[Congressional Record Volume 161, Number 147 (Wednesday, October 7, 2015)]
[House]
[Pages H6858-H6869]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
HOMEBUYERS ASSISTANCE ACT
Mr. HENSARLING. Mr. Speaker, pursuant to House Resolution 462, I call
up the bill (H.R. 3192) to provide for a temporary safe harbor from the
enforcement of integrated disclosure requirements for mortgage loan
transactions under the Real Estate Settlement Procedures Act of 1974
and the Truth in Lending Act, and for other purposes, and ask for its
immediate consideration in the House.
The Clerk read the title of the bill.
The SPEAKER pro tempore. Pursuant to House Resolution 462, the bill
is considered read.
The text of the bill is as follows:
H.R. 3192
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Homebuyers Assistance Act''.
SEC. 2. ENFORCEMENT SAFE HARBOR.
The integrated disclosure requirements for mortgage loan
transactions under section 4(a) of the Real Estate Settlement
Procedures Act of 1974 (12 U.S.C. 2603(a)), section 105(b) of
the Truth in Lending Act (15 U.S.C. 1604(b)), and regulations
issued under such sections may not be enforced against any
person until February 1, 2016, and no suit may be filed
against any person for a violation of such requirements
occurring before such date, so long as such person has made a
good faith effort to comply with such requirements.
The SPEAKER pro tempore. The bill shall be debatable for 1 hour,
equally divided and controlled by the chair and ranking minority member
of the Committee on Financial Services.
The gentleman from Texas (Mr. Hensarling) and the gentlewoman from
California (Ms. Maxine Waters) each will control 30 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
have 5 legislative days in which to revise and extend their remarks and
[[Page H6859]]
submit extraneous materials on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise today in strong support of H.R. 3192, the
Homebuyers Assistance Act. It is a very modest act, and it also happens
to be a very bipartisan act, that would bring some temporary relief to
mortgage market participants who are attempting to secure financing and
close on their homes. It will help allow there to be a transition
period for a very complicated rule that has been promulgated by the
Consumer Financial Protection Bureau that went into effect Saturday.
Mr. Speaker, we want to make sure that hardworking Americans do not
lose out on the opportunity for their portion of the American Dream,
including home ownership, as this new rule is brought to bear.
Now, let me be the first to say that as a Member of this body who
finds very little good to be found in the Dodd-Frank Act, directing the
CFPB to try to make disclosures more simple and more easily and readily
understandable is a good thing. But the problem, Mr. Speaker, is in
trying to integrate something called TILA, the Truth in Lending Act,
disclosures with something called RESPA, the Real Estate Settlement
Procedures Act, two different acts.
To try to reconcile those two, the CFPB promulgated a 1,888-page
rule, complete with guidance. So now those who are involved in the
marketplace trying to help finance homes are left with this behemoth to
try to put into their computer systems, their IT systems, into
training. Being able to streamline disclosures is a very, very
important thing to do, but it is fairly difficult to do when there are
almost 2,000 pages of complex, compound, complicated language.
We know that when these new systems are put into place, Mr. Speaker,
there can be glitches. There can be temporary setbacks. Sometimes the
software doesn't quite work as intended. Just ask those in charge of
the ObamaCare rollout. ObamaCare was on the books as law for many, many
years before the rollout came, and it was a disastrous rollout. I have
no doubt people were operating in good faith, but they rolled it out
and it failed.
So all over America, title agencies and mortgage lenders are having
to change their software, having to change their process and
procedures. We don't want low- and moderate-income people who finally
put enough money away for a down payment to be set back in their
attempt to get their mortgage.
I want to thank the gentleman from Arkansas (Mr. Hill), who is the
author of the bill. It is, again, a very, very bipartisan bill. I want
to thank him for his leadership. And before that, the gentleman from
New Mexico (Mr. Pearce) had been very, very engaged in this issue. I
want to thank them for their leadership, because without it, again,
what we are looking at here is people losing out on the opportunity to
close on their homes.
And so the bill is a simple bill. It says: You know what? For 4
months let's create a temporary, trial period and safe harbor for those
who act in good faith in trying to implement this new 1,888-page
behemoth rule. Let's allow a little bit of a transition period to hold
these people harmless if they act in good faith.
Again, Mr. Speaker, if they are acting in good faith.
Yes, I assume the CFPB, which promulgated the rule, acted in good
faith. But guess what, Mr. Speaker, they violated the law in rolling
out this rule, and yet they were held harmless in their so-called trial
period. Can't we do the same for those who are trying to make the
American Dream of home ownership come true?
If we do not pass this bill, I am afraid what we will hear is what I
have heard from different people back in my home State of Texas. What I
heard from one Texas land title man is:
No question, more conservative lending in sales volumes
will result. This will impact both buyers and sellers. And
the new rules could have a cost impact. Lenders may decide to
raise fees to cover potential exposure.
{time} 1430
Another real estate individual in Texas went on to say large lenders
have already announced they are not going to do one-time closings
anymore due to the uncertainty.
We are hearing all kinds of language, and that is one of the reasons
that 255 Members of this body, Mr. Speaker, including 91 Democrats,
wrote to the head of the CFPB asking him to do exactly what this bill
would do.
It is not just limited to the House side. Forty-one Senators signed
almost an identical letter asking the CFPB director for this very short
period of time for people who operate in good faith to be held harmless
and not to be sued, not to be fined, not to be persecuted, so that the
American people can enjoy their right of home ownership.
It is a modest bill. It is a bipartisan bill. It is for the
homeowner. I urge its adoption.
Mr. Speaker, I reserve the balance of my time.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield myself 5
minutes for an opening statement.
I rise today in opposition to H.R. 3192, a proposal that I believe
erodes consumers' ability to have their day in court and that
undermines efforts to comply with the CFPB's new TILA-RESPA Integrated
Disclosure act.
When I say TILA and RESPA, I am talking about the Truth in Lending
Act and the Real Estate Settlement Procedures Act.
Mr. Speaker, I stand in full support of the Consumer Financial
Protection Bureau's decision to engage in restrained enforcement of the
new disclosure rules until 2016, and I support the FFIEC's recent
announcement that prudential regulators' supervision of financial
institutions' compliance with the new rules will recognize the scope
and scale of the changes necessary for financial institutions and other
affected entities to effectively comply.
Simply speaking, when the business community and Democrats and
Republicans all basically said, ``We believe that these integrated
rules are complicated. It is going to take industry time to get up to
speed,'' they have got to change their paper. They have got to train
their employees, et cetera, et cetera. We all agree that there should
be a grace period.
So, with that, my support for a temporary period of restrained
administrative enforcement and supervision reflects the recognition of
the massive undertaking that lenders and other settlement providers
have undergone in preparation for the new disclosure rules.
Now, given the administrative liability that lenders would face under
both the Real Estate Settlement Procedures Act and the Truth in Lending
Act, I fully understand the real concerns that affected entities have,
given the scale and scope of the changes called for under the new
disclosure rules.
Mr. Speaker, industry requests to date that the Bureau and other
Federal regulators take a more thoughtful approach with respect to
their enforcement and supervision is reasonable.
My support for the actions taken to date by regulators to consider
good faith compliance efforts by lenders and other entities affected by
the new disclosure rules does not, however, extend to suspending, even
temporarily, one of the more important consumer protections available
to the Truth in Lending Act, which is a consumer's right to bring an
action protecting themselves in the event that a lender makes an
inaccurate, untimely, misleading disclosure.
Basically, what we are talking about now is who is going to protect
the consumer in all of this. We are saying that there is a need to
protect consumers. Those who oppose the amendment that I tried to bring
to the floor to do just that are saying they are not on the side of the
consumer.
While the good faith provision in H.R. 3192 does allow consumers to
bring actions in response to egregious violations of the Truth in
Lending Act, consumers can still rely on inaccurate or misleading
disclosure errors that are made in good faith.
Under current law, borrowers can bring an action where a disclosure
is inaccurate or misleading, even if the error is made in good faith,
and the burden under current law is on the
[[Page H6860]]
lender to prove that their disclosure is consistent with the Truth in
Lending Act.
Now we have a change. In contrast, under H.R. 3192, this legislation,
the burden is placed on the consumer to demonstrate from the onset of
an action that the error was not made in good faith, a bar that is
virtually impossible for most consumers to overcome. That is a drastic
departure from current law.
The private right of action under the Truth in Lending Act serves two
important purposes:
First, it allows consumers to protect themselves from inaccurate,
untimely, or misleading mortgage disclosures.
Second, through the act's provision of statutory and class-action
damages, as well as attorneys' fees and court costs, TILA also provides
clear incentives for lenders to ensure that the disclosures they
provide are timely and accurate.
I just want to take a look at what the TILA-RESPA Integrated
Disclosure would require. Let us take a look at what we are talking
about.
In this document, they identify the amounts for the loan, the
interest rates, the monthly principal and interest, whether or not
there are prepayment penalties, whether or not there is a balloon
payment, on and on and on. It gets down to exactly what is being
disclosed to the consumer.
