[Congressional Record Volume 164, Number 159 (Wednesday, September 26, 2018)]
[House]
[Pages H9064-H9065]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         PROTECT AFFORDABLE MORTGAGES FOR VETERANS ACT OF 2018

  Mr. TIPTON. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 6737) to amend the Economic Growth, Regulatory Relief, and 
Consumer Protection Act to clarify seasoning requirements for certain 
refinanced mortgage loans, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 6737

       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 ``Protect Affordable Mortgages 
     for Veterans Act of 2018''.

     SEC. 2. REQUIREMENTS FOR GINNIE MAE GUARANTEE OF SECURITIES.

       Paragraph (1) of section 306(g) of the National Housing Act 
     (12 U.S.C. 1721(g)(1)) is amended by striking the second 
     sentence (as added by section 309(b) of Public Law 115-174) 
     and inserting the following: ``The Association is authorized 
     to take actions to protect the integrity of its securities 
     from practices that it deems in good faith to represent 
     abusive refinancing activities and nothing in the Protect 
     Affordable Mortgages for Veterans Act of 2018, the amendment 
     made by such Act, or this title may be construed to limit 
     such authority.''.
  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Colorado (Mr. Tipton) and the gentleman from Nevada (Mr. Kihuen) each 
will control 20 minutes.
  The Chair recognizes the gentleman from Colorado.


                             General Leave

  Mr. TIPTON. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and include 
extraneous materials on this bill.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. TIPTON. Mr. Speaker, I yield 5 minutes to the gentleman from New 
York (Mr. Zeldin).
  Mr. ZELDIN. Mr. Speaker, I thank the gentleman for yielding.
  Mr. Speaker, I rise to urge passage of my bill, H.R. 6737, the 
Protect Affordable Mortgages for Veterans Act, which is bipartisan 
legislation that passed the committee with a unanimous vote of 49-0.
  This legislation would provide a technical fix so that recently 
issued loans refinanced by the Department of Veterans Affairs can 
remain eligible for the secondary market.
  This fix is essential to prevent a liquidity crisis in the veterans 
home loan market and ensure that the brave men and women who have 
served our Nation in uniform have access to affordable mortgages.
  Through passage of this bill, we can ensure that VA home loans are 
not adversely impacted by issues in the veterans mortgage market 
created by the unintended consequences of S. 2155.
  The Economic Growth, Regulatory Relief, and Consumer Protection Act, 
S. 2155, contained some very important bipartisan reforms to protect 
veterans from predatory lending and deceptive marketing. These 
provisions of S. 2155 are now the law of the land and essential to 
protect the VA home market. But unclear timelines laid out in the 
legislation and the way the Government National Mortgage Association, 
also known as Ginnie Mae, chose to implement the requirements of the 
new law have left an estimated 2,500 or more VA home loans boxed out of 
the secondary market.
  These mortgages are now considered orphan loans, because they are no 
longer eligible for Ginnie Mae securitization, even though they met all 
Federal requirements and are backed by the VA.
  My bill would prevent a government-triggered liquidity crisis in the 
VA mortgage market by fixing this problem and restoring eligibility for 
these orphan loans.
  Addressing this ensures that veteran homeowners or prospective home 
buyers who have earned access to the VA home loan program through their 
military service aren't harmed by a fluke in S. 2155.
  Without this bill, potential damage to the overall VA home loan 
market is

[[Page H9065]]

likely because VA lenders may have to sell or finance these orphan 
mortgages at a loss. This would have a negative impact on the brave men 
and women who have served our country and deserve a path to 
homeownership and the American Dream.
  If lenders aren't able to securitize VA home loans through Ginnie 
Mae, closing costs and borrowing costs could go up and opportunities to 
borrow or refinance could go down.
  Mr. Speaker, veterans have some of the lowest default and foreclosure 
rates in the Nation, and they have earned access to VA home loans 
through their selfless service to our country.
  As I mentioned earlier, it is estimated that 2,500 or more VA home 
loans that were issued earlier in May or June of this year may now be 
boxed out of the market due to a minuscule legislative error. Even one 
VA home loan negatively impacted by a minor mistake is one too many 
when it comes to giving our veterans access to homeownership.
  That is why we must pass this bipartisan bill. I thank my lead 
bipartisan cosponsors, Claudia Tenney of New York and Kyrsten Sinema of 
Arizona. I also thank Chairman Hensarling, Ranking Member Waters, and 
Housing and Insurance Subcommittee Chairman Sean Duffy for supporting 
this important bipartisan reform.
  I also thank the great staff of the House Financial Services 
Committee for all their help throughout this process. They certainly 
have shown a tremendous amount of care and compassion for our Nation's 
veterans with this bill and so many others.
  Mr. Speaker, I include in the Record a letter from Senator Tillis and 
Senator Warren expressing the need to address the issue of these orphan 
VA loans. I urge adoption of this important bipartisan bill.


