[House Report 115-590]
[From the U.S. Government Publishing Office]


115th Congress }                                          { REPORT
                        HOUSE OF REPRESENTATIVES
  2d Session   }                                          { 115-590

======================================================================
 
              SECURING ACCESS TO AFFORDABLE MORTGAGES ACT

                                _______
                                

 March 8, 2018.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3221]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 3221) to provide exemptions under the Truth in 
Lending Act and the Financial Institutions Reform, Recovery, 
and Enforcement Act of 1989 to encourage access to affordable 
mortgages, and for other purposes, having considered the same, 
report favorably thereon without amendment and recommend that 
the bill do pass.

                          Purpose and Summary

    Introduced on July 13, 2017, by Representative Kustoff, 
H.R. 3221, the ``Securing Access to Affordable Mortgages Act'' 
amends the Financial Institutions Reform, Recovery, and 
Enforcement Act of 1989 and the Truth in Lending Act to exempt 
from property appraisal requirements certain higher-risk 
mortgage loans of $250,000 or less if the loan appears on the 
balance sheet of the creditor of the loan for at least three 
years. It also exempts mortgage lenders and others involved in 
real estate transactions from incurring penalties for failing 
to report appraiser misconduct.

                  Background and Need for Legislation

    The Dodd-Frank Wall Street Reform and Consumer Protection 
Act (P.L. 111-203) (``Dodd-Frank Act'') increased federal 
requirements for real estate appraisers and transferred some 
federal oversight powers to the Bureau of Consumer Financial 
Protection (CFPB). Specifically, Title XIV of the Dodd-Frank 
Act changed the regulation of real estate appraisals to 
include:
           A requirement of a site visit for appraisals 
        of a property financed by a high-risk mortgage;
           Conditions for a second appraisal at no cost 
        to the home purchaser;
           Mandated independence for appraisers;
           Portability of some residential property 
        appraisals; rules for customary and reasonable fees; 
        and
           Standards for appraiser education; and a 
        mandatory annual report to Congress by the ASC on its 
        activities.
    These additional requirements are particularly burdensome 
for smaller institutions in rural areas where their appraisers 
are not readily available. In these areas, because the law 
requires appraisers to be independent from the lender, they may 
be unfamiliar with the area and therefore will not be able to 
accurately value a home, which creates appraisal errors and 
disparities. Smaller financial institutions also often have 
difficulty separating its loan production staff from the 
appraiser selection process. As a result, these Dodd-Frank Act 
requirements add substantial costs for individuals on both 
sides of a real estate transaction, and have resulted in longer 
waits and delayed closing for both buyers and sellers. These 
delays also affect the cost of purchasing a home as appraisal 
fees are generally paid by borrowers.
    There are also concerns related to Section 1472 of the 
Dodd-Frank Act which imposes mandatory reporting requirements 
on mortgage lenders and other providers of mortgage-related 
services who believe an appraiser is behaving unethically or 
violating applicable codes and laws, with large monetary 
penalties for failure to comply. The penalty for the first 
violation of this provision is a civil penalty of not more than 
$10,000 for each day a violation continues. For subsequent 
violations, the penalty is increased to $20,000 for each day a 
violation continues.
    Most creditors, real estate brokers, appraisal management 
companies, and servicers operate on a national level and in all 
U.S. states and territories. Currently there is little 
consistency in the reporting criteria for each state, and 
national companies find it difficult to monitor and comply with 
all state and territory reporting requirements. There is also a 
disincentive to file a report. Creditors, appraisal management 
companies, appraisers, mortgage brokers, real estate brokers 
and agents, title insurers, and other settlement service 
providers that file a report do not receive legal protection 
for defamation or other civil claims. This lack of legal 
protection is in contrast with other mandatory reporting 
regimes that provide some level of protection against these 
types of claims. H.R. 3221 will undo burdensome regulations and 
provide greater certainty in the home purchase process, 
particularly in rural communities.

                                Hearings

    The Committee on Financial Services held a hearing 
examining matters relating to H.R. 3221 on July 12, 2017.

