Community Mortgage Lender Regulatory Act of 2016

Summary: Community Mortgage Lender Regulatory Act of 2016 This bill amends the Consumer Financial Protection Act of 2010 to prohibit the Consumer Financial Protection Bureau (CFPB) from auditing, investigating, or taking an enforcement action against a responsible community mortgage lender unless requested to do so by one of several specified regulators or agencies. A "responsible community mortgage lender" is one that: (1)&nbsp;meets certain&nbsp;restrictions with respect to number and volume of mortgage loan originations and amount of either assets or net worth; and (2) has not, with respect to its mortgage loan originations and within a specified time frame,&nbsp;been subject to a cease and desist order or found by a court to have violated the law. Furthermore, the CFPB and other federal banking agencies are prohibited from requiring such a lender to audit&nbsp;one of its&nbsp;vendors or third-party contractors unless the CFPB or other agency&nbsp;has reasonable cause to believe that the vendor or contractor is&nbsp;causing the lender to violate the law. The bill also revises the methodology for calculating mortgage loan originations with respect to the qualified mortgage requirement in 2016.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Community Mortgage Lender Regulatory 
Act of 2016''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Responsible community mortgage lenders engaged in 
        traditional mortgage lending were not responsible for the 
        recent mortgage crisis.
            (2) Responsible community mortgage lenders provide a 
        valuable and critical service to consumers by, among other 
        things, fulfilling the housing finance needs of the communities 
        they serve and providing locally based alternative sources for 
        mortgage financing.
            (3) The activities and business practices of responsible 
        community mortgage lenders do not pose a substantial risk to 
        consumers, and did not pose a substantial risk to consumers 
        when the Dodd-Frank Wall Street Reform and Consumer Protection 
        Act was enacted.
            (4) Responsible community mortgage lenders are subject to 
        the oversight and control of various governmental authorities 
        and nongovernmental actors, including the Bureau of Consumer 
        Financial Protection, the Department of Housing and Urban 
        Development, the Federal Trade Commission, State supervisory 
        regulators, local government supervisory regulators, mortgage 
        loan investors, warehouse lenders, and various other 
        authorities or entities. As a result of this oversight and 
        control, the business practices and activities of responsible 
        community mortgage lenders are safe, transparent to the public 
        and the government, and do not pose a threat to consumers, the 
        public at large, the United States financial markets, or the 
        United States economy in general.
            (5) Responsible community mortgage lenders are unreasonably 
        burdened by increasing regulation geared to problems that they 
        did not create and activities that they did not and do not 
        engage in, and therefore responsible community mortgage lenders 
        are entitled to relief from certain provisions of the Dodd-
        Frank Wall Street Reform and Consumer Protection Act and its 
        attendant regulations, including the regulations of the Bureau 
        of Consumer Financial Protection.
            (6) Without relief many responsible community mortgage 
        lenders will be driven from the market thus limiting the 
        consumer's ability to choose a local lender for mortgage 
        financing and dangerously consolidating the mortgage lending 
        market into a smaller number of lenders.
            (7) The preservation of responsible community mortgage 
        lenders is critical to preserving competition and preventing 
        increasing concentration in mortgage lending.
            (8) The Bureau of Consumer Financial Protection should 
        prioritize its resources and ability to carry out examinations 
        by creating reasonable exclusions for smaller, responsible 
        mortgage lenders.

SEC. 3. DEFINITIONS.

