CLEARR Act of 2017

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 2017 CLEARR Act of 2017 2. 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 conforming the margins accordingly); (2) by striking The Board (1) In general The Bureau ; and (3) by adding at the end the following new paragraph: (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 principal dwelling, if such loan is held by a creditor with assets of $50,000,000,000 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 30,000 or fewer mortgage loans, in order to reduce regulatory burdens while appropriately balancing consumer protections. . 3. 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 certain mortgages The Bureau, the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the National Credit Union Administration Board, and the Federal Housing Finance Agency shall exempt, by rule, a mortgage loan of $250,000 or less from the requirements of this section 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 and the Resolution Trust Corporation (a) Real estate appraisals in connection with federally related transactions Each Federal financial institutions regulatory agency ; (2) by striking each such agency or instrumentality each such agency (3) in the flush left matter following paragraph (3), by striking Each such agency or instrumentality (b) Additional standards Each such agency described under subsection (a) ; and (4) by adding at the end the following new subsection: (c) Exemption for certain mortgage loans Each such agency described under subsection (a) shall exempt, by rule, a real estate appraisal or evaluation conducted in connection with a mortgage loan of $250,000 or less from the standards prescribed under this section, if such loan appears on the balance sheet of the creditor of such loan for a period of not less than 3 years. . 4. 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 5. Capital requirements for mortgage servicing assets (a) Repeal of Basel III regulations Not later than the end of the 60-day period beginning on the date of the enactment of this Act, each Federal banking agency shall— (1) repeal all regulations issued by the agency to implement the Basel III capital requirements or the NCUA capital requirements, as applicable, on mortgage servicing assets; and (2) revive or restore any regulation repealed or revised by a regulation described under paragraph (1). (b) New regulations Before any final regulation is issued by a Federal banking agency with respect to capital requirements on mortgage servicing assets, the Federal banking agency shall— (1) issue a new proposed rule for public comment; (2) submit to Congress a notification of the proposed rule and an explanation for the proposed rule; and (3) consider— (A) the history of the market for mortgage servicing assets, including particularly the market for such assets in the period of the financial crisis; (B) the impact on consumer access to mortgage lending and mortgage servicing; and (C) competition in the mortgage servicing market, including analysis of the role community and mid-sized financial institutions play in the mortgage servicing market. (c) Definitions For purposes of this section: (1) Basel III capital requirements The term Basel III capital requirements (2) Federal banking agency The term Federal banking agency (3) Mortgage servicing asset The term mortgage servicing asset (4) NCUA capital requirements The term NCUA capital requirements Risk-Based Capital 6. Bureau Authority Over Unfair and Deceptive Acts or Practices (a) In general Section 1031 of the Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5531 (1) in the heading of such section, by striking , deceptive, or abusive or deceptive (2) in subsection (a)— (A) by striking , deceptive, or abusive or deceptive (B) by adding at the end the following: The Bureau may not take any action described under this subsection against a covered person or service provider unless the Bureau first consults the covered person or service provider’s primary financial regulatory agency, if any. (3) in subsection (b)— (A) by striking , deceptive, or abusive or deceptive (B) by inserting at the end the following: In prescribing any rule under this subsection, the Bureau shall comply with the requirements of section 18 of the Federal Trade Commission Act ( 15 U.S.C. 57a (4) by striking subsection (d); and (5) by redesignating subsections (e) and (f) as subsections (d) and (e), respectively. (b) Conforming amendments (1) Consumer financial protection act of 2010 The Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5481 (A) by striking , deceptive, and abusive and deceptive (B) by striking , deceptive, or abusive or deceptive (2) Dodd-frank wall street reform and consumer protection act The table of contents in section 1(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is amended, in the item relating to section 1031, by striking , deceptive, or