Small Financial Institutions Regulatory Relief Act of 2014

Summary: Small Financial Institutions Regulatory Relief Act of 2014 - Amends the Truth in Lending Act (TILA), with respect to minimum standards for residential mortgage loans and the presumption of ability to repay, to treat as a &quot;qualified mortage&quot; any residential mortgage loan made by a creditor having less than $10 billion in total assets, so long as the loan is originated and retained in creditor's portfolio for the duration of the loan term. Directs the Consumer Financial Protection Bureau (CFPB) to exempt a creditor with assets of less than $10 billion from the requirement to establish escrow or impound accounts for the payment of taxes and hazard insurance before consummating a consumer credit transaction secured by a first lien on the principal dwelling of the consumer.  Amends the Real Estate Settlement Procedures Act of 1974 to direct the CFPB to provide either exemptions to, or adjustments from, its mortgage loan servicing and escrow account administration requirements for servicers that service fewer than 10,000 mortgage loans annually. Amends the Gramm-Leach-Bliley Act to exempt from its annual privacy policy notice requirement a financial institution that: (1) provides nonpublic personal information only in accordance with specified requirements, and (2) has not changed its policies and practices with regard to disclosing nonpublic personal information from those disclosed in its most recent disclosure to consumers. Directs the Board of Governors of the Federal Reserve System to publish in the Federal Register proposed revisions to the Small Bank Holding Company Policy Statement on the Assessment of Financial and Managerial Factors that: (1) apply that policy to bank holding companies having pro forma consolidated assets of less than $5 billion (adjusted annually), no engagement in nonbanking activities involving significant leverage, and no significant amount of outstanding debt; and (2) increase from 1.1 to 3.1 the debt-to-equity ratio allowable for a small bank holding company in order to retain its eligibility both to pay a corporate dividend and to implement expedited processing procedures under the Board's Regulation Y. Amends the Federal Reserve Act to require the Board to have at all times at least one member with demonstrated experience working in or supervising community banks having less than $10 billion in total assets. Directs the CFPB to establish an application process under which a person who lives or does business in a state may apply to have an area in the state identified as rural if it has not yet been so designated for purposes of federal consumer financial law.  Prescribes criteria for the CFPB to consider when evaluating an application. Requires the CFPB to: (1) grant or deny the application within 90 days after the public comment period ends; and (2) publish the grant or denial in the Federal Register.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Small Financial Institutions 
Regulatory Relief Act of 2014''.

SEC. 2. CERTAIN LOANS INCLUDED AS QUALIFIED MORTGAGES.

    Section 129C(b)(2) of the Truth in Lending Act (15 U.S.C. 
1639c(b)(2)) is amended by adding at the end the following:
                    ``(F) Loans held on portfolio.--The term `qualified 
                mortgage' includes a residential mortgage loan made by 
                a creditor having less than $10,000,000,000 in total 
                assets, so long as such loan is originated and retained 
                in portfolio of the creditor for the duration of the 
                loan term.''.

SEC. 3. EXEMPTION FROM ESCROW REQUIREMENTS FOR LOANS HELD BY SMALL 
              CREDITORS.

    Section 129D(c) of the Truth in Lending Act (15 U.S.C. 1639d(c)) is 
amended--
            (1) by redesignating paragraphs (1), (2), (3), and (4) as 
        subparagraphs (A), (B), (C), and (D) and moving such 
        subparagraphs 2 ems to the right;
            (2) striking ``The Board'' and inserting the following:
            ``(1) In general.--The Bureau''; and
            (3) by adding at the end the following:
    ``(2) Treatment of Loans Held by Smaller Creditors.--The Bureau 
shall, by regulation, exempt from the requirements of subsection (a) 
any loan secured by a first lien on a consumer's principle dwelling, if 
such loan is held by a creditor with assets of less than 
$10,000,000,000.''.

SEC. 4. INCREASE IN SMALL SERVICER EXEMPTION.

    Section 6 of the Real Estate Settlement Procedures Act of 1974 (12 
U.S.C. 2605) is amended by adding at the end the following:
    ``(n) Small Servicer Exemption.--The Bureau shall, by regulation, 
provide exemptions to, or adjustments for, the provisions of this 
section for servicers that service 10,000 or fewer mortgage loans, in 
order to reduce regulatory burdens while appropriately balancing 
consumer protections.''.

SEC. 5. EXCEPTION TO ANNUAL PRIVACY NOTICE REQUIREMENT UNDER THE GRAMM-
              LEACH-BLILEY ACT.

    Section 503 of the Gramm-Leach-Bliley Act (15 U.S.C. 6803) is 
amended by adding at the end the following:
    ``(f) Exception to Annual Notice Requirement.--A financial 
institution that--
            ``(1) provides nonpublic personal information only in 
        accordance with the provisions of subsection (b)(2) or (e) of 
        section 502 or regulations prescribed under section 504(b), and
            ``(2) has not changed its policies and practices with 
        regard to disclosing nonpublic personal information from the 
        policies and practices that were disclosed in the most recent 
        disclosure sent to consumers in accordance with this 
        subsection,
shall not be required to provide an annual disclosure under this 
subsection until such time as the financial institution fails to comply 
with any criteria described in paragraph (1) or (2).''.