Mr. Speaker, I reserve the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds just to say
that, if the ranking member is supportive of a safe harbor, she has a
funny way of showing it.
I would remind her that there is no private right of action under
RESPA. There is one under TILA. But under TILA, there is an exception,
a safe harbor for unintentional violations and bona fide errors, which
will be found in section 1640 of title 15.
There is another safe harbor for good faith compliance with rule
regulation and interpretation.
Mr. Speaker, I yield 5 minutes to the gentleman from Arkansas (Mr.
Hill), the sponsor of the bill.
Mr. HILL. Mr. Speaker, I thank the chairman for yielding me some time
on this important measure.
Mr. Speaker, I rise today in support of H.R. 3192, the Homebuyers
Assistance Act, this commonsense, bipartisan bill which will provide
certainty for the short transition period for the real estate industry,
preventing costly market disruptions and delays for American
homebuyers.
I thank Mr. Sherman for his help in design and leadership. I also
thank my friends, Mr. Vargas and Mr. Pearce, who worked on this bill as
well.
This straightforward measure will provide a temporary hold harmless
period from enforcement action and litigation during the initial
implementation of this new TILA-RESPA Integrated Disclosure form. This
rule, by the way, became effective this past Saturday.
Companies out in the real world are trying to get this closing regime
right and have spent billions of dollars in updating their systems and
hundreds of man-hours training employees to comply with this 1,800-page
rule.
Again, I remind my colleagues that, at the height of the Depression,
in rewriting all of America's banking laws, the Banking Act of 1933
consumed only 37 pages.
There is no opportunity to test. This is a bright-line rule that just
turns on. You have to have new forms and new, substantive changes, and
these compliance challenges are many.
This temporary grace period will allow the industry to work with the
CFPB to ensure a smooth transition. As previously noted, 300 bipartisan
Members have urged this grace period, including the ranking member.
We are here today by the inadequate response of the CFPB to a lot of
concerns across our Nation, from Realtors, mortgage lenders, title
companies, people in the appraisal business.
Mr. Cordray could have provided this certainty, just like HUD did for
the revised RESPA disclosures back in 2010. But statements from Mr.
Cordray like the industry can ``read between the lines'' doesn't
constitute certainty in the real world.
It might here in the Beltway. But as a Member of Congress who until
the end of 2014 was CEO of a community bank, I can assure you that kind
of ``read between the lines'' certainty doesn't work in the real world.
A recent survey by the American Bankers Association indicated over 40
percent of institutions have not yet received compliance software
needed to implement TRID. It is very frustrating to Members on both
sides of the aisle, particularly after the number of years that we have
talked about a new TRID form. But, nonetheless, it is a fact. Ninety
percent of institutions were still testing the incorporation into their
lending platforms.
I can tell you this is more complicated than it looks to someone who
is a bureaucrat in Washington. You have got a loan operating system and
a loan doc prep system typically from two different vendors. Both
require software changes.
Three-quarters of those surveyed in the mortgage banking industry
said they needed an additional 3 weeks to 4 months for additional
debugging and testing. So this commonsense bill will allow them to
perform that task, not disrupt closings, and allow people to have a
safe harbor from potential litigation or enforcement penalties.
One bank in Arkansas called me Monday, 2 days after TRID went live,
to say they are still not expected to get the final fix from their
software providers until Thanksgiving.
In addition to these kinds of operating implementation issues, many
are still out there waiting for clarification from the CFPB on certain
issues.
The chairman mentioned one-time close. One of the most popular
products in banking today, particularly among community banks, is a
construction-to-permanent mortgage closing, where one can build their
home and go to a permanent loan closing all with one application and
one set of forms and a single closing.
But because of confusion over how to properly disclose information
under the new TRID form, I think this is a problem. Several banks, as
noted, are going to cease one-time construction-to-permanent loan
making, again, one of the most popular products in community banking.
I want to emphasize that this temporary protection only applies to
those making a good faith effort to comply to this very complex rule.
It in no way alters the underlying rule.
While I disagree with much of Dodd-Frank, I support the general
purpose of this rule, which is to attempt to streamline and simplify
mortgage disclosures for consumers, albeit, comparing the forms side by
side, I don't know if that was accomplished or not. But it is
absolutely a worthy objective.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
Mr. HILL. Our title companies, bankers, and others in the industry
who are earnestly trying to comply with these new TRID rules need to
have the confidence and certainty that they can go into this closing
regime giving excellent customer service, and not be looking over their
shoulder for an inadvertent penalty or civil litigation.
Mr. Speaker, we are pro-consumer. 400,000 consumers buy a home every
month in this country, and over 230,000 consumers refinance a mortgage.
All will be positively impacted by this temporary measure. I urge its
consideration.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 5 minutes to
the gentlewoman from New York (Mrs. Carolyn B. Maloney).
Mrs. CAROLYN B. MALONEY of New York. Mr. Speaker, I thank the
gentlewoman for yielding, and for her leadership as ranking member on
the Financial Services Committee.
I rise in opposition to H.R. 3192. The Democrats have worked very
hard to protect consumers and, in fact, in Dodd-Frank, created the
Consumer Financial Protection Bureau, which has already returned $11
billion to 25 million consumers in just the first 4 years of its
existence. Their goal is to protect consumers, and that is what they
have done in the new rule that they came out with.
Democrats believe that consumers deserve easy-to-understand
disclosures of the cost of buying and financing a home. So, in response
to the mortgage crisis, the Consumer Financial Protection Bureau has
proposed to streamline and combine the disclosures that consumers get
when they are buying a
[[Page H6861]]
home so it is easier for them to understand.
{time} 1445
They used to get multiple disclosure forms, some under the Truth in
Lending Act and some under the Real Estate Settlement Procedures Act,
or RESPA. Now the CFPB has streamlined them into a new Integrated
Disclosure, which is important because it will make it far easier for
Americans to understand the loan terms and the fees that they are
paying when they buy a home.
But implementing a brand-new Integrated Disclosure form will also be
complicated, and it will take the industry some time to adjust to the
new rules. And industry raised those concerns to us.
This bill would give lenders a safe harbor from the CFPB's Integrated
Disclosure rule until February 21, 2016.
While I think that this bill addresses an important issue because
implementing the new Integrated Disclosure forms will be complex, the
truth is that the CFPB has already given the industry significant
relief on the rule. They have already done it.
Along with my colleague and very good friend from Kentucky, Mr. Barr,
we led a bipartisan letter which was signed by 254 Members of this
body, including Ranking Member Waters, requesting a grace period on the
Integrated Disclosure requirement.
I include for the Record the letter that the gentleman from Kentucky
and I circulated with all 254 signatures, as well as the letter we
received in response.
Congress of the United States,
Washington, DC, May 20, 2015.
Hon. Richard Cordray,
Director, Consumer Financial Protection Bureau.
Dear Director Cordray: The undersigned Members of Congress
acknowledge that the Consumer Financial Protection Bureau
(CFPB or Bureau) has done significant work on the TILA-RESPA
Integrated Disclosure (TRID) regulation. Nevertheless, this
complicated and extensive rule is likely to cause challenges
during implementation, which is currently scheduled for
August 1, 2015, that could negatively impact consumers. As
you know, the housing market is highly seasonal, with August,
September, and October consistently being some of the busiest
months of the year for home sales and settlements. By
contrast, January and February are consistently the slowest
months of the year for real estate activity. We therefore
encourage the Bureau to announce and implement a ``grace
period'' for those seeking to comply in good faith from
August 1st through the end of 2015.
Even with significant advance notice, understanding how to
implement and comply with this regulation will only become
clear when the industry gains experience using these new
forms and processes in real-life situations. As the TRID
regulation does not provide lenders an opportunity to start
using the new disclosure form prior to the August 1st
implementation date, market participants will not be able to
test their systems and procedures ahead of time, which
increases the risk of unanticipated disruptions on August
1st. That is why we believe that a grace period for those
seeking to comply in good faith from August 1st through the
end of 2015 would be particularly useful in these
circumstances. During this time, industry can provide data to
the CFPB on issues that arise so that the Bureau and industry
can work together to remove impediments to the effectiveness
of the rule.
Thank you for your time and consideration. If we may be of
assistance, please do not hesitate to contact us.
Sincerely,
Signed: 254 Members of Congress.
____
Consumer Financial
Protection Bureau,
Washington, DC, June 3, 2015.
Hon. Andy Barr,
House of Representatives, Washington, DC.
Hon. Carolyn B. Maloney,
House of Representatives, Washington, DC.
Dear Representatives Barr and Maloney: Thank you for your
letter about implementation of the TILA-RESPA Integrated
Disclosure Rule, which we finalized nineteen months ago to
carry out the law enacted by Congress. We share your desire
for a smooth and successful implementation of the Rule, and
we continue to work closely with all stakeholders to support
that goal. Like you, we recognize that successful
implementation poses challenges to industry and benefits both
industry and consumers, but in any event requires close
collaboration between industry and the Consumer Financial
Protection Bureau.