                        Committee Consideration

    The Committee on Financial Services met in open session on 
November 14 and 15, 2017, and ordered H.R. 3221 to be reported 
favorably by a recorded vote of 32 yeas to 26 nays (Record vote 
no. FC-103), a quorum being present.

                            Committee Votes

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole recorded vote was on a motion by Chairman Hensarling to 
report the bill favorably to the House without amendment. The 
motion was agreed to by a recorded vote of 32 yeas to 26 nays 
(Record vote no. FC-103), a quorum being present.


                      Committee Oversight Findings

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the Committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    Performance Goals and Objectives

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 3221 
exempts from property appraisal requirements certain higher-
risk mortgage loans of $250,000 or less if the loan appears on 
the balance sheet of the creditor of the loan for at least 
three years. It also exempts mortgage lenders and others 
involved in real estate transactions from incurring penalties 
for failing to report appraiser misconduct.

   New Budget Authority, Entitlement Authority, and Tax Expenditures

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                 Congressional Budget Office Estimates

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, March 8, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3221, the Securing 
Access to Affordable Mortgages Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Stephen 
Rabent.
            Sincerely,
                                                Keith Hall,
                                                          Director.
    Enclosure.

H.R. 3221--Securing Access to Affordable Mortgages Act

    H.R. 3221 would eliminate the requirement that lenders 
making higher-risk mortgages obtain a written appraisal of the 
property securing the mortgage if the original loan amount is 
less than $250,000 and if the lender holds the mortgage in its 
portfolio for at least three years. Among other 
characteristics, higher-risk mortgages have interest rates that 
are 1.5 percent or more above the prime rate. The bill also 
would exempt certain participants in a real estate transaction 
from paying civil penalties for failing to notify the 
appropriate state licensing agency if a real estate appraiser 
fails to comply with universal standards for appraisal 
practices.
    Using information from the Consumer Financial Protection 
Bureau (CFPB), CBO estimates that enacting H.R. 3221 would 
increase net direct spending by about $1 million over the 2019-
2027 period. Those costs would be for the CFPB and other 
financial regulatory agencies (the Federal Deposit Insurance 
Corporation, Office of the Comptroller of the Currency, and 
National Credit Union Administration) to amend regulations to 
reflect the new appraisal requirements. The Federal Reserve 
System also would incur costs of less than $500,000 for the 
same purpose. Those costs would be reflected as a decrease in 
remittances, which are recorded as revenues in the budget.
    H.R. 3221 also would reduce civil penalties (which are 
recorded in the budget as revenues) by exempting participants 
in real estate transactions--including mortgage lenders or 
brokers, mortgage bankers, and real estate brokers--from 
penalties that would be assessed for violating certain federal 
requirements. CBO estimates that enacting this provision would 
not have a significant effect on revenues.
    Because H.R. 3221 would affect direct spending and 
revenues, pay-as-you-go procedures apply.
    CBO estimates that enacting H.R. 3221 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year periods beginning in 2028.
    H.R. 3221 would impose a private-sector mandate as defined 
in the Unfunded Mandates Reform Act (UMRA). If the federal 
financial regulators increase fees to offset the costs 
associated with implementing the bill, H.R. 3221 would increase 
the cost of an existing mandate on private entities required to 
pay those fees. Using information from the federal financial 
regulators, CBO estimates that the incremental cost of the 
mandate would fall well below the annual threshold for private-
sector mandates established in UMRA ($156 million in 2017, 
adjusted annually for inflation).
    The bill contains no intergovernmental mandates as defined 
in UMRA.
    The CBO staff contacts for this estimate are Stephen Rabent 
(for federal costs) and Rachel Austin (for mandates). The 
estimate was approved by H. Samuel Papenfuss, Deputy Assistant 
Director for Budget Analysis.

                       Federal Mandates Statement

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995.
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  Applicability to Legislative Branch

    The Committee finds that the legislation does not relate to 
the terms and conditions of employment or access to public 
services or accommodations within the meaning of the section 
102(b)(3) of the Congressional Accountability Act.