    (a) In General.--Section 1002 of the Consumer Financial Protection 
Act of 2010 (12 U.S.C. 5481) is amended by adding at the end the 
following:
            ``(30) Community mortgage lender.--The term `community 
        mortgage lender' means a lender--
                    ``(A) who--
                            ``(i) in the case of a depository 
                        institution or credit union--
                                    ``(I) has assets of less than 
                                $2,000,000,000; and
                                    ``(II) originated fewer than 25,000 
                                mortgage loans in the preceding 
                                calendar year or originated a gross 
                                mortgage loan origination volume of 
                                less than $5,000,000,000 in the 
                                preceding calendar year; or
                            ``(ii) in the case of a person other than a 
                        depository institution--
                                    ``(I) has net worth of less than 
                                $50,000,000; and
                                    ``(II) originated fewer than 25,000 
                                mortgage loans in the preceding 
                                calendar year or originated a gross 
                                mortgage loan origination volume of 
                                less than $5,000,000,000 in the 
                                preceding calendar year; and
                    ``(B) had mortgage loan originations in the 
                preceding three calendar years that consisted of 95 
                percent qualified mortgages when measured by either--
                            ``(i) the number of mortgage loans 
                        originated; or
                            ``(ii) the dollar volume of mortgage loans 
                        originated.
            ``(31) Responsible community mortgage lender.--The term 
        `responsible community mortgage lender' means a community 
        mortgage lender who has not been found by a court of competent 
        jurisdiction to have violated the law, or been subject to a 
        cease and desist order, relating to its mortgage loan 
        originations--
                    ``(A) during the preceding two years; or
                    ``(B) since such person began originating mortgage 
                loans, if such period is less than two years.
            ``(32) Mortgage loan.--The term `mortgage loan' means a 
        loan secured by a first lien on a 1-4 unit family residence.
            ``(33) Qualified mortgage.--The term `qualified mortgage'--
                    ``(A) has the meaning given that term under section 
                129C(b)(2) of the Truth in Lending Act; and
                    ``(B) includes loans insured, guaranteed, or 
                administered by--
                            ``(i) the Department of Housing and Urban 
                        Development, with regard to mortgages insured 
                        under the National Housing Act (12 U.S.C. 1707 
                        et seq.);
                            ``(ii) the Department of Veterans Affairs, 
                        with regard to a loan made or guaranteed by the 
                        Secretary of Veterans Affairs;
                            ``(iii) the Department of Agriculture, with 
                        regard to loans guaranteed by the Secretary of 
                        Agriculture pursuant to section 502(h) of the 
                        Housing Act of 1949 (42 U.S.C. 1472(h)); and
                            ``(iv) the Rural Housing Service, with 
                        regard to loans insured by the Rural Housing 
                        Service.''.
    (b) Treatment of the Qualified Mortgage Requirement During Calendar 
Year 2016.--For purposes of computing mortgage loan originations under 
section 1002(30)(B) of the Consumer Financial Protection Act of 2010 
during calendar year 2016, such computation shall be based only on the 
preceding two calendar years instead of the preceding three calendar 
years.

SEC. 4. PRIORITIZATION OF BUREAU EXAMINATION AND ENFORCEMENT AUTHORITY 
              RESOURCES.

    (a) In General.--The Consumer Financial Protection Act of 2010 (12 
U.S.C. 5481 et seq.) is amended by inserting after section 1031 the 
following:

``SEC. 1031A. EXCLUSION RELATING TO RESPONSIBLE COMMUNITY MORTGAGE 
              LENDERS.

    ``(a) Limitations of Examination of Responsible Community Mortgage 
Lenders.--Except as permitted in subsection (b), the Bureau may not 
conduct any audit, examination, or investigation of, or take an 
enforcement against, a responsible community mortgage lender.
    ``(b) Referrals by Other Agencies.--The Bureau may conduct an 
audit, examination, or investigation of, or take an enforcement action 
against, a responsible community mortgage lender if requested by--
            ``(1) a State or local regulator;
            ``(2) a Federal department or agency that guarantees 
        mortgage loans originated, held, or serviced by such lender;
            ``(3) the Federal Housing Finance Agency or entities 
        supervised by such Agency; or
            ``(4) any other Federal department or agency that exercises 
        supervisory authority over such lender.
    ``(c) Rule of Construction.--Nothing in this section shall be 
construed as modifying, limiting, or superseding the operation of any 
provision of Federal or State law, or otherwise affecting the authority 
of any Federal or State department or agency other than the Bureau.''.
    (b) Clerical Amendment.--The table of contents under section 1(b) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act is 
amended by inserting after the item relating to section 1031 the 
following:

``Sec. 1031A. Exclusion relating to responsible community mortgage 
                            lenders.''.

SEC. 5. STREAMLINED VENDOR AUDITS.

    (a) In General.--The Consumer Financial Protection Act of 2010 (12 
U.S.C. 5481 et seq.), as amended by section 4(a), is further amended by 
inserting after section 1031A the following:

``SEC. 1031B. VENDOR AUDIT REQUIREMENTS RELATING TO RESPONSIBLE 
              COMMUNITY MORTGAGE LENDERS.

    ``(a) Vendor Audits.--The Bureau and the appropriate Federal 
banking agencies may only require a responsible community mortgage 
lender to perform an audit of a vendor or third-party contractor of the 
lender if the Bureau or the appropriate Federal banking agency, as 
applicable, has reasonable cause to believe that such vendor or third-
party contractor is performing services for the lender in a manner that 
is causing the lender to violate the law.''.
    (b) Clerical Amendment.--The table of contents under section 1(b) 
of the Dodd-Frank Wall Street Reform and Consumer Protection Act, as 
amended by section 4(b), is further amended by inserting after the item 
relating to section 1031A the following:

``Sec. 1031B. Vendor audit requirements relating to responsible 
                            community mortgage lenders.''.