As you may know, the Bureau has taken many steps to support
industry implementation and to help creditors, vendors, and
others affected by the Rule to better understand,
operationalize, and prepare to comply with the Rule's new
streamlined disclosures. Since the Rule was first published
in November 2013, we have made it a point to engage directly
and intensively with financial institutions and vendors
through a formal regulatory implementation project. The
Bureau's regulatory implementation project for the Rule
includes the following:
Inter-agency coordination. In-depth exam procedures were
approved by the Federal Financial Institutions Examination
Council in February 2015 and published by CFPB on April 1,
2015. The Bureau's own examination procedures incorporating
the FFIEC exam procedures were published on May 4, 2015.
Publish ``readiness guide,'' plain-language guides, and
other resources. The ``readiness guide'' includes a broad
check-list of things for industry to do prior to the Rule's
effective date. The Bureau has also published a compliance
guide, a guide to the new integrated disclosure forms, and an
illustrative timeline.
Publish amendments and updates to the Rule in response to
industry requests. In January 2015, after extensive outreach
to stakeholders, the Bureau adopted two minor modifications
and technical amendments to the Rule to smooth compliance for
industry.
Provide unofficial staff guidance. Bureau staff attorneys
have provided oral guidance in response to over 750
regulatory interpretation inquiries, received from trade
associations and through the CFPB_ RegI[email protected]
email address since the Rule was issued.
Engage with stakeholders. Bureau staff have provided
remarks and addressed questions about the Rule and related
implementation matters at over 40 formal events and over 50
informal stakeholder meetings since the Rule was issued.
Cmiduct webinars. The Bureau has conducted a series of five
free, publicly available webinars, available for viewing
through the Bureau's website, that provide guidance on how to
interpret and apply specific provisions.
Clarify misunderstandings. Today we are releasing a fact
sheet explaining the limited circumstances when the Rule
requires that the consumer be provided an additional three-
day review period. Only three specific changes require an
additional three-day review period: (1) an increase in the
APR of greater than 1/8 of a percentage point for a fixed-
rate loan or 1/4 of a percentage point for an adjustable-rate
loan (decreases in the APR based on a decrease in the
interest rate or fees charged do not trigger a delay); (2)
the addition of a prepayment penalty; and (3) changes in the
loan product, from a fixed-rate to an adjustable-rate loan,
for example. Importantly, no other changes require a delay
for re-disclosure.
Your letter raises a further important matter. As you have
suggested, the Bureau's work to support the implementation of
the Rule does not end on the effective date of August 1, as
we continue to work with industry, consumers, and other
stakeholders to answer questions, provide guidance, and
support a smooth transition for the mortgage market. As we do
so, and in response to considerable input we have received
from you and your constituents, I have spoken with our fellow
regulators to clarify that our oversight of the
implementation of the Rule will be sensitive to the progress
made by those entities that have squarely focused on making
good-faith efforts to come into compliance with the Rule on
time. My statement here of this approach is intended to ease
some of the concerns we have heard about this transition to
new processes in the coming months and is consistent with the
approach we took to implementation of the Title XIV mortgage
rules in the early months after the effective dates in
January 2014, which has worked out well.
As always, thank you for your strong interest in the
Bureau's work, and I personally appreciate your oversight
efforts. I hope you can see, here again, that we listen
closely and consider carefully how we can best address the
issues that you raise as we all pursue this important advance
in consumer protection and disclosure authorized by Congress.
Please contact me if you have any additional questions or
Bureau staff can meet with your staff, should that be helpful
to you.
Sincerely,
Richard Cordray,
Director.
Mrs. CAROLYN B. MALONEY of New York. Within 2 weeks, we received a
letter back from the CFPB, promising that they would do a grace period.
I thank Director Cordray for responding so quickly to the gentleman
from Kentucky's concerns and my concerns.
The grace period that the Bureau did for the qualified mortgage rule,
which they gave earlier, was very successful, and I have no doubt that
the grace period for the Integrated Disclosure rule will be just as
successful.
In fact, the Integrated Disclosure rule took effect last Saturday,
which means that the grace period that Director Cordray promised--which
this bill would codify--is already in effect. The grace period is
happening right now, and that is why this bill is just absolutely not
necessary.
It is also important to note that the bill would prohibit consumers
from suing for improper disclosure during the grace period. Now, that
is of deep concern to me because that takes a right away from
consumers.
[[Page H6862]]
I certainly did not come to Congress to vote in any way to limit or
roll back consumer protections. So this was something that I am
incredibly uncomfortable with because I don't think it is a good idea
to suspend both public enforcement and private enforcement through
lawsuits at the same time. I don't think that is good policy because it
takes away all the guardrails for consumers during this grace period.
This is also something that the White House strongly opposes. In
fact, they have issued a veto threat on this bill because they feel so
strongly about maintaining consumers' private right to sue.
And I will place into the Record a statement from President Obama's
White House, stating that he is opposed to rolling back any rights of
consumers.
Executive Office of the President, Office of Management
and Budget,
Washington, DC, October 6, 2015.
Statement of Administration Policy
H.R. 3192--Homebuyers Assistance Act
(Rep. Hill, R-AR, and one cosponsor)
Americans deserve clear and easy to understand disclosures
of the cost of buying and financing a home, which is why the
Dodd-Frank Wall Street Reform and Consumer Protection Act
directed the Consumer Financial Protection Bureau (CFPB) to
streamline conflicting disclosures that were required under
the Truth in Lending Act and the Real Estate Settlement
Procedures Act. The Know Before You Owe regulation issued by
the CFPB almost two years ago fulfills this mandate by
requiring mortgage lenders and settlement agents to provide
homebuyers with simpler forms that explain the true cost of
buying their home at least three days before closing. This
summer, the CFPB extended the effective date for these
requirements by two months, to last Saturday, October 3,
2015, to provide for a smooth transition and avoid
unnecessary disruptions to busy families seeking to close on
a new home at the beginning of the school year.
H.R. 3192 would revise the effective date for the Know
Before You Owe rule to February 1, 2016, and would shield
lenders from liability for violations for loans originated
before February 1 so long as lenders made a good faith effort
to comply.
The CFPB has already clearly stated that initial
examinations will evaluate good faith efforts by lenders. The
Administration strongly opposes H.R. 3192, as it would
unnecessarily delay implementation of important consumer
protections designed to eradicate opaque lending practices
that contribute to risky mortgages, hurt homeowners by
removing the private right of action for violations, and
undercut the Nation's financial stability.
If the President were presented with H.R. 3192, his senior
advisors would recommend that he veto the bill.
Mrs. CAROLYN B. MALONEY of New York. So while I am very sympathetic
to the concerns that motivated this bill, I have to oppose the bill
because I believe it is unnecessary.
They say the purpose is to codify it. Mr. Cordray responded to
Congress' request. They responded to industry's request, and they
granted the grace period. We have it. So this bill does nothing but
roll back consumer protections.
I would urge my colleagues to vote against this bill. I applaud my
colleagues that signed the letter that led to the relief we have today.
Mr. HENSARLING. Mr. Speaker, I yield myself 10 seconds to say we
certainly don't see a grace period from Mr. Cordray. We see ``I am
going to be sensitive and read between the lines.''
So the worst charge here is this bill is redundant. This bill does
nothing to constrain consumer rights, but what it does do is constrain
trial lawyers who are going to take away home ownership opportunities.
I yield 2 minutes to the gentleman from New Jersey (Mr. Garrett), the
chairman of the Capital Markets and Government Sponsored Enterprises
Subcommittee.
Mr. GARRETT. Mr. Speaker, I guess we have a new definition. We just
heard that the CFPB has streamlined things for local banks. I guess
this is Washington's version of streamlining regulations: 1,888 pages.
My gosh.
So I come to the floor today to commend the chairman of the committee
and the gentleman from Arkansas (Mr. Hill) for moving this legislation
before us, H.R. 3192, and for Members on both side of the aisle who
have supported this type of legislation as well.
Let us understand what this legislation does not do. It does not
remove any authority from the CFPB to take enforcement actions against
bad actors under the new Integrated Disclosure rules. Secondly, it does
not remove any kind of incentives for lenders to comply with the new
rule.
So I think it is important that we recognize what it does not do,
despite some of the claims that we are hearing from the other side of
the aisle.
So what does the bill do? It simply provides a grace period, if you
will, for lenders, your local bankers, if you will, who act in good
faith to comply with this 1,888-page simplification of the new rules
that the CFPB has put out there.
I think it is ironic that the CFPB took over 1,800 pages of
rulemaking authority and analysis and all the time, yet the agency is
unwilling to provide the lenders--your local banks, if you will--a
brief period in order to comply with all the rigamarole, the red tape,
the technology, the compliance for them to get up to speed on this.
Clearly, the length of the rulemaking suggests it was a complicated
project for the CFPB. It took them a long time to complete it. So why
are they not willing to in writing basically say: Here, you folks, you
local bankers, you also will have the same leniency as well?
