H. Rept. 115-806 - BUILDING UP INDEPENDENT LIVES AND DREAMS ACT115th Congress (2017-2018)
Committee Report
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115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-806
======================================================================
BUILDING UP INDEPENDENT LIVES AND DREAMS ACT
_______
July 10, 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
[To accompany H.R. 5953]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 5953) to provide regulatory relief to charitable
organizations that provide housing assistance, and for other
purposes, having considered the same, report favorably thereon
without amendment and recommend that the bill do pass.
Purpose and Summary
Introduced by Representative Barry Loudermilk on May 24,
2018, H.R. 5953, the ``Building Up Independent Lives and Dreams
Act'' or the ``BUILD Act'' amends the Truth in Lending Act
(TILA) and Real Estate Settlement Procedures Act (RESPA) to
allow bona-fide nonprofit organizations--that are eligible for
tax-exempt charitable donations and are making zero percent
interest mortgage loans--to choose whether to use the truth in
lending (TIL), good faith estimate (GFE), and HUD-1 forms in
place of the TILA-RESPA Integrated Disclosure (TRID) form
established under the Dodd-Frank Wall Street Reform and
Consumer Protection Act.
Background and Need for Legislation
On November 20, 2013, the Bureau of Consumer Financial
Protection (Bureau) issued the TILA-RESPA Integrated Disclosure
(TRID) Final Rule that requires mortgage lenders to use more
easily understood and streamlined mortgage disclosure forms.
The TRID Rule applies to most closed-end consumer mortgages. It
does not apply to home equity lines of credit (HELOCs), reverse
mortgages, or mortgages secured by a mobile home or by a
dwelling that is not attached to real property. It also does
not generally apply to loans made by persons who are not
considered ``creditors'' under TILA. The TRID Rule became
effective for mortgage applications received on or after
October 3, 2015.
Before the TRID Rule, both TILA and RESPA required lenders
to provide consumers disclosures about the estimated and actual
real estate settlement costs and financial terms of the
mortgages they offer. Among other requirements, RESPA requires
standardized disclosures such as a Good Faith Estimate of the
costs that borrowers should expect to pay at closing, and a
list of closing costs, commonly known as the HUD-1 document.
TILA requires lenders to disclose the cost of credit and the
repayment terms of mortgage loans before borrowers enter into a
transaction. These disclosures were intended to help consumers
compare the terms and make informed decisions regarding the
suitability of various mortgage products and services they are
offered.
However, Title X of the Dodd-Frank Act required the Bureau
promulgate ``a single, integrated disclosure for mortgage loan
transactions . . . to aid the borrower . . . in understanding
the transaction by utilizing readily understandable language to
simplify the technical nature of the disclosures'' that remains
compliant with both TILA and RESPA. The final TRID forms thus
combined elements of the Good Faith Estimate, the HUD-1, and
the TILA Disclosure.
And while the Bureau designed these forms to be more
consumer friendly, the forms include sections on balloon loans
and adjustable rate mortgages that may be applicable to
traditional mortgage lenders, but are not relevant to
charitable organizations like Habitat for Humanity.
Additionally, the TRID integrated disclosure forms pose
significant implementation and compliance challenges for
charitable organizations because they include difficult-to-
understand timing and delivery requirements and other practical
implementation issues that go beyond the previous content
requirements. The TRID Rule would require charities and other
non-profit entities to purchase costly and complex software and
then train their staff to use the software, which would divert
resources from the charitable organization's purpose, which the
Bureau intended for traditional mortgage lenders. As such, many
charitable organizations have difficulty with fulfilling the
needed compliance related to origination and servicing of their
loans.
Hearings
The Committee did not hold hearings to examine matters
related to H.R. 5953.
