends the Fair Credit Reporting Act to increase the length of time a consumer reporting agency must include a fraud alert in a consumer’s file. The amendments also: (1) require a consumer reporting agency to provide a consumer with free credit freezes and to notify a consumer of their availability, (2) establish provisions related to the placement and removal of these freezes, (3) create requirements related to the protection of the credit records of minors.
- The sunset provision of the Protecting Tenants at Foreclosure Act is repealed, restoring notification requirements and other protections related to the eviction of renters in foreclosed properties.
- The bill amends TILA to prospectively revise provisions relating to cosigners of private student loans. Specifically, the bill: (1) prohibits a creditor from declaring a default or accelerating the debt of a private student loan on the sole basis of the death or bankruptcy of a cosigner to such a loan, and (2) directs loan holders to release co-signers from any obligation upon the death of the student borrower.
- “PACE” loans will now be subject to the disclosure requirements of the Truth in Lending Act (“TILA”).
The Act itself is lengthy, and this is certainly not an exhaustive list of the legal changes in the Act. The full text of the Act can be found on the Congressional website here: https://www.congress.gov/bill/115th-congress/senate-bill/2155/text
On balance, the Act is welcome news for the banking and lending industry, who secured a number of long sought after regulatory relief provisions. However, the changes will require regulated entities to continue to stay abreast of the seemingly ever-changing law and regulations in their respective spaces.