This is a very straightforward and simple bill. It is intended to
provide a brief, 4-month grace period for your banks, lenders that act
in good faith to comply, nothing more, nothing less.
At the end of the day, who are we really helping here? No. It is not
the bankers. It is not the lenders. Really, who we are really helping
is all the American people who are trying to get a loan, who are trying
to go and get financing. Those are the people that this legislation
would help.
Ms. MAXINE WATERS of California. Mr. Speaker, I yield 3 minutes to
the gentlewoman from New York (Ms. Velazquez), the ranking member of
the Small Business Committee.
Ms. VELAZQUEZ. I thank the gentlewoman for yielding.
Mr. Speaker, I rise in opposition to H.R. 3192 to protect Americans'
investment in their homes.
The new TILA-RESPA disclosure rules are critical consumer protections
that will provide consumers with expanded information before buying a
home.
What we are doing today with this legislation is to use dilatory
tactics to prevent CFPB from doing their job in protecting consumers.
This legislation, however, is a solution in search of a problem. Just
last week, before a Financial Services Committee hearing, Consumer
Financial Protection Bureau Director Cordray indicated that the agency
will implement a hold harmless period so that the industry could
implement rules without risk of enforcement.
H.R. 3192, which will further extend the grace period, is, therefore,
unnecessary. The Consumer Financial Protection Bureau has already
indicated a willingness to work hand in hand with the industry. But I
guess that is not enough.
If this bill is enacted, the private right of action will be blocked,
denying consumers their basic right to a day in court. That is not
right, and this body should not stand for it. This will undermine the
intent of the Integrated Disclosure, which is to provide clear,
straightforward information to consumers regarding their mortgage.
How could you call this piece of legislation ``Protect Americans'
Investment in Their Homes'' and, yet, use all these dilatory tactics to
prevent consumers from having their right in court and from having the
information that they need in order to make a wise decision?
We are trying to make the process better for consumers, and there is
already a path before us that strikes a balance between the needs of
industry and millions of homebuyers.
I am confident that CFPB Director Cordray will not deviate from this
course. If he does, then we can hold the agency accountable. For these
reasons, I urge the Members of this House to oppose this bill.
Mr. HENSARLING. Mr. Speaker, I yield myself 30 seconds.
I would be happy to yield to any of my Democratic colleagues who
would show me where Director Cordray has ever used the words ``hold
harmless,'' where he has ever used the words ``grace period.''
I continue to hear these words bandied about. But he has appeared
before the House Financial Services Committee, the Senate Banking
Committee. He has written letters, conducted interviews. He has never
said this, never said this.
[[Page H6863]]
So, at worst, again, Mr. Speaker, the bill is redundant. If so, if my
colleagues will yield back their time, I will be happy to yield back my
time. We will have the vote, and we will get on with the other business
of the House if the worst they can say is this bill is redundant.
Mr. SHERMAN. Will the gentleman yield?
You said you would yield to a Democrat who could quote Mr. Cordray.
Mr. HENSARLING. I said I would yield to a Democrat who can give me
the Cordray quote where he says he will ``hold harmless'' or uses the
term ``grace period.''
So if the gentleman has the quote, I would be glad to yield to him.
Mr. SHERMAN. I am so close to that, you should yield to me.
Mr. HENSARLING. I yield to the gentleman from California.
Mr. SHERMAN. He has responded to my question and said of this grace
period, so it will ``be diagnostic and corrective, not punitive, and
there will be time for them to work to get it right.''
Mr. HENSARLING. Reclaiming my time, so I continue to hear
``diagnostic'' and read between the lines. So, again, at worst, the
bill is redundant.
Mr. Speaker, I yield 3 minutes to the gentleman from Texas (Mr.
Neugebauer), the chairman of the Financial Institutions and Consumer
Credit Subcommittee.
Mr. NEUGEBAUER. I thank the distinguished chairman for his work on
this important piece of legislation as well as my good friend from
Arkansas (Mr. Hill).
Mr. Speaker, for a good portion of my life before Congress I was in
the housing business and had the opportunity to help a lot of American
families buy their first home and sometimes their second home. I had
the opportunity to buy my first home.
I was thinking earlier today that, when you look at the history of
the closings over the years since I have been in the housing business,
the first house I bought was in 1973.
I came away with six pieces of paper: a copy of the note that I
signed that said I would promise to pay monthly payments of x; the deed
of trust, which gave the bank security for the loan that I was taking
out; a copy of the closing statement, which was on one page.
And over the years, I watched that grow and grow and grow until
today--and I wish I had had an opportunity to do that--that, in many
cases, the families walked out of closings with hundreds of pages of
closing documents because we have gotten more and more new regulations
and nuances into the buying a home process.
But let me talk about what I hear a lot of my colleagues on the other
side say that this bill does.
Let me tell you what it doesn't do. It doesn't do one thing that
inhibits the protections that are in TILA and RESPA for home buyers in
this country. It does nothing.
What it also does not do is it does not give anybody safe harbor if
they are not acting in good faith. Basically, what this bill says is:
Look, we have got a new process.
And I think it was a good idea. I have supported it. In fact, I
worked on working together to see if we could come up with one
disclosure statement because two are sometimes confusing to the home
buyer. So one made a lot of sense.
What didn't make sense was to take 1,888 pages to describe what we
ought to do on one form, a combined form.
But what this does do is it says: We have got a very sophisticated
process now because we have added all of these documents to closings
and all of these disclosures. What it says is: Now, effective Saturday,
we are going to implement a new system, and that new system is
complicated. It has a lot of moving parts.
And buying a home can have a lot of different parts because each
borrower, each buyer of a home, has different circumstances and
different verifications that are needed and different transactional
pieces of that. And trying to bring those all together in a new
environment with new software is very difficult.
So what we said is: Look, if you are trying to act in good faith and
you are trying to implement this and you are working on all the
glitches in your processes and in your computer system possibly and you
are doing that and if, for some reason, you missed one of the
guidelines in this combined statement, we are not going to give you a
penalty.
{time} 1500
I think that makes sense. The American people are tired of an
oppressive government. They are tired of the government being the
enemy. What we need for the CFPB to be doing in this circumstance is
working with the financial industry to make sure that this process is
smooth. If there are nuances or glitches in the system, hey, it makes
the system better when we share those.
So with that, Mr. Speaker, I support H.R. 3192 and encourage my
colleagues to vote for it.
Ms. MAXINE WATERS of California. Mr. Speaker and Members, my friends
on the opposite side of the aisle keep making the argument about the
grace period. That should not even be discussed here because we have
agreed, Mr. Cordray from the Consumer Financial Protection Bureau has
agreed and everybody has agreed, that there should have been a grace
period. That is not what my amendment was about that they would not
allow me to take up on the floor.
Mr. Speaker, my amendment is about consumer protection. They know it,
and they are trying to keep people misled by coming in here with their
props and saying that this bill is 1,800 pages when, in fact, it is
not. So I want everybody to be clear that this is not about the grace
period, and this is not about not giving the industry an opportunity to
get its act together. Really, the debate should be about whether or not
they protect consumers, and they don't.
Mr. Speaker, I yield 4 minutes to the gentleman from California (Mr.
Sherman).
Mr. SHERMAN. Mr. Speaker, back in the old days, this bill would have
just passed on suspension. It is bipartisan, it is small, and it is
temporary. Both sides have praised the CFPB's efforts in coming out
with this rule. Both sides believe in a grace period, and the question
before us is whether we should codify that grace period and apply it to
trial lawyer enforcement, or whether we should have it be more vague
than the chairman would want, and whether this grace period should
apply to private enforcement or only government enforcement.
Mr. Speaker, 91 Democrats called for this grace period. Half the
Democrats on the committee voted for the bill. The bill applies only
until the end of January. It is small, it is temporary, and it applies
only to lenders who operate in good faith. I said until the end of
January. Some would say it applies until February 1. Either way, it is
a temporary bill.
I know the pressure the Democrats are under. Anybody who shows up at
Democratic club meetings, they are thinking that any bill, no matter
how small, temporary, or practical, that is favored by the financial
services industry must be a complete sellout to banks. Well, as one of
the leaders against the $700 billion TARP bill, I can go to any
Democratic club holding my head up high even if I vote for bills that
are practical and yet may clash with some ideology.
The CFPB recognized the importance of this grace period, saying in
the letter of October 1:
We recognize that the industry needs to make significant
systems and operational changes.
They document all those changes and review them. That is why they
provide for a grace period which they have indicated may last longer
than 4 months. So why are smaller participants in the industry, small
escrow companies and small lenders, backing away, abandoning consumers
to only the biggest who know how to comply with this complicated 1,888-
page regulation without worrying about a period of a shakedown cruise
to get organized? Why? Because although they have got the restrained
administrative enforcement that has been praised, they don't have the
restrained trial lawyer enforcement.
This bill effectuates what the CFPB is trying to do: let people go,
do a shakedown cruise, make sure that things operate correctly, and do
so knowing that if they act in good faith, they won't face retribution.