                         Earmark Identification

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                    Duplication of Federal Programs

    In compliance with clause 3(c)(5) of rule XIII of the Rules 
of the House of Representatives, the Committee states that no 
provision of the bill establishes or reauthorizes: (1) a 
program of the Federal Government known to be duplicative of 
another Federal program; (2) a program included in any report 
from the Government Accountability Office to Congress pursuant 
to section 21 of Public Law 111-139; or (3) a program related 
to a program identified in the most recent Catalog of Federal 
Domestic Assistance, published pursuant to the Federal Program 
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No. 
98-169).

                   Disclosure of Directed Rulemaking

    Pursuant to section 3(i) of H. Res. 5, (115th Congress), 
the following statement is made concerning directed 
rulemakings: The Committee estimates that the bill requires two 
directed rulemakings within the meaning of such section.
    The first rulemaking requires the federal banking agencies 
to exempt by rule mortgage loans of $250,000 or less from the 
requirements of Section 129H of the Truth in Lending Act (TILA) 
if the loan appears on the balance sheet of the creditor of the 
loan for a period of not less than 3 years.
    The second rulemaking requires the federal banking agencies 
to exempt by rule mortgage loans of $250,000 or less from the 
requirements of Section 1110 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (FIRREA) if the 
loan appears on the balance sheet of the creditor of the loan 
for a period of not less than 3 years.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section cites H.R. 3221 as the ``Securing Access to 
Affordable Mortgage Act.''

Section 2. Access to affordable mortgages

    This section amends the Financial Institutions Reform, 
Recovery, and Enforcement Act of 1989 and the Truth in Lending 
Act to exempt from property appraisal requirements certain 
higher-risk mortgage loans of $250,000 or less if the loan 
appears on the balance sheet of the creditor of the loan for at 
least three years.
    This section also exempts mortgage lenders and others 
involved in real estate transactions from incurring penalties 
for failing to report appraiser misconduct.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, and existing law in which no 
change is proposed is shown in roman):

                          TRUTH IN LENDING ACT




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TITLE I--CONSUMER CREDIT COST DISCLOSURE

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CHAPTER 2--CREDIT TRANSACTIONS

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Sec. 129E. Appraisal independence requirements

