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Congresswoman Claudia Tenney’s Bill Passes the House

Community Institution Mortgage Relief Act Passes With Strong Bipartisan Vote

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Washington, December 12, 2017 | comments

Washington, D.C. – Today, Congresswoman Claudia Tenney (NY-22) announced that her bill, the Community Institution Mortgage Relief Act H.R. 3971 passed the House by a vote of 294-129. The bipartisan bill would rollback escrow regulations on small community financial institutions while providing relief from new regulations that have nearly doubled the cost of servicing loans, specifically for low-income borrowers. The bill would not prohibit community banks from providing escrow services if the institutions still desires to offer the service. The bill is cosponsored by Reps. Brad Sherman (D-CA), Rep. Roger Williams (R-TX), Rep. David Loebsack (D-IA) and Rep. Pete Sessions (R-TX).

“Costly escrow regulations have continued to harm community lending institutions. With smaller staffs and significantly less resources than larger financial institutions, community lending institutions are often unable to bear the costly burden of maintaining escrow accounts for their customers. Mandating that all institutions follow these escrow requirements raises the cost of credit for borrowers who can least afford it while harming small local institutions. In rural areas like the 22nd District, consumers and small businesses rely on relationship lending with local institutions. If these regulations continue, mortgage-lending services will be consolidated within larger institutions which will hurt our family farmers, small business and lower-income borrowers who depend on their existing relationships with these community intuitions to access capital,” said Congresswoman Claudia Tenney.  

Tenney continued, “On average, America loses one community bank per day. The Community Institution Mortgage Relief Act works to reverse this problem by lowering the cost of credit for low-income borrowers and rolling back onerous escrow regulations that continue to drive community institutions out of the mortgage lending market. This bipartisan bill will ensure that small institutions can continue to lend to their communities. I’m grateful to Chairman Hensarling for his leadership in working to pass this important bill, and I look forward to continuing to work alongside the Financial Services Committee to roll back onerous regulations and get our economy moving again.”

Under current law, the Truth in Lending Act requires creditors to establish and hold escrow accounts on mortgage loans, a costly and burdensome requirement which small institutions are often unable to manage throughout the life of a loan. This regulation has hurt a number of smaller community lending institutions, forcing these institutions to sell off the loan to larger institutions or mortgage insurance companies that have the resources needed to manage escrow requirements.

Since 2006, more than 1,500 banks have failed, been acquired or merged due to economic factors and the overwhelmingly expensive regulation brought forth by the passage of the Dodd Frank Act. For the first time in over 125 years, there are fewer than 6,000 banks and roughly 6,000 credit unions serving all consumers in the United States. Additionally, a 2014 study by the Independent Community Bankers Association cited that regulatory burdens prevented 73 percent of banks from making residential mortgage loans.

The Community Institution Mortgage Relief Act will work to reverse this trend by exempting community institutions from this regulatory burden, ensuring small institutions can become active in residential mortgage lending once again.

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