But the CFPB can do that only with regard to governmental enforcement.
It is up to
[[Page H6864]]
this Congress to make sure that it applies to private enforcement. That
is the purpose of this bill.
Let us achieve the purpose that the CFPB had when they issued their
letter of October 1. Let us make sure that those who act in good faith
will not face retribution. Let us make sure that the smaller mortgage
lenders and smaller escrow companies can continue to operate if they
try to do so in good faith. Let us not hand a huge competitive
advantage to those players in the industry that have the most lawyers
and the most sophisticated computer programmers.
If we are going to have a grace period, it needs to apply to both
private enforcement through lawsuits as well as public enforcement
through the CFPB. That is why I hope that Members will vote for this
bill.
Madam Speaker, I enter into the Record this letter of October 1.
Consumer Financial
Protection Bureau,
Washington, DC, October 1, 2015.
Re Your inquiry regarding supervisory practices.
Frank Keating,
President and CEO, American Bankers Association, Washington,
DC 20036
Dear Mr. Keating: Thank you for your letters of August 12th
and, with the trade associations copied below, September 8th
regarding the Consumer Financial Protection Bureau's Know
Before You Owe TILA-RESPA Integrated Disclosure Rule (the
Rule). The letters request that the FFIEC articulate its
policy for its member agencies' examination and supervision
of financial institutions for the initial months after the
Rule becomes effective on October 3, 2015.
The member agencies of the FFIEC recognize that the
mortgage industry has needed to make significant systems and
operational changes to adjust to the requirements of the
Rule, and that implementation requires extensive coordination
with third parties. We recognize that the mortgage industry
has dedicated substantial resources to understand the
requirements, adapt systems, and train affected personnel,
and that additional technical and other questions are likely
to be identified once the new forms are used in practice
after the effective date.
During initial examinations for compliance with the Rule,
the agencies' examiners will evaluate an institution's
compliance management system and overall efforts to come into
compliance, recognizing the scope and scale of changes
necessary for each supervised institution to achieve
effective compliance. Examiners will expect supervised
entities to make good faith efforts to comply with the Rule's
requirements in a timely manner. Specifically, examiners will
consider: the institution's implementation plan, including
actions taken to update policies, procedures, and processes;
its training of appropriate staff; and, its handling of early
technical problems or other implementation challenges.
As you may recall, this is similar to the approach the
member agencies took in initial examinations for compliance
with the mortgage rules that became effective at the
beginning of January, 2014. Our experience at that time was
that our institutions did make good faith efforts to comply
and were typically successful in doing so.
Again, thank you for your letter.
Sincerely,
Richard Cordray,
Director, Consumer Financial
Protection Bureau.
cc: American Land Title Association; American Escrow
Assocition; The Appraisal Firm Coalition; Appraisal
Institute; Collateral Risk Network; Consumer Bankers
Association; Community Home Lenders Association; Consumer
Mortgage Coalition; Community Mortgage Lenders; Credit Union
National Association; Housing Policy Council; Independent
Community Bankers of America; Mortgage Bankers Association;
National Association of Home Builders; National Association
of Mortgage Brokers; National Association of REALTORS; Real
Estate Services Providers Council, Inc.
Mr. SHERMAN. I do want to quote out of it. The CFPB recognizes that
``the mortgage industry has needed to make significant systems and
operational changes to adjust to the requirements of the Rule.''
It goes on to set forward why we need this grace period; and we need
to make sure the grace period applies to both private and public
enforcement.
Mr. HENSARLING. Madam Speaker, I yield 2\1/2\ minutes to the
gentleman from Michigan (Mr. Huizenga), the chairman of the Monetary
Policy and Trade Subcommittee.
Mr. HUIZENGA of Michigan. Madam Speaker, I rise in support of H.R.
3192.
Madam Speaker, just to reinforce what my colleague from California
was just talking about, this is a period here where we are going to be
moving forward to make sure what the CFPB is doing with its 1,888-
page--sorry, that is me straining trying to pick all that up--rule is
moving forward.
I would ask what is more pro-consumer: moving forward with a
clarified rule that grants certainty to those businesses and those
individuals like Realtors--I am a former Realtor, and mortgage folks
like myself, I used to be in the business--or not doing the deal and
not doing the closing. Because that is what is going to happen. That is
what is going to happen is you are going to see these companies say:
Wait a minute. We are not sure what our legal exposure is here.
Mr. Cordray, the head of the CFPB, has said that he will give a
certain grace and understanding and, I believe the word was
``sensitivity'' to this moving forward. That is not a grace period.
That is not clarity. Anybody who has a lawyer advising them or a CPA or
anybody else who has a fiduciary responsibility to make sure that their
client understands what is happening in the intent would not say that
that is going to stand up in court.
I also know as a former Realtor that the home-buying process, buying
or selling, can be one of the most challenging, confusing, and
stressful times, especially for a first-time home buyer. The three most
stressful points in life are marriage, death, and changing where you
live. That is a very difficult time.
As we are moving forward on this, there often has to be this domino
effect of homes closing to then get that closing settled, to then move
beyond to the next deal, and you will have two, three, four, five,
sometimes five or six homes all lined up, five or six families waiting
for this one closing to happen. What that is going to do is just cause
more confusion.
Madam Speaker, I support the intent and the spirit of the rule
because I have sat at that closing table having to go through form
after form after form. Everybody gets writer's cramp signing their name
on all of these different forms. This was a good thing about Dodd-
Frank, and combining these various forms and these various legal
documents that have to be signed makes total sense.
The SPEAKER pro tempore (Ms. Ros-Lehtinen). The time of the gentleman
has expired.
Mr. HENSARLING. Madam Speaker, I yield the gentleman an additional 30
seconds.
Mr. HUIZENGA of Michigan. Madam Speaker, I thank the gentleman.
Madam Speaker, as I was saying, the intent and the spirit of the rule
makes a lot of sense. Having something that is going to negatively
impact those home buyers, especially those first-time home buyers, is
not pro-consumer. It is not pro-growth. What we are trying to do with
this particular bill--and I applaud my new colleague for this--is to
allow the stakeholders, which is the buyer, the seller, and the
companies that have the legal responsibility to do this closing
properly to move forward and make sure that this is done in the proper
way for those consumers.
Ms. MAXINE WATERS of California. Madam Speaker, I yield 1 minute to
the gentlewoman from California (Ms. Pelosi), our distinguished leader.
Ms. PELOSI. Madam Speaker, I thank the gentlewoman for yielding and
salute her for her relentless championing of the rights of consumers in
our country as our ranking member on the Financial Services Committee.
I come to the floor on this legislation because it is something that
runs deep in terms of our commitment and our responsibility to the
consumers in our country.
It is very curious to me that this is called the Homeowners
Assistance Act because it is exactly the opposite of that. I say that
with regret because I think that there could have been some good
features of this bill--and there had been that we all agreed on, that
if there is legislation, as there has been, Dodd-Frank, and the
regulations that spring from it, as there must be, that we have
adequate time for the regulations to be implemented, to listen to the
private sector, to say: What are the ramifications of these
regulations, and do you need more time? We all subscribe that a certain
amount of time, not an amount of time that is going to deter ever
implementing the regulations, but a good faith attempt to come to
terms.
[[Page H6865]]
What is unfortunate about this legislation, though, Madam Speaker, is
that in taking that goodwill and turning it into a bill, what the
Republicans have decided to do is to take away the right of private
action for a homeowner, for a consumer. They are trying to destroy
homeowners' rights to be heard in court when they think they have been
tricked or misled in any kind of a transaction.
This is so really important. It was in September of 2008 when we had
a meeting in my office then at the time, Democrats and Republicans,
House and Senate, to talk about what was happening to the financial
institutions in our country. There was a meltdown of such seriousness
as was described by the Secretary of the Treasury that when I asked the
chairman of the Fed, who was in the room, Mr. Bernanke, did he agree
with that characterization of the situation we were in, he said: If we
do not act immediately, we may not have an economy by Monday.
This was Thursday night.
So we went forward, largely with Democratic votes, to support a
Republican President, President Bush, whose administration put forth
legislation, and we worked together to make it something that we could
pass on the floor, overwhelmingly Democratic votes supporting a
Republican President in order to protect our economy.
What we couldn't do in that legislation or since was include the
ability for a homeowner to declare bankruptcy--not that we wanted them
to, and not that we hoped they ever needed to, but they had the
leverage, they had the leverage in a negotiation with their lender to
do so. Many of them were seriously abused by bundling and all kinds of
other things that had happened that it was no longer my home loan from
my neighborhood banker or my community banker or something like that.
These notes, these mortgages, were sold and sold and sold, so nobody
even knew who their lender was. But we, the Congress, refused to give
them the right of bankruptcy.
Here we are again, Madam Speaker, these years later since September
of 2008 to October of 2015, 7 years later. We have passed that bill
that pulled back the financial institutions from their serious
meltdown, helping Main Street as well as our financial institutions
necessary for our economy. We passed the TARP bill, and we passed Dodd-
Frank to make sure that the abuses that occurred that caused that
meltdown in 2008 would not happen again because of what it did to our
economy, to our working families, and to our financial institutions in
our country.
