Financial CHOICE Act Up for Vote Today

By James. E. Hyland, Esq.
The Pennsylvania Avenue Group
TLTA Federal Legislative Counsel
June 8, 2017

Today, the U.S. House of Representatives will take up HR 10, the Financial CHOICE Act. This is Chairman Hensarling's (R-TX) blueprint to repeal and replace many parts of Dodd-Frank. Hensarling reported the legislation out of the Financial Services Committee nearly a month ago, along a party-line vote after a mark-up that lasted for two days. It is expected that it will pass the full House on Thursday or Friday, again on a largely party-line vote.

The bill would:
• Maintain the CFPB, but the bureau will be drastically modified. The focus will be on enforcing consumer statutes, not on creating new policy. It will remain headed by one person, but will be subject to Congressional appropriations, making it more accountable to the public.
• Establish an Office of Economic Analyses to review rules and regulations before they are promulgated to determine if they are necessary for consumer protection.
• Require that all major financial regulations – such as those likely to result in an annual economic impact of more than $100 million, or a major increase in prices for consumers or costs for businesses – receive affirmative Congressional approval before becoming effective.
• Remove authority from the CFPB to determine if a practice is “unfair or deceptive.” Given our industry's concerns with regulatory interpretations that may be inconsistent with past practices, the bill contains a provision that would remove deference to agency interpretations in court actions, known as the Chevron doctrine.
• Make it easier for community financial institutions to make mortgage loans.
• Create a legal safe harbor from ability-to-repay requirements for mortgage loans that are kept on a depository institution's balance sheet.

The legislation also includes the Mortgage Choice Act, as it did last year. This has impact on the title industry. Currently, title insurance costs do not count against the 3 percent cap on points and fees for a mortgage, unless the title company is affiliated with the lender. This legislation clarifies that lender
affiliated title company premiums would also not count toward the 3 percent cap.

An effort was made yesterday to remove this provision from the bill related to affiliated companies by Rep. Keith Ellison (R-MN), but his amendment was not made in order by the House Rules Committee, which sets the parameters of debate for any bill going to the House floor.

While the bill would pass the House, its path in the Senate is much less clear. The consensus is that Dodd-Frank reform will have to be bipartisan in the Senate and probably move in smaller pieces, leading to an effort much less sweeping than the Hensarling bill. Nevertheless, regulatory relief for community banks, credit unions and other CFPB-regulated entities remains a high priority of Senate Republicans.