Committee Consideration
The Committee on Financial Services met in open session on
June 14, 2018, and ordered H.R. 5953 to be reported favorably
by a recorded vote of 53 yeas to 0 nays (Record vote no. FC-
168), 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 53 yeas to 0 nays
(Record vote no. FC-186), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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. 5953
will reduce regulatory burden on charitable housing
organizations by permitting them to choose whether to use the
TIL, GFE, and HUD-1 mortgage disclosure forms instead of the
TRID forms.
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, July 10, 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. 5953, the BUILD
Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Mark P. Hadley
(For Keith Hall, Director).
Enclosure.
H.R. 5953--BUILD Act
Under current law, the Consumer Financial Protection Bureau
(CFPB) requires mortgage lenders to disclose certain
information regarding the terms and costs of home loans to
consumers at the beginning and closing of mortgage
transactions. H.R. 5953 would allow lenders offering
residential mortgages to tax-exempt organizations at a zero
percent interest rate to satisfy those disclosure requirements
by instead filing three different disclosure forms if the loan
is primarily for charitable purposes. The information on those
three forms is generally included in the disclosures required
under current law.
Using information from the CFPB, CBO estimates that
enacting H.R. 5953 would increase direct spending by less than
$500,000 for the agency to issue a rule to implement the
changes to the disclosure requirements.
Because enacting H.R. 5953 would affect direct spending,
pay-as-you-go procedures apply. Enacting the bill would not
affect revenues.
CBO estimates that enacting H.R. 5953 would not increase
net direct spending or on-budget deficits in any of the four
consecutive 10-year periods beginning in 2029.
H.R. 5953 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Stephen Rabent.
The estimate was reviewed 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 one
directed rulemaking within the meaning of such section. This
directed rulemaking will ensure that the CFPB revises the TILA
RESPA Rule to exempt non-profit tax exempt organizations from
TRID requirements.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 5953 as the ``Building Up
Independent Lives and Dreams Act or the ``BUILD Act''.
Section 2. Mortgage loan transaction disclosure requirements
This section amends Section 105 of the Truth in Lending Act
and Section 4 of the Real Estate Settlement Procedures Act to
allow non-profit entities which are eligible to receive tax-
exempt charitable contributions and are making zero percent
interest mortgage loans to choose whether to use the TIL, HUD-
1, and GFE mortgage disclosure forms in lieu of the TILA RESPA
Integrated Disclosures forms.
This section also requires the Director of the Bureau of
Consumer Financial Protection to issue regulations within 180
days of enactment as may be necessary to implement changes to
the Truth in Lending Act and Real Estate Settlement Procedures
Act. Finally, this section specifies that the option provided
in Section 2(a) and 2(b) shall take effect on the date of
enactment.
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 (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
TRUTH IN LENDING ACT
* * * * * * *
TITLE I--CONSUMER CREDIT COST DISCLOSURE
* * * * * * *
CHAPTER 1--GENERAL PROVISIONS
* * * * * * *
Sec. 105. Regulations
(a) The Bureau shall prescribe regulations to carry out the
purposes of this title. Except with respect to the provisions
of section 129 that apply to a mortgage referred to in section
103(aa), such regulations may contain such additional
requirements, classifications, differentiations, or other
provisions, and may provide for such adjustments and exceptions
for all or any class of transactions, as in the judgment of the
Bureau are necessary or proper to effectuate the purposes of
this title, to prevent circumvention or evasion thereof, or to
facilitate compliance therewith.
(b) The Bureau shall publish a single, integrated disclosure
for mortgage loan transactions (including real estate
settlement cost statements) which includes the disclosure
requirements of this title in conjunction with the disclosure
requirements of the Real Estate Settlement Procedures Act of
1974 that, taken together, may apply to a transaction that is
subject to both or either provisions of law. The purpose of
such model disclosure shall be to facilitate compliance with
the disclosure requirements of this title and the Real Estate
Settlement Procedures Act of 1974, and to aid the borrower or
lessee in understanding the transaction by utilizing readily
understandable language to simplify the technical nature of the
disclosures. In devising such forms, the Bureau shall consider
the use by creditors or lessors of data processing or similar
automated equipment. Nothing in this title may be construed to
require a creditor or lessor to use any such model form or
clause prescribed by the Bureau under this section. A creditor
or lessor shall be deemed to be in compliance with the
disclosure provisions of this title with respect to other than
numerical disclosures if the creditor or lessor (1) uses any
appropriate model form or clause as published by the Bureau, or
(2) uses any such model form or clause and changes it by (A)
deleting any information which is not required by this title,
or (B) rearranging the format, if in making such deletion or
rearranging the format, the creditor or lessor does not affect
the substance, clarity, or meaningful sequence of the
disclosure.
