CLEARR Act of 2015

To provide regulatory relief to community financial institutions, and for other purposes. 1. Short title This Act may be cited as the Community Lending Enhancement and Regulatory Relief Act of 2015 CLEARR Act of 2015 2. 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 (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 section, shall not be required to provide an annual disclosure under this section until such time as the financial institution fails to comply with any criteria described in paragraph (1) or (2). . 3. Community bank mortgage servicing asset capital requirements study (a) Definitions For purposes of this section: (1) Banking institution The term banking institution (2) Basel III capital requirements The term Basel III capital requirements (3) Federal banking agencies The term Federal banking agencies (4) Mortgage servicing asset The term mortgage servicing asset (5) NCUA capital requirements The term NCUA capital requirements Risk-Based Capital (6) Nonsystemic banking institution The term nonsystemic banking institution global systemically important bank (7) Other definitions (A) Banking definitions The terms bank holding company insured depository institution savings and loan holding company 12 U.S.C. 1813 (B) Credit union definitions The terms Federal credit union State credit union 12 U.S.C. 1752 (b) Study of the appropriate capital for mortgage servicing assets (1) In general The Federal banking agencies shall, jointly, conduct a study of the appropriate capital requirements for mortgage servicing assets for nonsystemic banking institutions. (2) Issues To be studied The study required by this subsection shall include, with a specific focus on nonsystemic banking institutions— (A) the risk to banking institutions of holding mortgage servicing assets; (B) the history of the market for mortgage servicing assets, including particularly the market for such assets in the period of the financial crisis; (C) the ability of banking institutions to establish a value for their mortgage servicing assets through periodic sales or other means; (D) regulatory approaches to mortgage servicing assets in addition to capital requirements that could be used to address concerns about the value of and ability to sell mortgage servicing assets; (E) the impact of imposing the Basel III capital requirements and the NCUA capital requirements on nonsystemic banking institutions on their ability to compete in the mortgage servicing business, including the need for economies of scale to compete in that business, and on their ability to provide service to consumers to whom they have made a mortgage loan; (F) an analysis of what the mortgage servicing marketplace would look like if the Basel III capital requirements and the NCUA capital requirements on mortgage servicing assets were fully implemented; (G) the significance of problems with mortgage servicing assets, if any, in banking institution failures and problem banking institutions, including specifically identifying failed banking institutions where mortgage servicing assets contributed to the failure; and (H) an analysis of the relevance of the Basel III capital requirements and the NCUA capital requirements on mortgage servicing assets to the banking systems of other significant developed countries. (3) Report to Congress Not later than the end of the 1-year period beginning on the date of the enactment of this Act, the Federal banking agencies shall issue a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives containing— (A) the results of the study required under paragraph (1); and (B) any analysis on the specific issue of mortgage servicing assets undertaken by the Federal banking agencies prior to finalizing regulations implementing the Basel III capital requirements and the NCUA capital requirements. (c) Delay of rulemaking (1) Rules on mortgage servicing assets Notwithstanding any other provision of law, no regulation to implement the Basel III capital requirements or the NCUA capital requirements with respect to mortgage servicing assets for nonsystemic banking institutions shall take effect before the end of the 6-month period beginning on the date the report is issued under subsection (b)(3). (2) Final rule requirements Before any final rule is issued by a Federal banking agency with respect to capital requirements on mortgage servicing assets for nonsystemic banking institutions, the Federal banking agency shall— (A) if the related proposed rule was issued before the date on which the report is issued under subsection (b)(3), issue a new proposed rule for public comment; and (B) consider regulatory approaches to mortgage servicing assets that could address concerns about the value of and ability to sell mortgage servicing assets. 4. Community Institution Mortgage Relief (a) 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) (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) by striking The Board (1) In general The Board ; and (3) by adding at the end the following new paragraph: (2) Treatment of loans held by smaller creditors The Board 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 $10,000,000,000 or less. . (b) Modification to exemption for small servicers of mortgage loans Section 6 of the Real Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2605 (n) Small Servicer Exemption The Bureau shall, by regulation, provide exemptions to, or adjustments for, the provisions of this section for servicers that annually service 20,000 or fewer mortgage loans, in order to reduce regulatory burdens while appropriately balancing consumer protections. . 