  (a) In General.--It shall be unlawful, in extending credit or 
in providing any services for a consumer credit transaction 
secured by the principal dwelling of the consumer, to engage in 
any act or practice that violates appraisal independence as 
described in or pursuant to regulations prescribed under this 
section.
  (b) Appraisal Independence.--For purposes of subsection (a), 
acts or practices that violate appraisal independence shall 
include--
          (1) any appraisal of a property offered as security 
        for repayment of the consumer credit transaction that 
        is conducted in connection with such transaction in 
        which a person with an interest in the underlying 
        transaction compensates, coerces, extorts, colludes, 
        instructs, induces, bribes, or intimidates a person, 
        appraisal management company, firm, or other entity 
        conducting or involved in an appraisal, or attempts, to 
        compensate, coerce, extort, collude, instruct, induce, 
        bribe, or intimidate such a person, for the purpose of 
        causing the appraised value assigned, under the 
        appraisal, to the property to be based on any factor 
        other than the independent judgment of the appraiser;
          (2) mischaracterizing, or suborning any 
        mischaracterization of, the appraised value of the 
        property securing the extension of the credit;
          (3) seeking to influence an appraiser or otherwise to 
        encourage a targeted value in order to facilitate the 
        making or pricing of the transaction; and
          (4) withholding or threatening to withhold timely 
        payment for an appraisal report or for appraisal 
        services rendered when the appraisal report or services 
        are provided for in accordance with the contract 
        between the parties.
  (c) Exceptions.--The requirements of subsection (b) shall not 
be construed as prohibiting a mortgage lender, mortgage broker, 
mortgage banker, real estate broker, appraisal management 
company, employee of an appraisal management company, consumer, 
or any other person with an interest in a real estate 
transaction from asking an appraiser to undertake 1 or more of 
the following:
          (1) Consider additional, appropriate property 
        information, including the consideration of additional 
        comparable properties to make or support an appraisal.
          (2) Provide further detail, substantiation, or 
        explanation for the appraiser's value conclusion.
          (3) Correct errors in the appraisal report.
  (d) Prohibitions on Conflicts of Interest.--No certified or 
licensed appraiser conducting, and no appraisal management 
company procuring or facilitating, an appraisal in connection 
with a consumer credit transaction secured by the principal 
dwelling of a consumer may have a direct or indirect interest, 
financial or otherwise, in the property or transaction 
involving the appraisal.
  (e) Mandatory Reporting.--Any mortgage lender, mortgage 
broker, mortgage banker, real estate broker, appraisal 
management company, employee of an appraisal management 
company, or any other person involved in a real estate 
transaction involving an appraisal in connection with a 
consumer credit transaction secured by the principal dwelling 
of a consumer who has a reasonable basis to believe an 
appraiser is failing to comply with the Uniform Standards of 
Professional Appraisal Practice, is violating applicable laws, 
or is otherwise engaging in unethical or unprofessional 
conduct, shall refer the matter to the applicable State 
appraiser certifying and licensing agency.
  (f) No Extension of Credit.--In connection with a consumer 
credit transaction secured by a consumer's principal dwelling, 
a creditor who knows, at or before loan consummation, of a 
violation of the appraisal independence standards established 
in subsections (b) or (d) shall not extend credit based on such 
appraisal unless the creditor documents that the creditor has 
acted with reasonable diligence to determine that the appraisal 
does not materially misstate or misrepresent the value of such 
dwelling.
  (g) Rules and Interpretive Guidelines.--
          (1) In general.--Except as provided under paragraph 
        (2), the Board, the Comptroller of the Currency, the 
        Federal Deposit Insurance Corporation, the National 
        Credit Union Administration Board, the Federal Housing 
        Finance Agency, and the Bureau may jointly issue rules, 
        interpretive guidelines, and general statements of 
        policy with respect to acts or practices that violate 
        appraisal independence in the provision of mortgage 
        lending services for a consumer credit transaction 