                                                  U.S. Senate,

                                    Washington, DC, June 11, 2018.
     J. Paul Compton, Jr.,
     General Counsel, U.S. Department of Housing and Urban 
         Development, Washington, DC.
       Dear Mr. Compton: As you know, S. 2304--the Protecting 
     Veterans from Predatory Lending Act of 2018 (Act)--was 
     introduced and subsequently included in S. 2155, the Economic 
     Growth, Regulatory Relief, and Consumer Protection Act, which 
     President Trump signed into law on May 24, 2018. The Act was 
     introduced to protect veterans from targeted predatory home 
     loan practices by requiring lenders to demonstrate a material 
     benefit to consumers when refinancing their mortgage. As 
     such, the legislation included: (1) a fee recoupment 
     requirement; (2) a net tangible benefit test; and (3) a loan 
     seasoning requirement.
       The aforementioned actions and subsequent signature of the 
     president were taken after witnessing some bad actors in the 
     U.S. Department of Veterans Affairs (VA) Home Loan space 
     engage in the practice of ``churning''--the refinancing of a 
     home loan over and over again to generate fees and profits 
     for lenders at the expense of the consumer and taxpayers. 
     Upon enactment of the legislation, questions arose 
     surrounding whether Ginnie Mae (Ginnie) is statutorily 
     authorized to continue to accept previously guaranteed Ginnie 
     Mortgage-Backed Securities (MBS) as eligible multiclass 
     securities collateral under its multiclass securities 
     programs, given the requirements of the legislation--i.e. the 
     MBS are backed by a refinanced loan that is guaranteed by the 
     VA benefit program and do not meet the conditions required by 
     the Act.
       Specifically, the Act requires that to be included as 
     eligible collateral for a Ginnie guaranteed MBS, a VA 
     refinance loan must be refinanced after the later of: (1) the 
     date that is 210 days after the date on which the first 
     monthly payment is made on the mortgage being refinanced, and 
     (2) the date on which six full monthly payments have been 
     made on the mortgage being refinanced. To implement the Act, 
     Ginnie revised its MBS pooling eligibility requirements and 
     amended its MBS Guide to specify how Ginnie MBS are affected 
     by this Act. Ginnie delineated that securities with an 
     issuance date of May 1, 2018 or earlier are unaffected even 
     if they do not meet the conditions of the Act, and that 
     Ginnie securities with an issuance dated June 1, 2018 or 
     later will comply with the new pooling requirements and 
     conditions of the Act. Ginnie also determined that given the 
     above-mentioned congressional reasons for enacting S. 2155, 
     there was never an intent by Congress to impact Ginnie's 
     ability to continue to guaranty multiclass securities that 
     are collateralized by Ginnie MBS guaranteed prior to the 
     enactment of the Act that may contain VA guaranteed 
     refinanced loans that do not meet the requirements of the 
     Act.
       We recognize that there are a small number of loans that do 
     not conform with the Act's requirements that were either 
     originated or in the process of being originated before the 
     May 31st date of Ginnie's APM regarding new seasoning 
     requirements. It was not our intention to ``orphan'' those 
     loans, and we urge Ginnie and the VA to work with lenders and 
     other federal agencies to attempt to ensure that those loans 
     are not adversely affected by the enactment of the Act.
       We support the steps that Ginnie has taken, and look 
     forward to working with Ginnie and the VA to further protect 
     veterans from loan ``churning.''
           Sincerely,
     Thom Tillis,
       United States Senate.
     Elizabeth Warren,
       United States Senate.

  Mr. KIHUEN. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, earlier this year, when Congress passed S. 2155, it 
included a section 309, a bill sponsored by Senators Tillis and Warren, 
entitled the ``Protecting Veterans from Predatory Lending Act of 
2018.'' That provision put new requirements in place to protect veteran 
borrowers from aggressive and deceptive marketing tactics of lenders 
pushing mortgage refinance deals.
  One of the new requirements included was a loan seasoning requirement 
that mandated a certain period of time before a VA borrower could 
refinance their loan. This new requirement was very similar to the loan 
seasoning requirement that Ginnie Mae had already implemented 
administratively prior to the passage of this law.
  However, slight differences between the old and new requirements, and 
the immediate ban on securitization of loans that did not meet the new 
requirements, resulted in an estimated 2,500 loans that were boxed out 
of Ginnie Mae securitization simply because they were in the process of 
being refinanced or securitized when the law became effective.
  The sponsors of the legislation, Senators Warren and Tillis, have 
weighed in with Ginnie Mae, stating that it was not their intention to 
orphan these loans, and they have urged Ginnie Mae to address the 
issue. However, Ginnie Mae believes legislation is needed.
  I believe H.R. 6737 is a reasonable attempt to address what was 
clearly an unintended consequence of previous legislation, and I am 
pleased to support this bill.
  Mr. Speaker, I ask for a ``yes'' vote. I support the bill and urge my 
colleagues to support it, and I yield back the balance of my time.
  Mr. TIPTON. Mr. Speaker, I yield back the balance of my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Colorado (Mr. Tipton) that the House suspend the rules 
and pass the bill, H.R. 6737, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________