II 115th CONGRESS 2d Session S. 2304 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. Short title This Act may be cited as the Protecting Veterans from Predatory Lending Act of 2018 . 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: 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. . 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. . 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. 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.