Protecting Consumers’ Access to Credit Act of 2017

Summary: .   Protecting Consumers' Access to Credit Act of 2017 (Sec. 3) This bill amends the Revised Statutes, the Home Owners' Loan Act, the Federal Credit Union Act, and the Federal Deposit Insurance Act to state that bank loans that are valid when made as to their maximum rate of interest in accordance with federal law shall remain valid with respect to that rate regardless of whether a bank has subsequently sold or assigned the loan to a third party. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Protecting Consumers' Access to 
Credit Act of 2017''.

SEC. 2. FINDINGS.

    Congress finds that--
            (1) the contractual doctrine of valid when made which, as 
        applied to lending agreements, provides that a loan that is 
        valid at inception cannot become usurious upon subsequent sale 
        or transfer to another person;
            (2) this important and longstanding principle derives from 
        the common law and its application has been a cornerstone of 
        United States banking law for nearly 200 years, as provided in 
        the case Nichols v. Fearson, 32 U.S. (7 Pet.) 103, 106 (1833), 
        where the Supreme Court famously declared: ``Yet the rule of 
        law is everywhere acknowledged, that a contract free from usury 
        in its inception, shall not be invalidated by any subsequent 
        usurious transactions upon it.'';
            (3) in 2016, the Solicitor General, in consultation with 
        all Federal banking regulators, filed an amicus brief in the 
        case of Midland Funding, LLC v. Madden, 136 S. Ct. 2505 (2016) 
        (mem.), denying cert. to 786 F.3d 246 (2d Cir. 2015), that 
        described the United States Court of Appeals for the Second 
        Circuit in that case ``incorrect'' with an ``analysis 
        reflect[ing] a misunderstanding'' of section 85 of the National 
        Bank Act and Supreme Court precedent, because it contradicted 
        the contractual doctrine of valid when made;
            (4) the valid-when-made doctrine, by bringing certainty to 
        the legal treatment of all valid loans that are transferred, 
        greatly enhances liquidity in the credit markets by widening 
        the potential pool of loan buyers and reducing the cost of 
        credit to borrowers at the time of origination;
            (5) a joint academic study from professors at Stanford, 
        Fordham, and Columbia universities concluded that the Madden v. 
        Midland decision has already disproportionately affected low- 
        and moderate-income individuals in the United States with lower 
        FICO scores; and
            (6) if the valid-when-made doctrine is not reaffirmed soon 
        by Congress, the lack of access to safe and affordable 
        financial services will force households in the United States 
        with the fewest resources to seek financial products that are 
        nontransparent, fail to inform consumers about the terms of 
        credit available, and do not comply with State and Federal laws 
        (including regulations).

SEC. 3. RATE OF INTEREST AFTER TRANSFER OF LOAN.

    (a) Amendment to the Revised Statutes.--Section 5197 of the Revised 
Statutes (12 U.S.C. 85) is amended by adding at the end the following: 
``A loan that is valid when made as to its maximum rate of interest in 
accordance with this section shall remain valid with respect to such 
rate regardless of whether the loan is subsequently sold, assigned, or 
otherwise transferred to a third party, and may be enforced by such 
third party notwithstanding any State law to the contrary.''.
    (b) Amendment to the Home Owners' Loan Act.--Section 4(g) of the 
Home Owners' Loan Act (12 U.S.C. 1463(g)) is amended by adding at the 
end the following:
    ``(3) A loan that is valid when made as to its maximum rate of 
interest in accordance with this subsection shall remain valid with 
respect to such rate regardless of whether the loan is subsequently 
sold, assigned, or otherwise transferred to a third party, and may be 
enforced by such third party notwithstanding any State law to the 
contrary.''.
    (c) Amendment to the Federal Credit Union Act.--Section 205(g) of 
the Federal Credit Union Act (12 U.S.C. 1785(g)) is amended by adding 
at the end the following:
    ``(3) A loan that is valid when made as to its maximum rate of 
interest in accordance with this subsection shall remain valid with 
respect to such rate regardless of whether the loan is subsequently 
sold, assigned, or otherwise transferred to a third party, and may be 
enforced by such third party notwithstanding any State law to the 
contrary.''.
    (d) Amendment to the Federal Deposit Insurance Act.--Section 27 of 
the Federal Deposit Insurance Act (12 U.S.C. 1831d) is amended by 
adding at the end the following:
    ``(c) A loan that is valid when made as to its maximum rate of 
interest in accordance with this section shall remain valid with 
respect to such rate regardless of whether the loan is subsequently 
sold, assigned, or otherwise transferred to a third party, and may be 
enforced by such third party notwithstanding any State law to the 
contrary.''.

SEC. 4. RULE OF CONSTRUCTION.

    Nothing in this Act may be construed as limiting the authority or 
jurisdiction of the Office of the Comptroller of the Currency, the 
Federal Deposit Insurance Corporation, the Board of Governors of the 
Federal Reserve System, the Bureau of Consumer Financial Protection, or 
the National Credit Union Administration.

            Passed the House of Representatives February 14, 2018.

            Attest:

                                                 KAREN L. HAAS,

                                                                 Clerk.