(c) Model disclosure forms and clauses shall be adopted by
the Bureau after notice duly given in the Federal Register and
an opportunity for public comment in accordance with section
553 of title 5, United States Code.
(d) Any regulation of the Bureau, or any amendment or
interpretation thereof, requiring any disclosure which differs
from the disclosures previously required by this chapter,
chapter 4, or chapter 5, or by any regulation of the Bureau
promulgated thereunder shall have an effective date of that
October 1 which follows by at least six months the date of
promulgation, except that the Bureau may at its discretion take
interim action by regulation, amendment, or interpretation to
lengthen the period of time permitted for creditors or lessors
to adjust their forms to accommodate new requirements or
shorten the length of time for creditors or lessors to make
such adjustments when it makes a specific finding that such
action is necessary to comply with the findings of a court or
to prevent unfair or deceptive disclosure practices.
Notwithstanding the previous sentence, any creditor or lessor
may comply with any such newly promulgated disclosure
requirements prior to the effective date of the requirements.
(e) Disclosure for Charitable Mortgage Loan Transactions.--
With respect to a mortgage loan transaction involving a
residential mortgage loan offered at zero percent interest
primarily for charitable purposes by an organization having
tax-exempt status under section 501(c)(3) of the Internal
Revenue Code of 1986, forms HUD-1 and GFE (as defined under
section 1024.2(b) of title 12, Code of Federal Regulations),
together with a disclosure substantially in the form of the
Loan Model Form H-2 (as defined under Appendix H to section
1026 of title 12, Code of Federal Regulations) shall,
collectively, be an appropriate model form for purposes of
subsection (b).
(f) Exemption Authority.--
(1) In general.--The Bureau may exempt, by
regulation, from all or part of this title all or any
class of transactions, other than transactions
involving any mortgage described in section 103(aa),
for which, in the determination of the Bureau, coverage
under all or part of this title does not provide a
meaningful benefit to consumers in the form of useful
information or protection.
(2) Factors for consideration.--In determining which
classes of transactions to exempt in whole or in part
under paragraph (1), the Bureau shall consider the
following factors and publish its rationale at the time
a proposed exemption is published for comment:
(A) The amount of the loan and whether the
disclosures, right of rescission, and other
provisions provide a benefit to the consumers
who are parties to such transactions, as
determined by the Bureau.
(B) The extent to which the requirements of
this title complicate, hinder, or make more
expensive the credit process for the class of
transactions.
(C) The status of the borrower, including--
(i) any related financial
arrangements of the borrower, as
determined by the Bureau;
(ii) the financial sophistication of
the borrower relative to the type of
transaction; and
(iii) the importance to the borrower
of the credit, related supporting
property, and coverage under this
title, as determined by the Bureau;
(D) whether the loan is secured by the
principal residence of the consumer; and
(E) whether the goal of consumer protection
would be undermined by such an exemption.
(g) Waiver for Certain Borrowers.--
(1) In general.--The Bureau, by regulation, may
exempt from the requirements of this title certain
credit transactions if--
(A) the transaction involves a consumer--
(i) with an annual earned income of
more than $200,000; or
(ii) having net assets in excess of
$1,000,000 at the time of the
transaction; and
(B) a waiver that is handwritten, signed, and
dated by the consumer is first obtained from
the consumer.
