[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.
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