        secured by the principal dwelling of the consumer and 
        mortgage brokerage services for such a transaction, 
        within the meaning of subsections (a), (b), (c), (d), 
        (e), (f), (h), and (i).
          (2) Interim final regulations.--The Board shall, for 
        purposes of this section, prescribe interim final 
        regulations no later than 90 days after the date of 
        enactment of this section defining with specificity 
        acts or practices that violate appraisal independence 
        in the provision of mortgage lending services for a 
        consumer credit transaction secured by the principal 
        dwelling of the consumer or mortgage brokerage services 
        for such a transaction and defining any terms in this 
        section or such regulations. Rules prescribed by the 
        Board under this paragraph shall be deemed to be rules 
        prescribed by the agencies jointly under paragraph (1).
  (h) Appraisal Report Portability.--Consistent with the 
requirements of this section, the Board, the Comptroller of the 
Currency, the Federal Deposit Insurance Corporation, the 
National Credit Union Administration Board, the Federal Housing 
Finance Agency, and the Bureau may jointly issue regulations 
that address the issue of appraisal report portability, 
including regulations that ensure the portability of the 
appraisal report between lenders for a consumer credit 
transaction secured by a 1-4 unit single family residence that 
is the principal dwelling of the consumer, or mortgage 
brokerage services for such a transaction.
  (i) Customary and Reasonable Fee.--
          (1) In general.--Lenders and their agents shall 
        compensate fee appraisers at a rate that is customary 
        and reasonable for appraisal services performed in the 
        market area of the property being appraised. Evidence 
        for such fees may be established by objective third-
        party information, such as government agency fee 
        schedules, academic studies, and independent private 
        sector surveys. Fee studies shall exclude assignments 
        ordered by known appraisal management companies.
          (2) Fee appraiser definition.--For purposes of this 
        section, the term ``fee appraiser'' means a person who 
        is not an employee of the mortgage loan originator or 
        appraisal management company engaging the appraiser and 
        is--
                  (A) a State licensed or certified appraiser 
                who receives a fee for performing an appraisal 
                and certifies that the appraisal has been 
                prepared in accordance with the Uniform 
                Standards of Professional Appraisal Practice; 
                or
                  (B) a company not subject to the requirements 
                of section 1124 of the Financial Institutions 
                Reform, Recovery, and Enforcement Act of 1989 
                (12 U.S.C. 3331 et seq.) that utilizes the 
                services of State licensed or certified 
                appraisers and receives a fee for performing 
                appraisals in accordance with the Uniform 
                Standards of Professional Appraisal Practice.
          (3) Exception for complex assignments.--In the case 
        of an appraisal involving a complex assignment, the 
        customary and reasonable fee may reflect the increased 
        time, difficulty, and scope of the work required for 
        such an appraisal and include an amount over and above 
        the customary and reasonable fee for non-complex 
        assignments.
  (j) Sunset.--Effective on the date the interim final 
regulations are promulgated pursuant to subsection (g), the 
Home Valuation Code of Conduct announced by the Federal Housing 
Finance Agency on December 23, 2008, shall have no force or 
effect.
  (k) Penalties.--
          (1) First violation.--In addition to the enforcement 
        provisions referred to in section 130, each person who 
        violates this section, other than subsection (e), shall 
        forfeit and pay a civil penalty of not more than 
        $10,000 for each day any such violation continues.
          (2) Subsequent violations.--In the case of any person 
        on whom a civil penalty has been imposed under 
        paragraph (1), paragraph (1) shall be applied by 
        substituting ``$20,000'' for ``$10,000'' with respect 
        to all subsequent violations.
          (3) Assessment.--The agency referred to in subsection 
        (a) or (c) of section 108 with respect to any person 
        described in paragraph (1) shall assess any penalty 
        under this subsection to which such person is subject.

