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House Passes Two Bipartisan Consumer Protection Bills

Washington, Nov 18 -

WASHINGTON- In an ongoing effort to keep the dangerously unaccountable and powerful Consumer Financial Protection Bureau (CFPB) from harming consumers, the House today passed two bipartisan bills to correct two of the Bureau’s damaging regulatory actions. 

H.R. 1737, the Reforming CFPB Indirect Auto Financing Guidance Act

The CFPB has created enormous uncertainty in the indirect auto lending market and threatens to increase the cost of buying automobiles by issuing regulatory “guidance” without a public notice and comment process.  Furthermore, the Bureau is basing its action on a controversial “disparate impact” methodology that even the CFPB’s own internal documents indicate is significantly flawed.

H.R. 1737, sponsored by Rep. Frank Guinta (R-NH), rescinds the CFPB’s guidance relating to indirect auto lending. The bill, co-sponsored by 166 Republicans and Democrats, provides more opportunities for consumers, especially those with low and moderate incomes, to receive the best financing available to purchase a car or truck.  H.R. 1737 will produce a more informed and transparent process by requiring the CFPB to study the impact of its policy on consumers and receive public input.  

“The CFPB’s flawed Bulletin on ‘Indirect Auto Lending and Compliance with the Equal Credit Opportunity Act’ attempts to regulate compensation paid to auto dealers, despite auto dealers being specifically exempted in the Dodd-Frank Act from CFPB’s rulemaking.  By issuing this bulletin, the Bureau went far beyond clarifying existing law and instead is attempting to make new policy through this guidance, and doing so without going through the normal rulemaking process and without public input.  This is an affront to due process, an affront to the rule of law and an affront to basic fairness,” said Financial Services Committee Chairman Jeb Hensarling (R-TX). 

H.R. 1737 passed the House today with bipartisan support 332-96.

H.R. 1210, the Portfolio Lending and Mortgage Access Act

The CFPB’s mortgage rules are making it more difficult for credit-worthy Americans to buy a home.  The Independent Community Bankers Association reports that 73 percent of community bankers have decreased their mortgage business or completely stopped providing mortgage loans due to the expense of complying with this regulatory burden.  One-out-of-five Americans who borrowed to buy a home just five years ago will not meet the underwriting requirements of the CFPB’s mortgage rules.  According to the Federal Reserve, that will hit roughly one-third of Hispanic and African-American borrowers.

In order to ensure that community financial institutions are able to continue providing mortgage credit to consumers, H.R. 1210 provides a common sense, flexible approach that allows residential mortgage loans held in portfolio to qualify for a safe harbor equivalent to that of the CFPB’s Qualified Mortgage rule.  H.R. 1210 will allow these financial institutions to meet the credit demands of consumers, while incentivizing that banks and credit unions ensure the borrower can meet the monthly obligations of a mortgage. 

“It should not be the job of Congress or unelected and unaccountable Washington regulators to decide who gets a mortgage and who does not, or to force community banks and credit unions to function like regulated utilities, issuing only plain-vanilla mortgages rubber-stamped in Washington. This common sense legislation recognizes that the most effective way to ensure that a borrower has the ability to repay is not a one-size-fits-all, top-down regulation from Washington that mandates the terms of loans and underwriting practices,” said Chairman Hensarling.

H.R. 1210 passed the House today with bipartisan support 255-174. 

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