II 

115TH CONGRESS 

2D SESSION S. 2304 

To amend title 38, United States Code, to protect veterans from predatory 

lending, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JANUARY 11, 2018 

Mr. TILLIS (for himself, Ms. WARREN, Mr. HELLER, Mr. TESTER, Mrs. CAPITO, Mr. MANCHIN, Mr. BURR, Mr. SCHATZ, Mr. SULLIVAN, Mr. VAN

HOLLEN, Mr. SCOTT, and Mr. DONNELLY) introduced the following bill; 

which was read twice and referred to the Committee on Veterans’ Affairs 

A BILL 

To amend title 38, United States Code, to protect veterans 

from predatory lending, and for other purposes. 

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 ‘‘Protecting Veterans 

5 from Predatory Lending Act of 2018’’. 


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1 SEC. 2. PROTECTING VETERANS FROM PREDATORY LEND2 ING. 

3 (a) IN GENERAL.—Subchapter I of chapter 37 of title 

4 38, United States Code, is amended by adding at the end 

5 the following new section: 

6 ‘‘§ 3709. Refinancing of housing loans 

7 ‘‘(a) FEE RECOUPMENT.—Notwithstanding section 

8 3703 of this title or any other provision of law, a loan 

9 to a veteran for a purpose specified in section 3710 of 

10 this title that is refinanced may not be guaranteed or in11 sured under this chapter unless— 

12 ‘‘(1) the issuer of the refinanced loan provides 

13 the Secretary with a certification of the recoupment 

14 period for fees, closing costs, and any expenses 

15 (other than taxes, amounts held in escrow, and fees 

16 paid under this chapter) that would be incurred by 

17 the borrower in the refinancing of the loan; 

18 ‘‘(2) all of the fees and incurred costs are 

19 scheduled to be recouped on or before the date that 

20 is 36 months after the date of loan issuance; and 

21 ‘‘(3) the recoupment is calculated through lower 

22 regular monthly payments as a result of the refi23 nanced loan. 

24 ‘‘(b) NET TANGIBLE BENEFIT TEST.—Notwith25 standing section 3703 of this title or any other provision 

26 of law, a loan to a veteran for a purpose specified in secVerDate Sep 11 2014 04:47 Jan 17, 2018 Jkt 079200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304

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1 tion 3710 of this title that is refinanced may not be guar2 anteed or insured under this chapter unless— 

3 ‘‘(1) the issuer of the refinanced loan provides 

4 the borrower with a net tangible benefit test; 

5 ‘‘(2) in a case in which the original loan had a 

6 fixed rate mortgage interest rate and the refinanced 

7 loan will have a fixed rate mortgage interest rate, 

8 the refinanced loan has a mortgage interest rate 

9 that is not less than 50 basis points less than the 

10 previous loan; 

11 ‘‘(3) in a case in which the original loan had a 

12 fixed rate mortgage interest rate and the refinanced 

13 loan will have an adjustable rate mortgage interest 

14 rate, the refinanced loan has a mortgage interest 

15 rate that is not less than 200 basis points less than 

16 the previous loan; and 

17 ‘‘(4) the lower interest rate is not produced 

18 solely from discount points, unless— 

19 ‘‘(A) such points are paid at closing; and 

20 ‘‘(B) such points are not added to the 

21 principal loan amount, unless the resulting loan 

22 balance after any fees and expenses allows the 

23 property with respect to which the loan was 

24 issued to maintain a loan to value ratio of 90 

25 percent or less. 


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1 ‘‘(c) LOAN SEASONING.—Notwithstanding section 

2 3703 of this title or any other provision of law, a loan 

3 to a veteran for a purpose specified in section 3710 of 

4 this title that is refinanced may not be guaranteed or in5 sured under this chapter until the date that is the later 

6 of— 

7 ‘‘(1) the date that is 210 days after the date on 

8 which the first monthly payment is made on the 

9 loan; and 

10 ‘‘(2) the date on which the sixth monthly pay11 ment is made on the loan.’’. 

