Title: Protecting Veterans from Predatory Lending Act of 2018
Policy area: Armed Forces and National Security

Summary:
Protecting Veterans from Predatory Lending Act of 2018
The bill establishes mortgage loan protections for veterans.
A refinanced home loan may not be guaranteed by the Department of Veterans Affairs (VA) unless: (1) a specified minimum time period has passed between the original loan and the refinancing; and (2) the lender complies with provisions related to fee recoupment, mortgage interest rates, and net tangible benefit tests.
The National Housing Act is amended to prohibit the Government National Mortgage Association (Ginnie Mae) from guaranteeing a new refinanced VA loan until the later of: (1) 210 days after the first loan payment, or (2) the sixth monthly loan payment.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 2304 Introduced in Senate (IS)]

<DOC>






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.

    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 ``Protecting Veterans from Predatory 
Lending Act of 2018''.

SEC. 2. PROTECTING VETERANS FROM PREDATORY LENDING.

    (a) In General.--Subchapter I of chapter 37 of title 38, United 
States Code, is amended by adding at the end the following new section:
``Sec. 3709. Refinancing of housing loans
    ``(a) Fee Recoupment.--Notwithstanding section 3703 of this title 
or any other provision of law, a loan to a veteran for a purpose 
specified in section 3710 of this title that is refinanced may not be 
guaranteed or insured under this chapter unless--
            ``(1) the issuer of the refinanced loan provides the 
        Secretary with a certification of the recoupment period for 
        fees, closing costs, and any expenses (other than taxes, 
        amounts held in escrow, and fees paid under this chapter) that 
        would be incurred by the borrower in the refinancing of the 
        loan;
            ``(2) all of the fees and incurred costs are scheduled to 
        be recouped on or before the date that is 36 months after the 
        date of loan issuance; and
            ``(3) the recoupment is calculated through lower regular 
        monthly payments as a result of the refinanced loan.
    ``(b) Net Tangible Benefit Test.--Notwithstanding section 3703 of 
this title or any other provision of law, a loan to a veteran for a 
purpose specified in section 3710 of this title that is refinanced may 
not be guaranteed or insured under this chapter unless--
            ``(1) the issuer of the refinanced loan provides the 
        borrower with a net tangible benefit test;
            ``(2) in a case in which the original loan had a fixed rate 
        mortgage interest rate and the refinanced loan will have a 
        fixed rate mortgage interest rate, the refinanced loan has a 
        mortgage interest rate that is not less than 50 basis points 
        less than the previous loan;
            ``(3) in a case in which the original loan had a fixed rate 
        mortgage interest rate and the refinanced loan will have an 
        adjustable rate mortgage interest rate, the refinanced loan has 
        a mortgage interest rate that is not less than 200 basis points 
        less than the previous loan; and
            ``(4) the lower interest rate is not produced solely from 
        discount points, unless--
                    ``(A) such points are paid at closing; and
                    ``(B) such points are not added to the principal 
                loan amount, unless the resulting loan balance after 
                any fees and expenses allows the property with respect 
                to which the loan was issued to maintain a loan to 
                value ratio of 90 percent or less.
    ``(c) Loan Seasoning.--Notwithstanding section 3703 of this title 
or any other provision of law, a loan to a veteran for a purpose 
specified in section 3710 of this title that is refinanced may not be 
guaranteed or insured under this chapter until the date that is the 
later of--
            ``(1) the date that is 210 days after the date on which the 
        first monthly payment is made on the loan; and
            ``(2) the date on which the sixth monthly payment is made 
        on the loan.''.
    (b) Regulations.--
            (1) In general.--In prescribing any regulation to carry out 
        section 3709 of title 38, United States Code, as added by 
        subsection (a), the Secretary may waive the requirements of 
        sections 551 through 559 of title 5, United States Code, if--
                    (A) the Secretary determines that urgent or 
                compelling circumstances make compliance with such 
                requirements impracticable or contrary to the public 
                interest;
                    (B) the Secretary submits to the Committee on 
                Veterans' Affairs of the Senate and the Committee on 
                Veterans' Affairs of the House of Representatives, and 
                publishes in the Federal Register, notice of such 
                waiver, including a description of the determination 
                made under subparagraph (A); and
                    (C) a period of 10 days elapses following the 
                notification under subparagraph (B).
            (2) Public notice and comment.--If a regulation prescribed 
        pursuant to a waiver made under paragraph (1) is in effect for 
        a period exceeding one year, the Secretary shall provide the 
        public an opportunity for notice and comment regarding such 
        regulation.
            (3) Effective date.--This subsection shall take effect on 
        the date of the enactment of this Act.
            (4) Termination date.--The authorities under this 
        subsection shall terminate on the date that is one year after 
        the date of the enactment of this Act.
    (c) Clerical Amendment.--The table of sections at the beginning of 
chapter 37 of title 38, United States Code, is amended by inserting 
after the item relating to section 3708 the following new item:

``3709. Refinancing of housing loans.''.

SEC. 3. LOAN SEASONING FOR GINNIE MAE MORTGAGE-BACKED SECURITIES.

    Section 306(g)(1) of the National Housing Act (12 U.S.C. 
1721(g)(1)) is amended by inserting ``The Association may not guarantee 
the timely payment of principal and interest on a security that is 
backed by a mortgage insured or guaranteed under chapter 37 of title 
38, United States Code, and that was refinanced until the later of the 
date that is 210 days after the date on which the first monthly payment 
is made on the mortgage being refinanced and the date on which 6 full 
monthly payments have been made on the mortgage.'' after ``Act of 
1992.''.

SEC. 4. REPORT ON LIQUIDITY OF THE DEPARTMENT OF VETERANS AFFAIRS 
              HOUSING LOAN PROGRAM.

    (a) Report.--Not later than one year after the date of the 
enactment of this Act, the Secretary of Housing and Urban Development 
and the President of the Ginnie Mae shall submit to the appropriate 
committees of Congress a report on the liquidity of the housing loan 
program under chapter 37 of title 38, United States Code, in the 
secondary mortgage market, which shall--
            (1) assess the loans provided under that chapter that 
        collateralize mortgage-backed securities that are guaranteed by 
        Ginnie Mae; and
            (2) include recommendations for actions that Ginnie Mae 
        should take to ensure that the liquidity of that housing loan 
        program is maintained.
    (b) Definitions.--In this section:
            (1) Appropriate committees of congress.--The term 
        ``appropriate committees of Congress'' means--
                    (A) the Committee on Veterans' Affairs and the 
                Committee on Banking, Housing, and Urban Affairs of the 
                Senate; and
                    (B) the Committee on Veterans' Affairs and the 
                Committee on Financial Services of the House of 
                Representatives.
            (2) Ginnie mae.--The term ``Ginnie Mae'' means the 
        Government National Mortgage Association.

SEC. 5. ANNUAL REPORT ON DOCUMENT DISCLOSURE AND CONSUMER EDUCATION.

    Not less frequently than once each year, the Secretary of Veterans 
Affairs shall issue a publicly available report that--
            (1) examines, with respect to loans provided to veterans 
        under chapter 37 of title 38, United States Code--
                    (A) the refinancing of fixed-rate mortgage loans to 
                adjustable rate mortgage loans;
                    (B) whether veterans are informed of the risks and 
                disclosures associated with that refinancing; and
                    (C) whether advertising materials for that 
                refinancing are clear and do not contain misleading 
                statements or assertions; and
            (2) includes findings based on any complaints received by 
        veterans and on an ongoing assessment of the refinancing market 
        by the Secretary.
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