Title: Modernizing Credit Opportunities Act
Policy area: Finance and Financial Sector

Summary:
Modernizing Credit Opportunities Act
This bill provides that an agreement between an insured depository institution and a third-party service provider shall not affect (1) the depository institution's role as lender, or (2) the determination of the location of the depository institution.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4439 Introduced in House (IH)]

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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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Modernizing Credit Opportunities 
Act''.

SEC. 2. FINDINGS.

    Congress finds the following:
            (1) Insured depository institutions have found efficiencies 
        in their lending operations through a variety of different 
        relationships with nondepository institutions that perform 
        different lending-related functions.
            (2) The Federal banking regulators have recognized that 
        insured depository institutions may enter into relationships 
        with third parties to originate loans, have recognized the 
        benefits of these arrangements for institutions and borrowers 
        alike, and have issued guidance to ensure the safety and 
        soundness of such relationships and to protect borrowers.
            (3) Insured depository institutions routinely engage in 
        third-party lending arrangements and regulators have long 
        recognized that third-party lending arrangements provide 
        institutions with the ability to supplement, enhance or 
        expedite lending services for their customers, and that 
        engaging in third-party lending arrangements also enables 
        institutions to reduce the cost of delivering credit products, 
        to expand access to credit, and to achieve strategic goals.
            (4) Litigation concerning loans made by an insured 
        depository institution that involve arrangements with third 
        parties that perform lending-related functions have required 
        the courts to determine the identity and location of the lender 
        but have reached inconsistent results.
            (5) Inconsistencies in the determinations of the identity 
        and location of the lender under judicially crafted multi-
        factor balancing tests lessen the efficiency of the lending 
        process, reduce the transparency of the lending process for 
        both lenders and borrowers, and jeopardize the substantial 
        benefits of third-party lending arrangements for borrowers and 
        the economy.
            (6) In order to maximize efficiency and transparency, it is 
        necessary to clarify and reinforce existing law by codifying 
        clear and straightforward standards that establish that an 
        insured depository institution is the lender on any loan or 
        discount made, or upon any note, bill of exchange or other 
        evidence of debt where it is the party to which the debt is 
        initially owed according to its terms and that any relationship 
        with a third party that performs lending-related functions does 
        not affect the determination of such institution's role as the 
        lender or its location.

SEC. 3. LOCATION OF INSURED DEPOSITORY INSTITUTION.

    (a) Amendment to the Bank Service Company Act.--Section 7 of the 
Bank Service Company Act (12 U.S.C. 1867) is amended--
            (1) by redesignating subsection (d) as subsection (e); and
            (2) by inserting after subsection (c) the following:
    ``(d) Location of Insured Depository Institution.--The geographic 
location within the United States of a person performing services for 
an insured depository institution under subsection (c) or the existence 
of an economic relationship between an insured depository institution 
and another person shall not affect the determination of the location 
of such institution under other applicable law.''.
    (b) Amendment to the Home Owners' Loan Act.--Section 5(d)(7) of the 
Home Owners' Loan Act (12 U.S.C. 1464(d)(7)) is amended--
            (1) by redesignating subparagraph (E) as subparagraph (F); 
        and
            (2) by inserting after subparagraph (D) the following:
                    ``(E) Location of savings association.--The 
                geographic location within the United States of a 
                person performing services for a savings association 
                under subparagraph (D) or the existence of an economic 
                relationship between a savings association and another 
                person shall not affect the determination of the 
                location of the savings association under other 
                applicable law.''.

SEC. 4. TERMS AND CONDITIONS.

    (a) Amendment to the Revised Statutes.--Section 5197 of the Revised 
Statutes (12 U.S.C. 85) is amended by inserting the following after the 
first sentence: ``A loan, discount, note, bill of exchange, or other 
debt is made by an association, and subject to the preceding sentence, 
where the association is the party to which the debt is owed according 
to the terms of the loan, discount, note, bill of exchange, or other 
debt, regardless of any later assignment. The existence of a service or 
economic relationship between an association and another person shall 
not affect the application of this section to the rate of interest upon 
the loan or discount made, or the note, bill, or other evidence of debt 
or the identity of the association as the lender under the 
agreement.''.
    (b) Amendment to the Federal Deposit Insurance Act.--Subsection (a) 
of section 27 of the Federal Deposit Insurance Act (12 U.S.C. 1831d(a)) 
is amended by adding at the end the following: ``A loan, discount, 
note, bill of exchange, or other debt is made by a State bank or an 
insured branch of a foreign bank, and subject to the preceding 
sentence, where a State bank or an insured branch of a foreign bank is 
the party to which the debt is owed according to the terms of the loan, 
discount, note, bill of exchange or other debt, regardless of any later 
assignment. The existence of a service or economic relationship between 
a State bank or insured branch of a foreign bank and another person 
shall not affect the application of this subsection to the interest 
rate upon the loan or discount made, or upon the note, bill of 
exchange, or other evidence of debt or the identity of the State bank 
or insured branch of a foreign bank as the lender under the 
agreement.''.
    (c) Amendment to the Home Owners' Loan Act.--Section 4(g)(1) of the 
Home Owners' Loan Act (12 U.S.C. 1463(g)(1)) is amended by adding at 
the end the following: ``An extension of credit is made by a savings 
association, and subject to the preceding sentence, where a savings 
association is the party to which the debt is owed according to the 
terms of the debt, regardless of any later assignment. The existence of 
a service or economic relationship between a savings association and 
another person shall not affect the application of this subsection to 
the interest rate upon the extension of credit or the identity of the 
savings association as the lender under the agreement.''.
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