So with Dodd-Frank, we had something that was really a breakthrough
to protect the consumers, that Financial Consumer Protection Agency,
and there is something really important, to protect average people,
consumers. So when the regulations are released and the private sector
said they needed more time, take more time. The administrator of the
agency said: Okay, take more time. Then our Republican friends said:
Oh, no, let's bring it to the floor and turn it into a bill to take
more time. But then, to put this, like a Trojan horse, this bill comes
in here with this underbelly of taking away the right of private action
for a consumer.
{time} 1515
How many people have we heard from, one reason or another engaged in
a contract, a financial transaction, where not the devil was in the
details, hell was in the details. Terrible for them, and they had no
right of private action. This just isn't right.
So we may have our differences of opinion as to the amount of
regulation or the timing of regulation. That is a legitimate debate for
us to have, and to listen to the private sector in our public-private
discussions to make sure that the intent of Congress and the intent of
protecting the American people is intact. I don't paint everyone in the
private sector with the same brush as I come out against those who say
let's take away that right for consumers to have their day in court.
So I ask my colleagues, think about the consumer, what it means to
the consumer to have his or her day in court. We are not supposed to be
constricting leverage for the consumer in our country; we are supposed
to be expanding opportunity for them so that when they engage in a
transaction, they are respected because they have leverage at the
table. Don't diminish their leverage by passing this legislation.
I am so pleased that the President's staff has said that they would
recommend a veto should this bill come to the President's desk. Remove
all doubt in the consumers' mind. We are not here to deter them, but to
empower them.
I thank the gentlewoman again for her leadership and the members of
the committee who have been so protective of America's consumers,
because do you know what? The consumers are the lifeblood of our
economy. We are a consumer economy. And until consumers have the
consumer confidence to invest, to spend, to buy a home, to inject
demand into the economy, our economy will never turn around.
We are a middle class economy. We are a consumer economy. Let's
strengthen that by voting ``no'' on this bill and saying ``yes'' to
consumers. We want them to be as strong at the negotiating table as
they can be.
With that, I commend the gentlewoman from California, Ranking Member
Waters.
Mr. HENSARLING. Madam Speaker, may I inquire how much time is
remaining on each side?
The SPEAKER pro tempore. The gentleman from Texas has 9\1/4\ minutes
remaining. The gentlewoman from California has 11\1/2\ minutes
remaining.
Mr. HENSARLING. Madam Speaker, I yield myself 10 seconds just to say,
I know it is the custom of my friends on the other side of the aisle to
want to vote on a bill before they read a bill, but I would suggest if
they actually read H.R. 3192, they will discover the private right of
action is preserved. There is merely a hold harmless section for those
who act in good faith. I would commend to the distinguished minority
leader and all Democrats they actually read the bill and they might
discover that.
I now yield 2 minutes to the gentleman from Wisconsin (Mr. Duffy),
the chairman of our Oversight and Investigations Subcommittee.
Mr. DUFFY. Madam Speaker, I want to thank the sponsor of this bill,
Mr. Hill, for his good work and our chairman for driving this
legislation. It is bipartisan.
Listening to the remarks that just took place from the minority
leader, I know there is a comment, Madam Speaker, about consumers, but
I think this is more of a play for the trial bar. Because if this 4-
month hold harmless doesn't move forward, it is the consumers who are
going to get hurt. It is the divorcee who needs the proceeds from the
sale of her home from her husband to actually work on putting her life
back together that now won't have that sale go through.
In communities like mine in rural America where you don't have really
large lenders and large title companies and large Realtors, we have
small institutions. It is those communities that are going to be hurt
the worst if we don't have this 4-month hold harmless. You have given
up your lease. You expect to close on a house, and that closing is not
going to happen. Or you are getting a new job and you are moving to
rural America and you didn't secure a lease because you are buying a
house, but you can't buy a house because you have the whole sector of
this base that is not willing to take the risk.
We are beating a horse here of 1,800-plus pages. It is a significant
rule. It is very complex, and it baffles me that we wouldn't make sure
that, as the system is implemented, we have a hold harmless provision,
as long as those folks who are imposing new systems are making a good
faith effort to comply.
I think you were listening to the debate. We are all saying the same
thing. We want to make sure we protect consumers. We want to make sure
the private sector can actually implement the rule effectively.
Mr. Cordray has come forward and indicated he is in support of a hold
harmless, but I think the gentleman from California made a good point.
It is not just the exposure that you have on the governmental side. It
is also the exposure that you have the private side from private
litigation.
The SPEAKER pro tempore. The time of the gentleman has expired.
Mr. HENSARLING. I yield the gentleman an additional 30 seconds.
[[Page H6866]]
Mr. DUFFY. And so I am concerned that we will have consumers who are
set to buy a home who won't have that sale go through, and it is those
families who are hurt the worst.
There is a lot of stuff that we have to fight about that we disagree
on, but it seems like we are so close on this one. Let's just go
forward and do what is right for the consumers and right for the
private sector and make sure that we have a 4-month hold harmless
provision.
Ms. MAXINE WATERS of California. Madam Speaker, I yield 4 minutes to
the gentleman from Minnesota (Mr. Ellison).
Mr. ELLISON. Madam Speaker, I thank the ranking member of the
committee for her hard work on this.
I urge Members to vote ``no,'' and the reason why is that we have
been considering and considering and trying to implement Dodd-Frank for
such a long time. Every step of the way we have seen delay. Every step
of the way we have seen things that just couldn't happen now for all
these good reasons. But the fact of the matter is that what brought us
to Dodd-Frank were serious abuses in the financial industry, and this
bill and all the rules associated need to be implemented.
Now, the Know Before You Owe rule is a huge victory for home buyers.
It is a good thing for home buyers to know exactly what is going on
before they execute on a home loan. Anyone who has bought a home
remembers the anxiety of wondering if they are going to have enough
cash to close, to cover all the expenses. They also remember feeling
bewildered by all of the various fees of $100 or $200, all these
surprises. Home buyers need access to clear disclosures in plenty of
time to comparison shop and challenge junk fees.
The bill we consider today would remove the legal right of homeowners
to seek legal redress if they do not receive accurate disclosures until
February 2016. The consumer protections are already in place now. We
shouldn't postpone them.
If we really want to ``assist'' home buyers--and this bill is
ironically called the Homebuyer Assistance Act--don't postpone what is
already in the law today. Home buyers should get a clear home estimate
when they apply for the loan. Home buyers should get their actual
closing costs 3 days prior to settlement. And if a home buyer is
mistreated in the closing process, the home buyer should retain the
right to go to court and seek a remedy.
I remain concerned that home buyers are overcharged at closing. Not
all; I am not one of those who paints with a broad brush. I believe
many of our folks in the industry are excellent, but there are enough
exceptions to that to concern all of us.
I strongly oppose a lot of lenders, mortgage brokers, builders who
receive a financial benefit for a referral. Affiliated business
arrangements and reverse competition are not good for home buyers.
Consumers need information to protect themselves from overcharges and
kickback schemes.
Please stand up for home buyers and vote ``no'' on H.R. 3192.
Mr. HENSARLING. Madam Speaker, I now yield 2 minutes to the gentleman
from New Hampshire (Mr. Guinta).
Mr. GUINTA. Madam Speaker, I thank Chairman Hensarling.
Madam Speaker, I would like to thank the gentleman from Arkansas (Mr.
Hill) for introducing this very important and significant piece of
legislation.
H.R. 3192 acknowledges the learning curve that accompanies
implementation of any new Federal regulation.
The TILA-RESPA Integrated Disclosure rule has been in effect now for
4 days. At this early stage, agencies are unable to protect the
industry from liability risk that will follow during the early days of
compliance, and Director Cordray has acknowledged that compliance would
be difficult during these days of implementation. The loss should take
into account Director Cordray's statement and protect home buyers,
sellers, and the industry from regulatory and civil liability as they
make good faith efforts to comply with the latest CFPB requirements.
I met with New Hampshire bankers, credit unions, and Realtors in
September. They shared their concerns about what could happen if,
misinterpreting the new rules, they made an unfortunate or
unintentional error.
Compliance costs from other CFPB rules currently in effect have
hobbled New Hampshire's financial institutions. The risks of this new
rule could even lead some to quit the residential lending business, and
that has already happened in one circumstance in my district. That
means less consumer choice and fewer options for home buyers in a
shrinking real estate market, inevitably raising the price for the very
consumer we try to protect.
Madam Speaker, I want to remind everyone that the private right of
action is preserved in this piece of legislation and that this bill
passed the House Financial Services Committee on a strong bipartisan
vote of 45-13.
I want to thank Mr. Hill and Mr. Sherman for this legislation.
I urge my colleagues to vote in favor of it to prevent frustrating
and costly delays for the American consumer.