12 (b) REGULATIONS.— 

13 (1) IN GENERAL.—In prescribing any regula14 tion to carry out section 3709 of title 38, United 

15 States Code, as added by subsection (a), the Sec16 retary may waive the requirements of sections 551 

17 through 559 of title 5, United States Code, if— 

18 (A) the Secretary determines that urgent 

19 or compelling circumstances make compliance 

20 with such requirements impracticable or con21 trary to the public interest; 

22 (B) the Secretary submits to the Com23 mittee on Veterans’ Affairs of the Senate and 

24 the Committee on Veterans’ Affairs of the 

25 House of Representatives, and publishes in the 


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1 Federal Register, notice of such waiver, includ2 ing a description of the determination made 

3 under subparagraph (A); and 

4 (C) a period of 10 days elapses following 

5 the notification under subparagraph (B). 

6 (2) PUBLIC NOTICE AND COMMENT.—If a regu7 lation prescribed pursuant to a waiver made under 

8 paragraph (1) is in effect for a period exceeding one 

9 year, the Secretary shall provide the public an op10 portunity for notice and comment regarding such 

11 regulation. 

12 (3) EFFECTIVE DATE.—This subsection shall 

13 take effect on the date of the enactment of this Act. 

14 (4) TERMINATION DATE.—The authorities 

15 under this subsection shall terminate on the date 

16 that is one year after the date of the enactment of 

17 this Act. 

18 (c) CLERICAL AMENDMENT.—The table of sections 

19 at the beginning of chapter 37 of title 38, United States 

20 Code, is amended by inserting after the item relating to 

21 section 3708 the following new item: 

‘‘3709. Refinancing of housing loans.’’. 

22 SEC. 3. LOAN SEASONING FOR GINNIE MAE MORTGAGE23 BACKED SECURITIES. 

24 Section 306(g)(1) of the National Housing Act (12 

25 U.S.C. 1721(g)(1)) is amended by inserting ‘‘The AssociaVerDate Sep 11 2014 00:31 Jan 19, 2018 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S2304.IS S2304

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1 tion may not guarantee the timely payment of principal 

2 and interest on a security that is backed by a mortgage 

3 insured or guaranteed under chapter 37 of title 38, United 

4 States Code, and that was refinanced until the later of 

5 the date that is 210 days after the date on which the first 

6 monthly payment is made on the mortgage being refi7 nanced and the date on which 6 full monthly payments 

8 have been made on the mortgage.’’ after ‘‘Act of 1992.’’. 

9 SEC. 4. REPORT ON LIQUIDITY OF THE DEPARTMENT OF 

10 VETERANS AFFAIRS HOUSING LOAN PRO11 GRAM. 

12 (a) REPORT.—Not later than one year after the date 

13 of the enactment of this Act, the Secretary of Housing 

14 and Urban Development and the President of the Ginnie 

15 Mae shall submit to the appropriate committees of Con16 gress a report on the liquidity of the housing loan program 

17 under chapter 37 of title 38, United States Code, in the 

18 secondary mortgage market, which shall— 

19 (1) assess the loans provided under that chap20 ter that collateralize mortgage-backed securities that 

21 are guaranteed by Ginnie Mae; and 

22 (2) include recommendations for actions that 

23 Ginnie Mae should take to ensure that the liquidity 

24 of that housing loan program is maintained. 

25 (b) DEFINITIONS.—In this section: 


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1 (1) APPROPRIATE COMMITTEES OF CON2 GRESS.—The term ‘‘appropriate committees of Con3 gress’’ means— 

4 (A) the Committee on Veterans’ Affairs 

5 and the Committee on Banking, Housing, and 

6 Urban Affairs of the Senate; and 

7 (B) the Committee on Veterans’ Affairs 

8 and the Committee on Financial Services of the 

9 House of Representatives. 

10 (2) GINNIE MAE.—The term ‘‘Ginnie Mae’’ 

11 means the Government National Mortgage Associa12 tion. 

13 SEC. 5. ANNUAL REPORT ON DOCUMENT DISCLOSURE AND 

14 CONSUMER EDUCATION. 

15 Not less frequently than once each year, the Sec16 retary of Veterans Affairs shall issue a publicly available 

17 report that— 

18 (1) examines, with respect to loans provided to 

19 veterans under chapter 37 of title 38, United States 

20 Code— 

21 (A) the refinancing of fixed-rate mortgage 

22 loans to adjustable rate mortgage loans; 

23 (B) whether veterans are informed of the 

24 risks and disclosures associated with that refi25 nancing; and 


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1 (C) whether advertising materials for that 

2 refinancing are clear and do not contain mis3 leading statements or assertions; and 

4 (2) includes findings based on any complaints 

5 received by veterans and on an ongoing assessment 

6 of the refinancing market by the Secretary. 

Æ 


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