abusive or deceptive (3) Omnibus appropriations act, 2009 Section 626(a)(1) of the Omnibus Appropriations Act, 2009 ( 15 U.S.C. 1638 , deceptive, or abusive or deceptive 7. Amendments to the Equal Credit Opportunity Act and the Fair Housing Act to require intent to discriminate (a) Amendment to Equal Credit Opportunity Act Subsection (a) of section 701 of the Equal Credit Opportunity Act ( 15 U.S.C. 1691(a) intentionally discriminate (b) Amendment to Fair Housing Act The Fair Housing Act ( 42 U.S.C. 3601 (1) in section 804— (A) by inserting intentionally discriminate (B) in subsection (a), by inserting intentionally refuse (C) in subsection (c)— (i) by inserting intentionally make (ii) by inserting intentionally cause (D) in subsection (d), by inserting intentionally represent (E) in subsection (e), by striking induce or attempt intentionally induce or intentionally attempt (2) in section 805, by inserting intentionally discriminate (3) in section 806, by inserting intentionally discriminate 8. Amendments to the Home Mortgage Disclosure Act of 1975 (a) Loan volume threshold Section 304(i) of the Home Mortgage Disclosure Act of 1975 ( 12 U.S.C. 2803(i) (i) Exemption From Certain Disclosure Requirements (1) In general The requirements of subsections (b)(4), (b)(5), and (b)(6) shall not apply with respect to any depository institution described in section 303(2)(A). (2) Closed-end mortgage loans With respect to a depository institution, the requirements of subsections (a) and (b) shall not apply with respect to closed-end mortgage loans if the depository institution originated less than 1,000 closed-end mortgage loans in each of the 2 preceding calendar years. (3) Open-end lines of credit With respect to a depository institution, the requirements of subsections (a) and (b) shall not apply with respect to open-end lines of credit if the depository institution originated less than 2,000 open-end lines of credit in each of the 2 preceding calendar years. . (b) Data points Section 304(b) of the Home Mortgage Disclosure Act of 1975 ( 12 U.S.C. 2803(b) (1) by striking paragraphs (5) and (6); (2) in paragraph (3), by inserting and (3) in paragraph (4), by striking age. 9. Repeal of small business loan collection data (a) Repeal Section 704B of the Equal Credit Opportunity Act ( 15 U.S.C. 1691c–2 (b) Clerical amendment The table of sections for title VII of the Consumer Credit Protection Act is amended by striking the item relating to section 704B. 10. Requirements for deposit account termination requests and orders (a) Termination requests or orders must be material (1) In general An appropriate Federal banking agency may not formally or informally request or order a depository institution to terminate a specific customer account or group of customer accounts or to otherwise restrict or discourage a depository institution from entering into or maintaining a banking relationship with a specific customer or group of customers unless— (A) the agency has a material reason for such request or order; and (B) such reason is not based solely on reputation risk. (2) Treatment of national security threats If an appropriate Federal banking agency believes a specific customer or group of customers is, or is acting as a conduit for, an entity which— (A) poses a threat to national security; (B) is involved in terrorist financing; (C) is an agency of the government of Iran, North Korea, Syria, or any country listed from time to time on the State Sponsors of Terrorism list; (D) is located in, or is subject to the jurisdiction of, any country specified in subparagraph (C); or (E) does business with any entity described in subparagraph (C) or (D), unless the appropriate Federal banking agency determines that the customer or group of customers has used due diligence to avoid doing business with any entity described in subparagraph (C) or (D), such belief shall satisfy the requirement under paragraph (1). (b) Notice requirement (1) In general If an appropriate Federal banking agency formally or informally requests or orders a depository institution to terminate a specific customer account or a group of customer accounts, the agency shall— (A) provide such request or order to the institution in writing; and (B) accompany such request or order with a written justification for why such termination is needed, including any specific laws or regulations the agency believes are being violated by the customer or group of customers, if any. (2) Justification requirement A justification described under paragraph (1)(B) may not be based solely on the reputation risk to the depository institution. (c) Customer notice (1) Notice not required Nothing in this section shall be construed as requiring a depository institution or an appropriate Federal banking agency to inform a customer or customers of the justification for the customer’s account termination described under subsection (b). (2) Notice