I 

115TH CONGRESS 

1ST SESSION H. R. 4439 

To amend the Revised Statutes, the Bank Service Company Act, the Federal 

Deposit Insurance Act, and the Home Owners’ Loan Act to clarify 

that the role of the insured depository institution as lender and the 

location of an insured depository institution under applicable law are 

not affected by any contract between the institution and a third-party 

service provider, and to clarify that Federal preemption of State usury 

laws applies to any loan to which an insured depository institution 

is the party to which the debt is initially owed according to its terms, 

and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 16, 2017 

Mr. HOLLINGSWORTH (for himself, Mr. HASTINGS, Mr. MCHENRY, Mr. 

LUETKEMEYER, and Mr. CUELLAR) introduced the following bill; which 

was referred to the Committee on Financial Services 

A BILL 

To amend the Revised Statutes, the Bank Service Company 

Act, the Federal Deposit Insurance Act, and the Home 

Owners’ Loan Act to clarify that the role of the insured 

depository institution as lender and the location of an 

insured depository institution under applicable law are 

not affected by any contract between the institution and 

a third-party service provider, and to clarify that Federal 

preemption of State usury laws applies to any loan to 

which an insured depository institution is the party to 

which the debt is initially owed according to its terms, 

and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Modernizing Credit 

5 Opportunities Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds the following: 

8 (1) Insured depository institutions have found 

9 efficiencies in their lending operations through a va10 riety of different relationships with nondepository in11 stitutions that perform different lending-related 

12 functions. 

13 (2) The Federal banking regulators have recog14 nized that insured depository institutions may enter 

15 into relationships with third parties to originate 

16 loans, have recognized the benefits of these arrange17 ments for institutions and borrowers alike, and have 

18 issued guidance to ensure the safety and soundness 

19 of such relationships and to protect borrowers. 

20 (3) Insured depository institutions routinely en21 gage in third-party lending arrangements and regu22 lators have long recognized that third-party lending 

23 arrangements provide institutions with the ability to 

24 supplement, enhance or expedite lending services for 

25 their customers, and that engaging in third-party 


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1 lending arrangements also enables institutions to re2 duce the cost of delivering credit products, to expand 

3 access to credit, and to achieve strategic goals. 

4 (4) Litigation concerning loans made by an in5 sured depository institution that involve arrange6 ments with third parties that perform lending-re7 lated functions have required the courts to deter8 mine the identity and location of the lender but have 

9 reached inconsistent results. 

10 (5) Inconsistencies in the determinations of the 

11 identity and location of the lender under judicially 

12 crafted multi-factor balancing tests lessen the effi13 ciency of the lending process, reduce the trans14 parency of the lending process for both lenders and 

15 borrowers, and jeopardize the substantial benefits of 

16 third-party lending arrangements for borrowers and 

17 the economy. 

18 (6) In order to maximize efficiency and trans19 parency, it is necessary to clarify and reinforce exist20 ing law by codifying clear and straightforward 

21 standards that establish that an insured depository 

22 institution is the lender on any loan or discount 

23 made, or upon any note, bill of exchange or other 

24 evidence of debt where it is the party to which the 

25 debt is initially owed according to its terms and that 


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1 any relationship with a third party that performs 

2 lending-related functions does not affect the deter3 mination of such institution’s role as the lender or 

4 its location. 

5 SEC. 3. LOCATION OF INSURED DEPOSITORY INSTITUTION. 

6 (a) AMENDMENT TO THE BANK SERVICE COMPANY

7 ACT.—Section 7 of the Bank Service Company Act (12 

8 U.S.C. 1867) is amended— 

9 (1) by redesignating subsection (d) as sub10 section (e); and 

11 (2) by inserting after subsection (c) the fol12 lowing: 

13 ‘‘(d) LOCATION OF INSURED DEPOSITORY INSTITU14 TION.—The geographic location within the United States 

15 of a person performing services for an insured depository 

16 institution under subsection (c) or the existence of an eco17 nomic relationship between an insured depository institu18 tion and another person shall not affect the determination 

19 of the location of such institution under other applicable 

20 law.’’. 

21 (b) AMENDMENT TO THE HOME OWNERS’ LOAN

22 ACT.—Section 5(d)(7) of the Home Owners’ Loan Act (12 

23 U.S.C. 1464(d)(7)) is amended— 

24 (1) by redesignating subparagraph (E) as sub25 paragraph (F); and 


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1 (2) by inserting after subparagraph (D) the fol2 lowing: 

3 ‘‘(E) LOCATION OF SAVINGS ASSOCIA4 TION.—The geographic location within the 

5 United States of a person performing services 

6 for a savings association under subparagraph 

7 (D) or the existence of an economic relationship 

8 between a savings association and another per9 son shall not affect the determination of the lo10 cation of the savings association under other 

11 applicable law.’’. 

12 SEC. 4. TERMS AND CONDITIONS. 

13 (a) AMENDMENT TO THE REVISED STATUTES.—Sec14 tion 5197 of the Revised Statutes (12 U.S.C. 85) is 

15 amended by inserting the following after the first sen16 tence: ‘‘A loan, discount, note, bill of exchange, or other 

17 debt is made by an association, and subject to the pre18 ceding sentence, where the association is the party to 

19 which the debt is owed according to the terms of the loan, 

20 discount, note, bill of exchange, or other debt, regardless 

21 of any later assignment. The existence of a service or eco22 nomic relationship between an association and another 

23 person shall not affect the application of this section to 

24 the rate of interest upon the loan or discount made, or 


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1 the note, bill, or other evidence of debt or the identity of 

2 the association as the lender under the agreement.’’. 

3 (b) AMENDMENT TO THE FEDERAL DEPOSIT INSUR4 ANCE ACT.—Subsection (a) of section 27 of the Federal 

5 Deposit Insurance Act (12 U.S.C. 1831d(a)) is amended 

6 by adding at the end the following: ‘‘A loan, discount, 

7 note, bill of exchange, or other debt is made by a State 

8 bank or an insured branch of a foreign bank, and subject 

9 to the preceding sentence, where a State bank or an in10 sured branch of a foreign bank is the party to which the 

11 debt is owed according to the terms of the loan, discount, 

12 note, bill of exchange or other debt, regardless of any later 

13 assignment. The existence of a service or economic rela14 tionship between a State bank or insured branch of a for15 eign bank and another person shall not affect the applica16 tion of this subsection to the interest rate upon the loan 

17 or discount made, or upon the note, bill of exchange, or 

18 other evidence of debt or the identity of the State bank 

19 or insured branch of a foreign bank as the lender under 

20 the agreement.’’. 

21 (c) AMENDMENT TO THE HOME OWNERS’ LOAN

22 ACT.—Section 4(g)(1) of the Home Owners’ Loan Act (12 

23 U.S.C. 1463(g)(1)) is amended by adding at the end the 

24 following: ‘‘An extension of credit is made by a savings 

25 association, and subject to the preceding sentence, where 


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1 a savings association is the party to which the debt is owed 

2 according to the terms of the debt, regardless of any later 

3 assignment. The existence of a service or economic rela4 tionship between a savings association and another person 

5 shall not affect the application of this subsection to the 

6 interest rate upon the extension of credit or the identity 

7 of the savings association as the lender under the agree8 ment.’’. 

Æ 


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