06.08.17

Rounds, Heitkamp Introduce Bill to Provide Regulatory Relief for Community Financial Institutions

WASHINGTON—U.S. Sens. Mike Rounds (R-S.D.) and Heidi Heitkamp (D-N.D.), members of the Senate Banking Committee, introduced the Home Mortgage Disclosure Adjustment Act. This bipartisan legislation would provide regulatory relief for community banks and credit unions by exempting them from the Consumer Financial Protection Bureau’s (CFPB) revised Regulation C final rule, which amends the 1975 Home Mortgage Disclosure Act (HMDA). Additional cosponsors include Sens. John Hoeven (R-N.D.), Joe Donnelly (D-Ind.), John Kennedy (R-La.) and Jon Tester (D-Mont.).  

“The costly, time-consuming regulations stemming from Dodd-Frank and the CFPB disproportionately hurt smaller financial institutions,” said Rounds. “Our legislation would exempt small community banks and credit unions from the revised HMDA rule, allowing them to spend more time and resources providing loans to hard-working families, rather than meeting burdensome, onerous paperwork requirements. I look forward to working with my colleagues to pass HMDA and continuing to seek opportunities to work across the aisle to provide relief from the Dodd-Frank Act.” 

“As anyone from a small town can tell you, rural communities rely on trust they have with their neighbors to get the job done, that’s why it’s so important that small, local lenders can get back to the business of relationship lending,” said Heitkamp. “But focusing on relationship lending can be a challenge when small banks – like the community banks and credit unions in our own backyards – are saddled with new, complex regulations, many of which are designed for much larger institutions. By making sure hometown lenders providing less than 500 mortgages in a year aren’t subjected to a host of new regulatory reporting requirements, my bipartisan solution with Senator Rounds would help make sure our businesses and families – and our farming community in particular – can get the attention and service from their lenders they deserve.”

HMDA was enacted in 1975. The act requires certain financial institutions to provide the public, and public officials, with mortgage data to determine if financial institutions are properly serving the communities in which they are located. Following the passage of the Dodd-Frank Act, rulemaking authority for HMDA was transferred to the CFPB. The CFPB revised HMDA to require community banks and credit unions to collect nearly 50 unique data points on loan applications and share that information with the federal government.  

The Home Mortgage Disclosure Adjustment Act would raise the thresholds for the number of closed- and open-end loans a financial institution can originate before being subject to HMDA reporting requirements. This would allow more community financial institutions to be exempt from the HMDA rule. The bill would raise the number of closed-end loans financial institutions can originate to 500 per calendar year. It would also increase the exemption for open-end lines of credit to 500.

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