prohibited in cases of national security If an appropriate Federal banking agency requests or orders a depository institution to terminate a specific customer account or a group of customer accounts based on a belief that the customer or customers pose a threat to national security, neither the depository institution nor the appropriate Federal banking agency may inform the customer or customers of the justification for the customer’s account termination. (d) Reporting requirement Each appropriate Federal banking agency shall issue an annual report to the Congress stating— (1) the aggregate number of specific customer accounts that the agency requested or ordered a depository institution to terminate during the previous year; and (2) the legal authority on which the agency relied in making such requests and orders and the frequency on which the agency relied on each such authority. (e) Definitions For purposes of this section: (1) Appropriate federal banking agency The term appropriate Federal banking agency (A) the appropriate Federal banking agency, as defined under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (B) the National Credit Union Administration, in the case of an insured credit union. (2) Depository institution The term depository institution (A) a depository institution, as defined under section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 (B) an insured credit union. 11. Amendments to civil penalties under FIRREA Section 951 of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ( 12 U.S.C. 1833a (1) in subsection (c)(2), by striking affecting a federally insured financial institution against a federally insured financial institution or by a federally insured financial institution against an unaffiliated third person (2) in subsection (g)— (A) in the header, by striking Subpoenas Investigations (B) by amending paragraph (1)(C) to read as follows: (C) summon witnesses and require the production of any books, papers, correspondence, memoranda, or other records which the Attorney General deems relevant or material to the inquiry, if the Attorney General— (i) requests a court order from a court of competent jurisdiction for such actions and offers specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant and material for conducting an investigation under this section; or (ii) either personally or through delegation no lower than the Deputy Attorney General, issues and signs a subpoena for such actions and such subpoena is supported by specific and articulable facts showing that there are reasonable grounds to believe that the information or testimony sought is relevant for conducting an investigation under this section. . 12. Waiver of waiting period Not later than 120 days after the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue regulations establishing a process to waive the requirement relating to the timing of providing closing disclosures for mortgage loans described under section 1026.19(f)(1)(ii) of title 12, Code of Federal Regulations. 13. Limit on Bureau Supervision The Consumer Financial Protection Act of 2010 ( 12 U.S.C. 5481 (1) in section 1025(a), by striking $10,000,000,000 $50,000,000,000 (2) in section 1026(a), by striking $10,000,000,000 $50,000,000,000 14. Limited exception for reciprocal deposits (a) In general Section 29 of the Federal Deposit Insurance Act ( 12 U.S.C. 1831f (a) Limited exception for reciprocal deposits (1) In general Reciprocal deposits of an insured depository institution shall not be considered to be funds obtained, directly or indirectly, by or through a deposit broker if— (A) when the institution was most recently examined, its composite condition was found to be outstanding or good; or (B) the total amount of such reciprocal deposits does not exceed the lesser of— (i) $10,000,000,000; or (ii) an amount equal to 20 percent of the total liabilities of the insured depository institution. (2) Rule of construction Nothing in this subsection shall be construed to limit the authority of the Corporation to require, on a case-by-case basis, that an agent institution that is less than adequately capitalized (as defined in section 38(b)(1)(B)) not accept particular types of deposits upon finding that the acceptance of such deposits constitutes an unsafe or unsound practice with respect to such institution. (3) Definitions In this subsection: (A) Agent institution The term agent institution (i) is well capitalized (as defined in section 38(b)(1)(A)) or has obtained a waiver pursuant to subsection (c) of this section; or (ii) does not receive an amount of reciprocal deposits that causes the total amount of reciprocal deposits held by the agent institution to be greater than the average of the total amount of reciprocal deposits held by the agent institution on the last day of each of the 4 calendar quarters preceding the calendar quarter in which the agent institution was determined to be not well capitalized. (B) Covered deposit The term covered deposit (i) is submitted for placement through a deposit placement network by an agent institution; and (ii) does not consist of funds that were obtained for the agent institution, directly or indirectly, by or through a deposit broker before submission for placement through a deposit placement network. (C) Deposit placement network The term deposit placement network (D) Network member bank The term network member bank (E) Reciprocal deposits The term reciprocal deposits . (b) Applicability Nothing in this Act shall be construed to limit the application of any provision of the Federal Deposit Insurance Act, other than section 29 of such Act ( 12 U.S.C. 1831f 12 U.S.C. 1813(c) 15. 