5. Access to Affordable Mortgages (a) Exemption from property appraisal requirements for lower-Cost dwellings Section 129H of the Truth in Lending Act ( 15 U.S.C. 1639h (g) Exemption for higher-Risk mortgages This section shall not apply to a higher-risk mortgage loan of $250,000 or less if such loan appears on the balance sheet of the creditor of such loan for a period of not less than 3 years. . (b) Exemption from penalties for failure To report appraisers Paragraph (1) of section 129E(k) of the Truth in Lending Act ( 15 U.S.C. 1639e(k)(1) this section , other than subsection (e), (c) Exemption from appraisal standard requirements for lower-Cost dwellings Section 1110 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 3339 (1) by striking Each Federal financial institutions regulatory agency (a) Real estate appraisals in connection with federally related transactions Each Federal financial institutions regulatory agency ; (2) by striking Each such agency or instrumentality (b) Additional standards Each such agency or instrumentality described under subsection (a) ; and (3) by adding at the end the following new subsection: (c) Exception for certain higher-Risk mortgage loans Standards prescribed under this section shall not apply to a real estate appraisal or evaluation conducted in connection with a higher-risk mortgage loan (as defined in section 129H(f) of the Truth in Lending Act ( 15 U.S.C. 1639h(f) . 6. Short form call report and examination cycle (a) In general Section 7(a) of the Federal Deposit Insurance Act ( 12 U.S.C. 1817(a) (12) Short form reporting (A) In general The appropriate Federal banking agencies shall issue regulations allowing for a reduced reporting requirement for covered depository institutions when making the first and third report of condition for a year, as required pursuant to paragraph (3). (B) Covered depository institution defined For purposes of this paragraph, the term covered depository institution (i) has a CAMELS composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating under a comparable rating system) as of the most recent examination of such institution; and (ii) satisfies such other criteria as the appropriate Federal banking agencies determine appropriate. . (b) Longer examination cycle Section 10(d) of the Federal Deposit Insurance Act ( 12 U.S.C. 1820(d) (1) by redesignating paragraphs (5) through (10) as paragraphs (6) through (11), respectively; (2) in each of paragraphs (8) and (9), as so redesignated, by striking paragraph (6) paragraph (7) (3) by inserting after paragraph (4) the following: (5) 24-month rule for certain institutions With respect to an insured depository institution and notwithstanding paragraph (4), paragraphs (1), (2), and (3) shall apply with 24-month 12-month (A) meets the requirements under subparagraphs (B) through (D) of paragraph (4); and (B) is a covered depository institution, as defined under section 7(a)(12)(B). . 7. Coordination among financial institutions Chapter 53 (1) by inserting after section 5332 the following new section: 5333. Coordination among financial institutions (a) In general In the case of an entry received via an automated clearing house, no receiving depository financial institution shall be required to verify that the entry is not a prohibited transaction, if the originating depository financial institution has warranted, pursuant to the automated clearing house rules governing such entry or otherwise, that the originating depository financial institution has complied with the sanctions programs administered by the Office of Foreign Assets Control in connection with such entry. (b) Definitions For purposes of this section: (1) Automated clearing house The term automated clearing house (2) Depository financial institution The term depository financial institution (A) any insured depository institution, as such term is defined under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (B) any depository institution which is eligible to apply to become an insured depository institution under section 5 of the Federal Deposit Insurance Act ( 12 U.S.C. 1815 (C) any insured credit union, as defined in section 101 of the Federal Credit Union Act ( 12 U.S.C. 1752 (D) any credit union which is eligible to apply to become an insured credit union pursuant to section 201 of the Federal Credit Union Act ( 12 U.S.C. 1781 (3) Entry The term entry (4) Originating depository financial institution The term originating depository financial institution (5) Prohibited transaction The term prohibited transaction (6) Receiving depository financial institution The term receiving depository financial institution ; and (2) in the table of contents for such chapter by inserting after the item relating to section 5332 the following new item: 5333. Coordination among financial institutions. . 8. Changes required to small bank holding company policy statement on assessment of financial and managerial factors 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 revise the Small Bank Holding Company Policy Statement on Assessment of Financial and Managerial Factors (12 C.F.R. part 225—appendix C) to raise the consolidated asset threshold under such policy statement from $1,000,000,000 (as adjusted by Public Law 113–250 9. Safe harbor for certain loans held on portfolio (a) In general Section 129C of the Truth in Lending Act ( 15 U.S.C. 1639c (j) Safe harbor for certain loans held on portfolio (1) Safe harbor for creditors that are depository institutions (A) In general A creditor that is a depository institution shall not be subject to suit for failure to comply with subsection (a), (c)(1), or (f)(2) of this section or section 129H with