Ms. MAXINE WATERS of California. Madam Speaker, I yield myself such
time as I may consume.
I think it is important for us all to really understand what is
taking place here today.
First of all, I want to warn against misleading information. When we
keep hearing that those stack of papers represent the bill--that the
bill is 1,800 pages long--that is not the case. As a matter of fact,
the chairman of the committee knows that 171 pages are simply sample
model forms to say to the banks: These are the kind of forms that you
need, and you can take these samples and use them: 63 pages are
description of the rationale behind the rule, why do we have this rule;
15 pages are summarizing the rulemaking process; 308 pages with
section-by-section analysis.
So that is not the bill, those pages that you see, the props that are
being used.
If we go to the beginning of this, you have to understand that it was
Dodd-Frank that decided they wanted to make this process more easily
understood by the consumers. Out of the Dodd-Frank legislation, they
are the ones that combined both TILA and RESPA into this integrated
disclosure form to make it simpler.
So despite the fact that the banks and the industry have--
particularly the big banks--thousands of employees, millions of
dollars, doing big trades, et cetera, et cetera, they said: We really
can't get our act together in the length of time that is given us with
this rule.
So for some of us who thought, well, you know, they are very well-
staffed, they have a lot of money, they could really do this, but we
will take them at their word. And not only that, some of us on the
Democratic side said we would take them at their word, Mr. Cordray led
the effort in saying, all right, there should be a grace period.
I don't care what my chairman said. If Mr. Cordray did not say it in
the exact words the way that he wanted him to say it, that is just too
bad; but the fact of the matter is he did say it, that he would support
a grace period, and that is what we have all done.
So given that he has said that, given that we have support for it on
the Democratic side and the Republican side, really, there is no need
for the bill. This is just taking up precious time and energy for
something that is not needed.
I think I know why there is such a fight for this legislation.
Because it includes in it something that would protect the lenders even
when they make a big mistake.
{time} 1530
We talk about good faith, but I want to tell you what is included in
this Integrated Disclosure. People are talking about real issues here.
Will the loan amount be the same that the consumer has agreed upon?
Will the interest rate be the same? Or will somehow there be a little
mistake; instead of 3.8 in interest rates, it is going to end up 4.2 or
4.3? If that happens, what can the consumer do if you don't give them
the right to go into court? Basically, they can do nothing, and the
lender can say ``too bad about that.''
We cannot treat consumers that way. We have to give them the right to
have their day in court. And even with the burden being on the consumer
to have to prove that the lender acted in good faith, the consumer
needs to have the right to go and make the case.
And so my amendment that was not allowed in the Rules Committee and
we
[[Page H6867]]
did not get a chance to come to the floor and debate it because they
closed down the rule simply means that my friends on the opposite side
of the aisle said: We don't care what you are saying about protecting
the consumers. We know that there could be some mistakes. However, we
say, if those mistakes are made, it was in good faith. They didn't
really mean to do it and, no, the consumer doesn't have a right to go
into the court and make the case.
That is not right. It should not happen.
As our leader has said, we have gone through a period of time where
this country almost had a depression. We certainly did have a recession
because the big banks and too many of the banks and financial
institutions in this country came up with all of these exotic products.
People were misled. They signed on the dotted line for mortgages that
many of them could not afford. These mortgages reset, and people ended
up paying higher interest rates 6 months or a year after they signed on
the dotted line. They didn't know. They didn't understand.
So you can say that the banks who treated the consumers this way were
acting in good faith and they didn't intend to do it, but we know
enough now that we cannot depend on representations of ``I didn't mean
it.'' If you didn't mean it, you shouldn't have done it. And if you did
it, you need to be able to be dealt with in a court of law.
So here we are with this legislation. And if you had not put that
part in the legislation, there would not even have to be a discussion.
You are absolutely right; it could have been on suspension or there
could not have been a bill at all.
But, no, the concern about the consumer is not what appears to be
foremost in the minds of those who would dismiss their opportunity to
go to court. We should not treat our consumers that way. We should have
learned our lesson. We should have learned our lesson.
Folks who are buying a home maybe for the first time and this is the
biggest decision and this is the biggest credit action that they are
going to make in their lifetime, they need to have some assurances that
they are being treated right.
Why do you think we have all of these disclosure laws? Before these
disclosure laws were developed, people were misled. They ended up with
balloon payments, prepayment penalties, on and on and on.
We are saying, yes, let's have a grace period; let's allow the banks
to use this time to get their house in order. They can train their
staff. They can get their papers together. We agree to all of that.
That is not an issue, and we say it over and over again because we
don't want anybody to be misled that somehow we are standing in the way
of the great spirit. We are not doing that. We agree to that. What we
are standing in the way of is abuse of our consumers.
We created this Consumer Financial Protection Bureau because our
consumers did not have the protection that they needed. Our regulators
didn't pay attention to consumers. They were supposed to be there, not
only to deal with the possible risks in the system, et cetera, and the
consumers, but nobody was looking out for the consumers.
So this is the centerpiece of Dodd-Frank reforms, the Consumer
Financial Protection Bureau. The centerpiece of Dodd-Frank is to
protect consumers and not allow them to be tricked, not allow them to
be misled, not allow them to be prevented from going to court. You can
describe it any way that you want to describe it, but the fact of the
matter is you are either with the consumers or you are not.
We on this side of the aisle, for the most part, are telling you over
and over again that we are with the great spirit. We are not with your
actions and that part of the bill that will not allow our consumers to
be protected.
And you can protest all you want. You cannot tell me if Ms. Jones, in
signing on the dotted line, ends up with a higher interest rate than
she thought she was getting and if she does not have the right to go
into court, what happens. Who is going to protect her if she does not
have the right to go into court and make the case and show that this is
not simply an error of a comma or a period? This is an action that does
not show good faith. This is an action that will cause me to pay
hundreds of more dollars for my loan that I had not anticipated.
Consumers should not be treated that way. Consumers should be
protected in every possible way that we can because, in the final
analysis, that is why they send us to Congress, to be able to be their
voice, to speak for them. We on this side of the aisle will continue to
do that in spite of the tricks of the trade that are being employed by
others.
I yield back the balance of my time.
Mr. HENSARLING. Madam Speaker, how much time do I have remaining?
The SPEAKER pro tempore. The gentleman from Texas has 4\1/2\ minutes
remaining.
Mr. HENSARLING. Madam Speaker, I yield myself the balance of my time.
H.R. 3192, the Homebuyers Assistance Act, is bipartisan. Half of the
Democrats on the House Financial Services Committee supported it. Over
200 Members of this body wrote to the head of the CFPB asking for a
hold harmless period.
So what we have is a modest, bipartisan bill that says, you know
what? For 120 days--actually, fewer than 120 days now, Madam Speaker--
for those who in good faith are trying to implement the most dramatic
changes in our disclosure laws in a decade, if they act in good faith,
you know what, for 120 days we are going to let you get your systems
in. We are going to hold you harmless as long as you are acting in good
faith.
If you purposely violate the law, if you intentionally violate the
law, that is something different. But if you are acting in good faith,
you know, during this transition period, during this rollout, we are
going to hold you harmless because we want to help people close their
homes.
We want people to be able to partake in that portion of the American
Dream, which is home ownership. And whether you call it rule, guidance,
forms, there are 1,888 pages of text from the CFPB that must be
digested by all kinds of very expensive attorneys that have to be
integrated into the information technology systems. There are 1,888
pages, courtesy of the CFPB, in order to simplify forms.
Madam Speaker, it is a good idea to simplify forms. I am not sure the
CFPB got it right. The bottom line is the CFPB prevented people in the
industry from even having a trial of their systems. They were not
allowed to go live before October 3. So this is the first time they
have had to do it.
If anything, the Federal Government ought to know something about
failed rollouts. Look at ObamaCare. Yet, somehow, those people were
held harmless for the mistakes they made on rolling out something that
was very complex.
What is going to happen here if we don't pass this bill? Again, I
have talked to people in Texas involved in the industry. What I heard
at a workshop dealing with this Integrated Disclosure rule, a gentleman
from El Paso indicated their institution was going to stop residential
mortgage lending for a time ``until they could get a good feeling for
how the regulations were going to be officially interpreted.''
I know my friends on the other side of the aisle keep talking about
this grace period from Mr. Cordray. I don't see it. He appeared before
our committee just days ago and said, ``I don't think it is appropriate
for me to say I won't enforce the law when my job is to enforce the
law.'' I didn't find the words ``grace period'' anywhere there, Madam
Speaker, so it doesn't exist. And if it did, the worst they can say
about this bill is it is redundant.
People who have been wronged by those who act purposely have a right
to private litigation, but that doesn't appear in RESPA; it only
appears in TILA. And you can't tell me, in these new forms, which is
which. You can't tell me, and so it is completely confusing.
So it comes down to this, Madam Speaker: Whose side are you on? Are
you on the side of the wealthy, litigious trial lawyers who are looking
for their next big class-action payday? Are you looking to help low-and
moderate-income people who have worked hard to put together a nest egg
to finally save for their piece of the American Dream? Who are you for?
