[Congressional Record Volume 164, Number 40 (Wednesday, March 7, 2018)]
[Senate]
[Pages S1469-S1470]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SA 2090. Mr. TILLIS (for himself, Ms. Warren, and Mr. Scott)
submitted an amendment intended to be proposed by him to the bill S.
2155, to promote economic growth, provide tailored regulatory relief,
and enhance consumer protections, and for other purposes; which was
ordered to lie on the table; as follows:
At the end, add the following:
TITLE VI--PROTECTING VETERANS FROM PREDATORY LENDING
SEC. 601. SHORT TITLE.
This title may be cited as the ``Protecting Veterans from
Predatory Lending Act of 2018''.
SEC. 602. PROTECTING VETERANS FROM PREDATORY LENDING.
(a) In General.--Subchapter I of chapter 37 of title 38,
United States Code, is amended by adding at the end the
following new section:
``Sec. 3709. Refinancing of housing loans
``(a) Fee Recoupment.--Except as provided in subsection (d)
and notwithstanding section 3703 of this title or any other
provision of law, a loan to a veteran for a purpose specified
in section 3710 of this title that is being refinanced may
not be guaranteed or insured under this chapter unless--
``(1) the issuer of the refinanced loan provides the
Secretary with a certification of the recoupment period for
fees, closing costs, and any expenses (other than taxes,
amounts held in escrow, and fees paid under this chapter)
that would be incurred by the borrower in the refinancing of
the loan;
``(2) all of the fees and incurred costs are scheduled to
be recouped on or before the date that is 36 months after the
date of loan issuance; and
``(3) the recoupment is calculated through lower regular
monthly payments (other than taxes, amounts held in escrow,
and fees paid under this chapter) as a result of the
refinanced loan.
``(b) Net Tangible Benefit Test.--Except as provided in
subsection (d) and notwithstanding section 3703 of this title
or any other provision of law, a loan to a veteran for a
purpose specified in section 3710 of this title that is
refinanced may not be guaranteed or insured under this
chapter unless--
``(1) the issuer of the refinanced loan provides the
borrower with a net tangible benefit test;
``(2) in a case in which the original loan had a fixed rate
mortgage interest rate and the refinanced loan will have a
fixed rate mortgage interest rate, the refinanced loan has a
mortgage interest rate that is not less than 50 basis points
less than the previous loan;
``(3) in a case in which the original loan had a fixed rate
mortgage interest rate and the refinanced loan will have an
adjustable rate mortgage interest rate, the refinanced loan
has a mortgage interest rate that is not less than 200 basis
points less than the previous loan; and
``(4) the lower interest rate is not produced solely from
discount points, unless--
``(A) such points are paid at closing; and
``(B) such points are not added to the principal loan
amount, unless--
``(i) for discount point amounts that are less than or
equal to one discount point, the resulting loan balance after
any fees and expenses allows the property with respect to
which the loan was issued to maintain a loan to value ratio
of 100 percent or less; and
[[Page S1470]]
``(ii) for discount point amounts that are greater than one
discount point, the resulting loan balance after any fees and
expenses allows the property with respect to which the loan
was issued to maintain a loan to value ratio of 90 percent or
less.
``(c) Loan Seasoning.--Except as provided in subsection (d)
and notwithstanding section 3703 of this title or any other
provision of law, a loan to a veteran for a purpose specified
in section 3710 of this title that is refinanced may not be
guaranteed or insured under this chapter until the date that
is the later of--
``(1) the date that is 210 days after the date on which the
first monthly payment is made on the loan; and
``(2) the date on which the sixth monthly payment is made
on the loan.
``(d) Cash-out Refinances.--(1) Subsections (a) through (c)
shall not apply in a case of a loan refinancing in which the
amount of the principal for the new loan to be guaranteed or
insured under this chapter is larger than the payoff amount
of the refinanced loan.
``(2) Not later than 180 days after the date of the
enactment of the Protecting Veterans from Predatory Lending
Act of 2018, the Secretary shall promulgate such rules as the
Secretary considers appropriate with respect to refinancing
described in paragraph (1) to ensure that such refinancing is
in the financial interest of the borrower, including rules
relating to recoupment, seasoning, and net tangible
benefits.''.