respect to a residential mortgage loan, and the banking regulators shall treat such loan as a qualified mortgage, if— (i) the creditor has, since the origination of the loan, held the loan on the balance sheet of the creditor; and (ii) all prepayment penalties with respect to the loan comply with the limitations described under subsection (c)(3). (B) Exception for certain transfers In the case of a depository institution that transfers a loan originated by that institution to another depository institution by reason of the bankruptcy or failure of the originating depository institution or the purchase of the originating depository institution, the depository institution transferring such loan shall be deemed to have complied with the requirement under subparagraph (A)(i). (2) Safe harbor for mortgage originators A mortgage originator shall not be subject to suit for a violation of section 129B(c)(3)(B) for steering a consumer to a residential mortgage loan if— (A) the creditor of such loan is a depository institution and has informed the mortgage originator that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan; and (B) the mortgage originator informs the consumer that the creditor intends to hold the loan on the balance sheet of the creditor for the life of the loan. (3) Definitions For purposes of this subsection: (A) Banking regulators The term banking regulators (B) Depository institution The term depository institution 12 U.S.C. 505(b)(1) (C) Federal banking agencies The term Federal banking agencies . (b) Rule of construction Nothing in the amendment made by this section may be construed as preventing a balloon loan from qualifying for the safe harbor provided under section 129C(j) of the Truth in Lending Act if the balloon loan otherwise meets all of the requirements under such subsection (j), regardless of whether the balloon loan meets the requirements described under clauses (i) through (iv) of section 129C(b)(2)(E) of such Act.

Summary: Community Lending Enhancement and Regulatory Relief Act of 2015 or the CLEARR Act of 2015 This bill amends the Gramm-Leach-Bliley Act to exempt from its annual privacy policy notice requirement any financial institution which: (1) provides nonpublic personal information only in accordance with specified requirements, and (2) has not changed its policies and practices regarding disclosures of nonpublic personal information from those disclosed in the most recent disclosure sent to consumers. The federal banking agencies are directed to study jointly the appropriate capital requirements for mortgage servicing assets for nonsystemic banking institutions. Mortgage servicing assets are those resulting from contracts to service loans secured by real estate, where such loans are owned by third parties. A nonsystemic banking institution is any banking institution other than one identified by the Financial Stability Board as a global systemically important bank. Any regulatory implementation of either Basel III or National Credit Union Administration capital requirements about mortgage servicing assets for nonsystemic banking institutions is prohibited until six months after a report to Congress on the study. The Truth in Lending Act (TILA) is amended to direct the Board of Governors of the Federal Reserve System (Federal Reserve Board) to exempt from certain escrow or impound requirements a loan secured by a first lien on a consumer's principal dwelling if the loan is held by a creditor with assets of $10 billion or less. The Consumer Financial Protection Bureau must provide either exemptions to or adjustments from the mortgage loan servicing and escrow account administration requirements of the Real Estate Settlement Procedures Act of 1974 for servicers of 20,000 or fewer mortgage loans. The TILA is also amended to exempt from property appraisal requirements a higher-risk mortgage loan of $250,000 or less if it appears on the loan creditor's balance sheet for at least three years. The Federal Deposit Insurance Act is revised to direct federal banking agencies to issue regulations that allow a reduced reporting requirement for depository institutions meeting certain criteria when making the first and third report of condition for a year. If a depository financial institution receives an order to request a funds transfer (entry) via an automated clearing house, it shall not be required to verify that the entry is not a prohibited monetary transaction if the originating depository financial institution has warranted its compliance with the sanctions programs administered by the Office of Foreign Assets Control. The Federal Reserve Board must revise the Small Bank Holding Company Policy Statement on the Assessment of Financial and Managerial Factors to raise its consolidated asset threshold from $1 billion to $5 billion. The TILA is again amended to create a safe harbor from lawsuit for creditors that are depository institutions for any failure to comply with certain requirements with respect to a residential mortgage loan, and the banking regulators are required to treat such a loan as a qualified mortgage, if the creditor has, since the loan's origination, held it on its balance sheet and all prepayment penalties with respect to the loan comply with specified limitations. A safe harbor from lawsuit is also created for mortgage originators for steering a consumer to a residential mortgage loan if: the creditor is a depository institution and has informed the mortgage originator that it intends to hold the loan on its balance sheet for the life of the loan, and the mortgage originator informs the consumer that the creditor intends to do so.