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Sec. 129H. Property appraisal requirements

  (a) In General.--A creditor may not extend credit in the form 
of a higher-risk mortgage to any consumer without first 
obtaining a written appraisal of the property to be mortgaged 
prepared in accordance with the requirements of this section.
  (b) Appraisal Requirements.--
          (1) Physical property visit.--Subject to the rules 
        prescribed under paragraph (4), an appraisal of 
        property to be secured by a higher-risk mortgage does 
        not meet the requirement of this section unless it is 
        performed by a certified or licensed appraiser who 
        conducts a physical property visit of the interior of 
        the mortgaged property.
          (2) Second appraisal under certain circumstances.--
                  (A) In general.--If the purpose of a higher-
                risk mortgage is to finance the purchase or 
                acquisition of the mortgaged property from a 
                person within 180 days of the purchase or 
                acquisition of such property by that person at 
                a price that was lower than the current sale 
                price of the property, the creditor shall 
                obtain a second appraisal from a different 
                certified or licensed appraiser. The second 
                appraisal shall include an analysis of the 
                difference in sale prices, changes in market 
                conditions, and any improvements made to the 
                property between the date of the previous sale 
                and the current sale.
                  (B) No cost to applicant.--The cost of any 
                second appraisal required under subparagraph 
                (A) may not be charged to the applicant.
          (3) Certified or licensed appraiser defined.--For 
        purposes of this section, the term ``certified or 
        licensed appraiser'' means a person who--
                  (A) is, at a minimum, certified or licensed 
                by the State in which the property to be 
                appraised is located; and
                  (B) performs each appraisal in conformity 
                with the Uniform Standards of Professional 
                Appraisal Practice and title XI of the 
                Financial Institutions Reform, Recovery, and 
                Enforcement Act of 1989, and the regulations 
                prescribed under such title, as in effect on 
                the date of the appraisal.
          (4) Regulations.--
                  (A) In general.--The Board, the Comptroller 
                of the Currency, the Federal Deposit Insurance 
                Corporation, the National Credit Union 
                Administration Board, the Federal Housing 
                Finance Agency, and the Bureau shall jointly 
                prescribe regulations to implement this 
                section.
                  (B) Exemption.--The agencies listed in 
                subparagraph (A) may jointly exempt, by rule, a 
                class of loans from the requirements of this 
                subsection or subsection (a) if the agencies 
                determine that the exemption is in the public 
                interest and promotes the safety and soundness 
                of creditors.
  (c) Free Copy of Appraisal.--A creditor shall provide 1 copy 
of each appraisal conducted in accordance with this section in 
connection with a higher-risk mortgage to the applicant without 
charge, and at least 3 days prior to the transaction closing 
date.
  (d) Consumer Notification.--At the time of the initial 
mortgage application, the applicant shall be provided with a 
statement by the creditor that any appraisal prepared for the 
mortgage is for the sole use of the creditor, and that the 
applicant may choose to have a separate appraisal conducted at 
the expense of the applicant.
  (e) Violations.--In addition to any other liability to any 
person under this title, a creditor found to have willfully 
failed to obtain an appraisal as required in this section shall 
be liable to the applicant or borrower for the sum of $2,000.
  (f) Higher-risk Mortgage Defined.--For purposes of this 
section, the term ``higher-risk mortgage'' means a residential 
mortgage loan, other than a reverse mortgage loan that is a 
qualified mortgage, as defined in section 129C, secured by a 
principal dwelling--
          (1) that is not a qualified mortgage, as defined in 
        section 129C; and
          (2) with an annual percentage rate that exceeds the 
        average prime offer rate for a comparable transaction, 
        as defined in section 129C, as of the date the interest 
        rate is set--
                  (A) by 1.5 or more percentage points, in the 
                case of a first lien residential mortgage loan 
                having an original principal obligation amount 
                that does not exceed the amount of the maximum 
                limitation on the original principal obligation 
                of mortgage in effect for a residence of the 
                applicable size, as of the date of such 
                interest rate set, pursuant to the sixth 
                sentence of section 305(a)(2) the Federal Home 
                Loan Mortgage Corporation Act (12 U.S.C. 
                1454(a)(2));
                  (B) by 2.5 or more percentage points, in the 
                case of a first lien residential mortgage loan 
                having an original principal obligation amount 
                that exceeds the amount of the maximum 
                limitation on the original principal obligation 
                of mortgage in effect for a residence of the 
                applicable size, as of the date of such 
                interest rate set, pursuant to the sixth 
                sentence of section 305(a)(2) the Federal Home 
                Loan Mortgage Corporation Act (12 U.S.C. 
                1454(a)(2)); and
                  (C) by 3.5 or more percentage points for a 
                subordinate lien residential mortgage loan.
  (g) Exemption for Certain Mortgages.--The Bureau, the 
Comptroller of the Currency, the Federal Deposit Insurance 
Corporation, the National Credit Union Administration Board, 
and the Federal Housing Finance Agency shall exempt, by rule, a 
mortgage loan of $250,000 or less from the requirements of this 
section if such loan appears on the balance sheet of the 
creditor of such loan for a period of not less than 3 years.

           *       *       *       *       *       *       *

                              ----------                              


  FINANCIAL INSTITUTIONS REFORM, RECOVERY, AND ENFORCEMENT ACT OF 1989



           *       *       *       *       *       *       *
TITLE XI--REAL ESTATE APPRAISAL REFORM AMENDMENTS

           *       *       *       *       *       *       *


SEC. 1110. FUNCTIONS OF THE FEDERAL FINANCIAL INSTITUTIONS REGULATORY 
                    AGENCIES RELATING TO APPRAISAL STANDARDS.

    [Each Federal financial institutions regulatory agency and 
the Resolution Trust Corporation] (a)  Real Estate Appraisals 
in Connection With Federally Related Transactions._Each Federal 
financial institutions regulatory agency  shall prescribe 
appropriate standards for the performance of real estate 
appraisals in connection with federally related transactions 
under the jurisdiction of [each such agency or instrumentality] 
each such agency. These rules shall require, at a minimum--
          (1) that real estate appraisals be performed in 
        accordance with generally accepted appraisal standards 
        as evidenced by the appraisal standards promulgated by 
        the Appraisal Standards Board of the Appraisal 
        Foundation;
          (2) that such appraisals shall be written appraisals; 
        and
          (3) that such appraisals shall be subject to 
        appropriate review for compliance with the Uniform 
        Standards of Professional Appraisal Practice.
 [Each such agency or instrumentality] (b)  Additional 
Standards._Each such agency described under subsection (a)  may 
require compliance with additional standards if it makes a 
determination in writing that such additional standards are 
required in order to properly carry out its statutory 
responsibilities.
  (c) Exemption for Certain Mortgage Loans.--Each such agency 
described under subsection (a) shall exempt, by rule, a real 
estate appraisal or evaluation conducted in connection with a 
mortgage loan of $250,000 or less from the standards prescribed 
under this section, if such loan appears on the balance sheet 
of the creditor of such loan for a period of not less than 3 
years.