SEC. 6. CHANGES REQUIRED TO SMALL BANK HOLDING COMPANY POLICY STATEMENT 
              ON ASSESSMENT OF FINANCIAL AND MANAGERIAL FACTORS.

    (a) Small Bank Holding Company Policy Statement on Assessment of 
Financial and Managerial Factors.--
            (1) In general.--Before the end of the 6-month period 
        beginning on the date of the enactment of this Act, the Board 
        of Governors of the Federal Reserve System shall publish in the 
        Federal Register proposed revisions to the Small Bank Holding 
        Company Policy Statement on Assessment of Financial and 
        Managerial Factors (12 C.F.R. part 225--appendix C) that 
        provide that the policy shall apply to a bank holding company 
        which has pro forma consolidated assets of less than 
        $5,000,000,000 and that--
                    (A) is not engaged in any nonbanking activities 
                involving significant leverage; and
                    (B) does not have a significant amount of 
                outstanding debt that is held by the general public.
            (2) Adjustment of amount.--The Board of Governors of the 
        Federal Reserve System shall annually adjust the dollar amount 
        referred to in paragraph (1) in the Small Bank Holding Company 
        Policy Statement on Assessment of Financial and Managerial 
        Factors by an amount equal to the percentage increase, for the 
        most recent year, in total assets held by all insured 
        depository institutions, as determined by the Board.
    (b) Increase in Debt-to-Equity Ratio of Small Bank Holding 
Company.--Before the end of the 6-month period beginning on the date of 
the enactment of this Act, the Board of Governors of the Federal 
Reserve System shall publish in the Federal Register proposed revisions 
to the Small Bank Holding Company Policy Statement on Assessment of 
Financial and Managerial Factors (12 C.F.R. part 225--appendix C) such 
that the debt-to-equity ratio allowable for a small bank holding 
company in order to remain eligible to pay a corporate dividend and to 
remain eligible for expedited processing procedures under Regulation Y 
of the Board of Governors of the Federal Reserve System would increase 
from 1:1 to 3:1.

SEC. 7. MEMBERSHIP OF BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.

    (a) Inclusion of a Person With Community Bank Experience.--The 
first undesignated paragraph of section 10 of the Federal Reserve Act 
(12 U.S.C. 241) is amended by inserting after the second sentence the 
following: ``The Board shall at all times have as a member at least 1 
person with demonstrated experience working in or supervising community 
banks having less than $10,000,000,000 in total assets''.
    (b) Effective Date.--The amendment made by subsection (a) shall 
take effect on the date of enactment of this Act and apply to 
appointments made on and after that effective date, excluding any 
nomination pending in the Senate on that date.

SEC. 8. DESIGNATION OF RURAL AREA.

    (a) Application.--Not later than 90 days after the date of the 
enactment of this Act, the Bureau of Consumer Financial Protection 
shall establish an application process under which a person who lives 
or does business in a State may, with respect to an area identified by 
the person in such State that has not been designated by the Bureau as 
a rural area for purposes of a Federal consumer financial law (as 
defined under section 1002 of the Consumer Financial Protection Act of 
2010), apply for such area to be so designated.
    (b) Evaluation Criteria.--When evaluating an application submitted 
under subsection (a), the Bureau shall take into consideration the 
following factors:
            (1) Criteria used by the Director of the Bureau of the 
        Census for classifying geographical areas as rural or urban.
            (2) Criteria used by the Director of the Office of 
        Management and Budget to designate counties as metropolitan or 
        micropolitan or neither.
            (3) Criteria used by the Secretary of Agriculture to 
        determine property eligibility for rural development programs.
            (4) The Department of Agriculture rural-urban commuting 
        area codes.
            (5) A written opinion provided by the State's bank 
        supervisor, as defined under section 3(r) of the Federal 
        Deposit Insurance Act (12 U.S.C. 1813(r)).
            (6) Population density.
    (c) Public Comment Period.--
            (1) In general.--Not later than 60 days after receiving an 
        application submitted under subsection (a), the Bureau shall--
                    (A) publish such application in the Federal 
                Register; and
                    (B) make such application available for public 
                comment for not fewer than 90 days.
            (2) Limitation on additional applications.--Nothing in this 
        section shall be construed to require the Bureau, during the 
        public comment period with respect to an application submitted 
        under subsection (a), to accept an additional application with 
        respect to the area that is the subject of the initial 
        application.
    (d) Decision on Designation.--Not later than 90 days after the end 
of the public comment period under subsection (c)(1) for an 
application, the Bureau shall--
            (1) grant or deny such application, in whole or in part; 
        and
            (2) publish such grant or denial in the Federal Register, 
        along with an explanation of what factors the Bureau relied on 
        in making such determination.
    (e) Subsequent Applications.--A decision by the Bureau under 
subsection (d) to deny an application for an area to be designated as a 
rural area shall not preclude the Bureau from accepting a subsequent 
application submitted under subsection (a) for such area to be so 
designated, so long as such subsequent application is made after the 
end of the 90-day period beginning on the date that the Bureau denies 
the application under subsection (d).