(2) Adjustments by the board.--The Bureau, at its
discretion, may adjust the annual earned income and net
asset requirements of paragraph (1) for inflation.
(i) Authority of the board to
prescribe rules.--Notwithstanding
subsection (a), the Board shall have
authority to prescribe rules under this
title with respect to a person
described in section 1029(a) of the
Consumer Financial Protection Act of
2010. Regulations prescribed under this
subsection may contain such
classifications, differentiations, or
other provisions, as in the judgment of
the Board are necessary or proper to
effectuate the purposes of this title,
to prevent circumvention or evasion
thereof, or to facilitate compliance
therewith.
(h) Deference.--Notwithstanding any power granted to any
Federal agency under this title, the deference that a court
affords to the Bureau with respect to a determination made by
the Bureau relating to the meaning or interpretation of any
provision of this title, other than section 129E or 129H, shall
be applied as if the Bureau were the only agency authorized to
apply, enforce, interpret, or administer the provisions of this
title.
* * * * * * *
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REAL ESTATE SETTLEMENT PROCEDURES ACT OF 1974
* * * * * * *
uniform settlement statement
Sec. 4. (a) The Bureau shall publish a single, integrated
disclosure for mortgage loan transactions (including real
estate settlement cost statements) which includes the
disclosure requirements of this section and section 5, in
conjunction with the disclosure requirements of the Truth in
Lending Act that, taken together, may apply to a transaction
that is subject to both or either provisions of law. The
purpose of such model disclosure shall be to facilitate
compliance with the disclosure requirements of this title and
the Truth in Lending Act, and to aid the borrower or lessee in
understanding the transaction by utilizing readily
understandable language to simplify the technical nature of the
disclosures. Such forms shall conspicuously and clearly itemize
all charges imposed upon the borrower and all charges imposed
upon the seller in connection with the settlement and shall
indicate whether any title insurance premium included in such
charges covers or insures the lender's interest in the
property, the borrower's interest, or both. The Bureau may, by
regulation, permit the deletion from the forms prescribed under
this section of items which are not, under local laws or
customs, applicable in any locality, except that such
regulation shall require that the numerical code prescribed by
the Bureau be retained in forms to be used in all localities.
Nothing in this section may be construed to require that that
part of the standard forms which relates to the borrower's
transaction to be furnished to the seller, or to require that
that part of the standard forms which relates to the seller be
furnished to the borrower.
(b) The forms prescribed under this section shall be
completed and made available for inspection by the borrower at
or before settlement by the person conducting the settlement,
except that (1) the Bureau may exempt from the requirements of
this section settlements occurring in localities where the
final settlement statement is not customarily provided at or
before the date of settlement, or settlements where such
requirements are impractical and (2) the borrower may, in
accordance with regulations of the Bureau, waive his right to
have the forms made available at such time. Upon the request of
the borrower to inspect the forms prescribed under this section
during the business day immediately preceding the day of
settlement, the person who will conduct the settlement shall
permit the borrower to inspect those items which are known to
such person during such preceding day.
(c) The standard form described in subsection (a) may
include, in the case of an appraisal coordinated by an
appraisal management company (as such term is defined in
section 1121(11) of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (12 U.S.C. 3350(11))), a
clear disclosure of--
(1) the fee paid directly to the appraiser by such
company; and
(2) the administration fee charged by such company.
(d) With respect to a mortgage loan transaction involving a
residential mortgage loan offered at zero percent interest
primarily for charitable purposes, an organization having tax-
exempt status under section 501(c)(3) of the Internal Revenue
Code of 1986 may use forms HUD-1 and GFE (as defined under
section 1024.2(b) of title 12, Code of Federal Regulations)
together with a disclosure substantially in the form of the
Loan Model Form H-2 (as defined under Appendix H to section
1026 of title 12, Code of Federal Regulations), collectively,
in lieu of the disclosure published under subsection (a).
* * * * * * *
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