[[Page H6868]]
Well, I am happy that at least half of the Democrats on this
committee that serve with the ranking member have said: You know what?
We want to be with the homeowner. We don't necessarily want to be with
the litigious trial attorneys. So that is really the choice we are
making here. It is, again, Madam Speaker, such a modest bipartisan
bill.
I have heard the ranking member say it is a waste of time. Well,
then, why didn't she yield back her time?
This should be on what we call the suspension calendar. Something
that is bipartisan and modest should have been on the suspension
calendar and should have already been taken care of. But somebody
wishes to protect the wealthy trial attorneys.
So you have got to make a choice, Madam Speaker, and I hope that the
House today comes down thoroughly on the side of the American home
buyer and enacts H.R. 3192 from the gentleman from Arkansas.
I yield back the balance of my time.
Mr. LUETKEMEYER. Madam Speaker, there is no doubt reform of TILA and
RESPA is needed. Change has been advocated by all parties, and by
Members on both sides of the aisle.
Like many of you, I continue to hear from lenders, real estate
professionals, and title insurance companies in my district that third
parties were not frilly prepared for the October 3rd implementation of
TRID. This is particularly true for small businesses with fewer
resources.
Beyond preparedness issues, there remain questions over TRID
processes and associated liability. Countless concerns have also been
raised over the lack of a formalized restrained enforcement period. A
hold harmless period would allow a better understanding of the changes
associated with TRID, and help to ensure consumer confidence and
stability in the housing market.
In addition to a wide array of financial services industries, a
bipartisan group of lawmakers has expressed the need for a hold
harmless period like the one included in H.R. 3192. In fact, more than
250 Members of Congress, 92 of whom were Democrats, expressed strong
support for the idea in a letter led by Mr. Barr of Kentucky and Mrs.
Maloney of New York.
CFPB Director Richard Cordray indicated in an April 22nd letter that
the Bureau ``expects to continue working with industry . . . to answer
questions, provide guidance, and evaluate any issues . . .'', but that
he would not use his authority to institute a grace period.
This summer, a bipartisan group of Financial Services Committee
members met with Director Cordray to make an appeal for a commonsense
approach to implementation of this rule. The request was reiterated at
a Committee hearing just last week. In both instances, Director Cordray
indicated that he would institute a hold harmless period; and in both
instances, despite assurances, he failed to do so.
The changes to the home-buying process in TRID will affect millions
of Americans. We owe it to consumers to ensure that the rule put in
place serves its purpose without causing unintended consequences.
The practice of buying or selling a home is confusing. Buyers and
sellers put pen to paper on pages they've not read and don't
understand. Make no mistake, we all believe the procedure needs to
change; but, on something this important, CFPB needs to move slowly and
deliberately, taking into account concerns from consumer groups and
industry alike.
It's my sincere hope that implementation of this rule moves forward
without complication; however, the unfortunate reality is that a change
of this magnitude will create issues for consumers, lenders, and the
CFPB alike.
I want to thank the gentleman from Arkansas, Mr. Hill, and the
gentleman from California, Mr. Sherman, for their work on this
legislation, as well as the many other Members, including Mr. Pearce of
New Mexico, for their leadership on this front.
This is not a partisan issue; it's a consumer issue, a small business
issue. I ask my colleagues for their support of H.R. 3192.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 462, the previous question is ordered on
the bill.
The question is on engrossment and third reading of the bill.
The bill was ordered to be engrossed and read a third time, and was
read the third time.
Motion to Recommit
Mr. MOULTON. Madam Speaker, I have a motion to recommit at the desk.
The SPEAKER pro tempore. Is the gentleman opposed to the bill?
Mr. MOULTON. Madam Speaker, I am opposed in its current form.
The SPEAKER pro tempore. The Clerk will report the motion to
recommit.
The Clerk read as follows:
Mr. Moulton moves to recommit the bill H.R. 3192 to the
Committee on Financial Services with instructions to report
the same back to the House forthwith, with the following
amendment:
Add at the end of the bill the following new section:
SEC. 3. PROTECTING SERVICEMEMBERS AND OTHERS.
The safe harbor provided by section 2 shall not apply to
private suits filed by servicemembers, veterans, seniors,
students, and family members of servicemembers, veterans,
seniors, and students.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Massachusetts is recognized for 5 minutes in support of his motion.
Mr. MOULTON. Madam Speaker, this is the final amendment to the bill.
It will not kill the bill or send it back to committee. If adopted, the
bill will proceed immediately to final passage as amended.
We all agree that the men and women who serve in our Nation's
military should be afforded every opportunity to live the American
Dream that they risked their lives to defend. Unfortunately, too often
our servicemembers, veterans, and their families fall victim to unfair
and abusive financial practices.
In 2014 alone, the Consumer Financial Protection Bureau received more
than 17,000 complaints from servicemembers, veterans, and their
families on a variety of issues, from deceptive subprime auto lending
to troublesome credit card fees and predatory mortgage loans. That same
year, the CFPB was able to return more than $1.6 million to these
families. The CFPB is a vital watchdog for American consumers.
{time} 1545
The bill before us today would delay the enforcement of the CFPB's
rule regarding disclosures that mortgage lenders must provide to home
buyers. Additionally, the bill would permanently eliminate a borrower's
ability to enforce his or her legal rights if a lender fails to
disclose or obscures important information for all loans originated
over the next 5 months so long as the error is made ``in good faith,''
a term that the bill does not define and that substantially narrows
existing protections for consumers afforded under the Truth in Lending
Act.
The mortgage industry has had nearly 2 years to implement these new
disclosure requirements and was given an additional grace period this
year. Despite assurances from the CFPB Director that the agency would
implement a restrained enforcement process that takes into account the
industry's good faith effort to comply, this legislation could leave
millions of American home buyers without the legal protections to which
all citizens are entitled.
The amendment I am offering today would allow our servicemembers,
veterans, seniors, and students--some of our Nation's most vulnerable
populations--with the opportunity to seek their day in court if a
mortgage lender acts in bad faith.
As we learned following the 2008 financial crisis, far too often the
people with the fewest resources pay the heaviest price when they are
deceived by bad actors in the financial marketplace.
While reasonable people can disagree on the merits of the underlying
bill, I hope we can all agree that our servicemembers, veterans,
students, and seniors deserve the consumer financial protections the
CFPB offers.
That is what this amendment would help to achieve, and I urge your
support.
Madam Speaker, I yield back the balance of my time.
Mr. HENSARLING. Madam Speaker, I rise in opposition to the motion.
The SPEAKER pro tempore. The gentleman from Texas is recognized for 5
minutes.
Mr. HENSARLING. Madam Speaker, again, this underlying bill, H.R.
3192, modest, bipartisan. Grace period for those who act in good faith
in trying to implement the most dramatic changes in our real estate
disclosure laws in a decade, 1,888 pages worth.
We know, Madam Speaker, if we do not enact this bill, people are
going to be denied homeownership opportunities. We have already heard
within our
[[Page H6869]]
committee. We have heard from our constituents already. For example:
Large lenders have already announced they are not going to
do one-time closings anymore due to the uncertainty.
That comes from an individual in Tyler, Texas.
I quoted earlier one from El Paso, who stated:
Presented in El Paso, an institution is going to stop
residential mortgage lending for a time until they can get a
good feeling on how the regulation is going to be officially
interpreted.
Americans are being denied homeownership opportunities, and all the
gentleman from Arkansas (Mr. Hill), the author of H.R. 3192, says is:
Let's have, for those who operate in good faith, a temporary grace
period in trying to roll this out.
So what the motion to recommit does--and I know this is not the
gentleman's purpose, but what his motion to recommit does, if adopted
by the House, is actually discriminate against the very people that he
says he wishes to help because now, all of a sudden, it is going to be
our servicemembers, our veterans, our seniors, our students, and family
members of servicemembers, veterans, seniors, and students who are
going to be denied their homeownership opportunities.
Now, maybe in the gentleman's district they prefer the lawsuit. In my
district, in the Fifth District of Texas, they prefer the homeownership
opportunity. Any bad actors can still be sued under TILA in a private
right-of-action, but when we are trying to ensure that people are not
denied their homeownership opportunities, why would we want to
discriminate against our servicemembers and veterans? Because all of a
sudden, then, there is extra liability.
So everybody will know now that if you are going to lend on a home
mortgage to a veteran, you are going to have extra liability. Are you
going to make that loan? Are you going to charge them more? This House
should reject any discrimination against our servicemembers, veterans,
seniors, students, and family members of servicemembers, veterans,
seniors, and students, and reject this motion to recommit.
Madam Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. Without objection, the previous question is
ordered on the motion to recommit.
There was no objection.
The SPEAKER pro tempore. The question is on the motion to recommit.
The question was taken; and the Speaker pro tempore announced that
the noes appeared to have it.
Mr. MOULTON. Madam Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to the order of the House of today,
further proceedings on this question will be postponed.
____________________