(b) Regulations.--
(1) In general.--In prescribing any regulation to carry out
section 3709 of title 38, United States Code, as added by
subsection (a), the Secretary of Veterans Affairs may waive
the requirements of sections 551 through 559 of title 5,
United States Code, if--
(A) the Secretary determines that urgent or compelling
circumstances make compliance with such requirements
impracticable or contrary to the public interest;
(B) the Secretary submits to the Committee on Veterans'
Affairs of the Senate and the Committee on Veterans' Affairs
of the House of Representatives, and publishes in the Federal
Register, notice of such waiver, including a description of
the determination made under subparagraph (A); and
(C) a period of 10 days elapses following the notification
under subparagraph (B).
(2) Public notice and comment.--If a regulation prescribed
pursuant to a waiver made under paragraph (1) is in effect
for a period exceeding one year, the Secretary shall provide
the public an opportunity for notice and comment regarding
such regulation.
(3) Effective date.--This subsection shall take effect on
the date of the enactment of this Act.
(4) Termination date.--The authorities under this
subsection shall terminate on the date that is one year after
the date of the enactment of this Act.
(c) Report on Cash-out Refinances.--
(1) In general.--Not later than one year after the date of
the enactment of this Act, the Secretary shall, in
consultation with the President of the Ginnie Mae, submit to
Congress a report on refinancing--
(A) of loans--
(i) made to veterans for purposes specified in section 3710
of title 38, United States Code; and
(ii) that were guaranteed or insured under chapter 37 of
such title; and
(B) in which the amount of the principal for the new loan
to be guaranteed or insured under such chapter is larger than
the payoff amount of the refinanced loan.
(2) Contents.--The report required by paragraph (1) shall
include the following:
(A) An assessment of whether additional requirements,
including a net tangible benefit test, fee recoupment period,
and loan seasoning requirement, are necessary to ensure that
the refinancing described in paragraph (1) is in the
financial interest of the borrower.
(B) Such recommendations as the Secretary may have for
additional legislative or administrative action to ensure
that refinancing described in paragraph (1) is carried out in
the financial interest of the borrower.
(d) Clerical Amendment.--The table of sections at the
beginning of chapter 37 of title 38, United States Code, is
amended by inserting after the item relating to section 3709
the following new item:
``3709. Refinancing of housing loans.''.
SEC. 603. LOAN SEASONING FOR GINNIE MAE MORTGAGE-BACKED
SECURITIES.
Section 306(g)(1) of the National Housing Act (12 U.S.C.
1721(g)(1)) is amended by inserting ``The Association may not
guarantee the timely payment of principal and interest on a
security that is backed by a mortgage insured or guaranteed
under chapter 37 of title 38, United States Code, and that
was refinanced until the later of the date that is 210 days
after the date on which the first monthly payment is made on
the mortgage being refinanced and the date on which 6 full
monthly payments have been made on the mortgage being
refinanced.'' after ``Act of 1992.''.
SEC. 604. REPORT ON LIQUIDITY OF THE DEPARTMENT OF VETERANS
AFFAIRS HOUSING LOAN PROGRAM.
(a) Report.--Not later than one year after the date of the
enactment of this Act, the Secretary of Housing and Urban
Development and the President of the Ginnie Mae shall submit
to the appropriate committees of Congress a report on the
liquidity of the housing loan program under chapter 37 of
title 38, United States Code, in the secondary mortgage
market, which shall--
(1) assess the loans provided under that chapter that
collateralize mortgage-backed securities that are guaranteed
by Ginnie Mae; and
(2) include recommendations for actions that Ginnie Mae
should take to ensure that the liquidity of that housing loan
program is maintained.
(b) Definitions.--In this section:
(1) Appropriate committees of congress.--The term
``appropriate committees of Congress'' means--
(A) the Committee on Veterans' Affairs and the Committee on
Banking, Housing, and Urban Affairs of the Senate; and
(B) the Committee on Veterans' Affairs and the Committee on
Financial Services of the House of Representatives.
(2) Ginnie mae.--The term ``Ginnie Mae'' means the
Government National Mortgage Association.
SEC. 605. ANNUAL REPORT ON DOCUMENT DISCLOSURE AND CONSUMER
EDUCATION.
Not less frequently than once each year, the Secretary of
Veterans Affairs shall issue a publicly available report
that--
(1) examines, with respect to loans provided to veterans
under chapter 37 of title 38, United States Code--
(A) the refinancing of fixed-rate mortgage loans to
adjustable rate mortgage loans;
(B) whether veterans are informed of the risks and
disclosures associated with that refinancing; and
(C) whether advertising materials for that refinancing are
clear and do not contain misleading statements or assertions;
and
(2) includes findings based on any complaints received by
veterans and on an ongoing assessment of the refinancing
market by the Secretary.
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