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 Act 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. 16. Amendments to ability to pay requirements for mortgage loans Section 129C(b)(3) of the Truth in Lending Act ( 15 U.S.C. 1639C(b)(3) (1) by amending subparagraph (A) to read as follows: (A) In general (i) Bureau regulations The Bureau shall prescribe regulations to carry out the purposes of this subsection, except that the Bureau may not prescribe any regulation that addresses modifies any provision of paragraph (2)(A)(iii), or that addresses modifies any rule promulgated by the Federal Housing Finance Agency pursuant to subparagraph (B)(i). Any existing regulation of the Bureau that addresses modifies paragraph (2)(A)(iii) shall have no force or effect as of the date the Federal Housing Finance Agency prescribes a rule pursuant to subparagraph (B)(i)(II). (ii) Federal Housing Finance Agency regulations The Federal Housing Finance Agency shall only prescribe regulations to carry out the purposes of paragraph (2)(A)(iii). The Federal Housing Finance Agency may not prescribe any regulation that addresses modifies any requirement under clause (i), (ii), (iv), (v), (vi), (vii), (viii), or (ix) of paragraph (2)(A), or that addresses modifies any rule promulgated by the Bureau pursuant to clause (i) or subparagraph (B)(i)(I). ; (2) in subparagraph (B)— (A) by striking The Board may (I) Bureau regulations The Bureau may . (B) in subclause (I), as designated by subparagraph (A), by striking compliance with such actions , except that the Bureau may not prescribe any regulation that violates the provisions of subparagraph (A). The Bureau may not eliminate any requirement or add any new requirement under clause (i), (ii), (iv), (v), (vi), (vii), (viii), or (ix) of paragraph (2)(A) unless it does so by prescribing a rule enacted pursuant to the procedures set forth in section 553 of title 5, United States Code (C) in clause (i), by adding at the end the following new subclause: (II) Federal Housing Finance Agency regulations Not later than 180 days after the date of the enactment of this subclause, the Federal Housing Finance Agency shall prescribe regulations to carry out the requirements of paragraph (2)(A)(iii). Notwithstanding the procedures set forth in section 553 of title 5, United States Code, the Federal Housing Finance Agency shall review its promulgated standards under such paragraph at least annually, and shall publish any proposed adjustments to such standards in the Federal Register. The Federal Housing Finance Agency may not eliminate any requirement or add any new requirement under paragraph (2)(A)(iii) unless it does so by prescribing a rule enacted pursuant to the procedures set forth in section 553 of title 5, United States Code. ; and (D) in clause (ii), by striking with the Board with the Bureau with respect to the requirements under clauses (i), (ii), (iv), (v), (vi), (vii), (viii), and (ix) of paragraph (2)(A), and in consultation with the Federal Housing Finance Agency with respect to the requirement under paragraph (2)(A)(iii)

Summary: Community Lending Enhancement and Regulatory Relief Act of 2017 or the CLEARR Act of 2017 This bill exempts small banks from certain mortgage escrow requirements and from mandatory disclosures of loan servicing transfers; exempts small mortgage loans from specified property appraisal requirements; requires federal banking agencies to revise regulations regarding capital requirements for mortgage servicing assets; modifies the authority of the Consumer Financial Protection Bureau (CFPB) over unfair, deceptive, or abusive acts; limits the institutions over which the CFPB has a supervisory role; limits prohibitions on discrimination under the Equal Credit Opportunity Act and the Fair Housing Act to intentional acts; modifies certain mortgage loan recordkeeping and disclosure requirements; limits the authority of a federal banking agency to request or order a deposit institution to terminate a customer account; limits the liability of creditors and mortgage originators for violating certain ability-to-pay requirements; and otherwise modifies provisions related to financial institutions.