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                             MINORITY VIEWS

    Under section 129H of the Truth in Lending Act (``TILA''), 
a creditor ``may not extend credit in the form of a `higher-
risk' mortgage to any consumer without first obtaining a 
written appraisal of the property to be mortgaged'' in 
accordance with certain enumerated duties. H.R. 3221 would 
allow higher-risk mortgage loans to effectively be treated in 
the same manner as almost all other loans that are not as risky 
to consumers. H.R. 3221 would also eliminate penalties under 
TILA for failing to report appraisers for professional 
misconduct, unethical behavior, or violations of law in home 
mortgage transactions.
    In a March 2017 report, the Board of Governors of the 
Federal Reserve System, the Office of the Comptroller of the 
Currency, the Federal Deposit Insurance Corporation, and the 
National Credit Union Administration discussed that while some 
parties have called for increased thresholds in connection with 
appraisal requirements for higher-risk mortgages, the current 
exemption threshold of $25,000 was based on the two-pronged 
statutory standard that the threshold be set in the public 
interest and promote the safety and soundness of creditors. The 
regulators considered and declined to pursue changes to these 
appraisal rules or this particular appraisal threshold relating 
to higher-risk mortgages.\1\
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    \1\EGRPRA Report, available at: https://www.ffiec.gov/pdf/
2017_FFIEC_EGRPRA_Joint-Report_to_Congress.pdf, pages 28-40.
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    We are sympathetic to the concern that there may be 
potential appraiser shortages and related issues in rural 
areas, which in turn triggers the consideration of raising 
various appraisal thresholds to reduce appraisal backlogs. 
However, there are various exemptions and flexibilities for 
appraisal requirements available under current law. For 
example, the appraisal requirement for higher-risk mortgages 
already exempts all ``qualified mortgages'' under TILA, which, 
according to federal banking regulators, constitutes a large 
proportion of the mortgage market.
    Furthermore, the lack of adequate regulation in the 
appraisal market was a significant contributing factor to the 
2007-2009 financial crisis. According to the Final Report of 
the National Commission on the Causes of the Financial and 
Economic Crisis in the United States, ``a public petition 
signed by 11,000 appraisers and including the name and address 
of each . . . charged that lenders were pressuring appraisers 
to place artificially high prices on properties. According to 
the petition, lenders were ``blacklisting honest appraisers and 
instead assigning business only to appraisers who would hit the 
desired price targets''\2\
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    \2\Financial Crisis Inquiry Report, Final Report of the National 
Commission on the Causes of the Financial and Economic Crisis in the 
United States. Submitted by The Financial Crisis Inquiry Commission 
Pursuant to Public Law 111-21, January 2011, page 18, available at: 
https://www.gpo.gov/fdsys/pkg/GPO-FCIC/pdf/GPO-FCIC.pdf.
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    We do not support a rollback of consumer protections that 
may present a threat to the safety and soundness of our 
nation's real estate market. For these reasons, we oppose H.R. 
3221.

                                   Maxine Waters.
                                   Gregory W. Meeks.
                                   Stephen F. Lynch.
                                   Michael E. Capuano.
                                   Carolyn B. Maloney.
                                   Al Green.
                                   Emanuel Cleaver.
                                   Gwen Moore.
                                   Nydia M. Velazquez.
                                   Vicente Gonzalez.
                                   Daniel T. Kildee.

                                    [all]