Sec. 907. Safe harbor for certain loans held in portfolio

462 words·~2 min read·/bill/114/s/2132/pcs/section-907

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Section 129C of the Truth in Lending Act ( 15 U.S.C. 1639c ) is amended by adding at the end the following: In this section— the term appropriate Federal banking agency has the meaning given that term in section 3 of the Federal Deposit Insurance Act ( 12 U.S.C. 1813 ); the term depository institution has the meaning given that term in section 19(b)(1) of the Federal Reserve Act ( 12 U.S.C. 461(b)(1) ); and the term financial institution regulator means an appropriate Federal banking agency, the Bureau, and the National Credit Union Administration.

A creditor 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 financial institution regulators shall treat such loan as a qualified mortgage, if— the creditor has, since the origination of the loan, held the loan on the balance sheet of the creditor; or any person acquiring the loan has continued to hold the loan on the balance sheet of the person; the loan has not been acquired through a securitization; all prepayment penalties with respect to the loan comply with the limitations described in subsection (c)(3); the loan does not have— negative amortization; interest-only features; or a loan term of more than 30 years; and the creditor has documented the consumer’s— income; employment; assets; and credit history.

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 acquiring the loan shall be deemed to have complied with the requirement under subparagraph (A)(i). . Section 18(o) of the Federal Deposit Insurance Act ( 12 U.S.C. 1828(o) ) is amended by adding at the end the following:

The appropriate Federal banking agency shall periodically review the mortgage portfolio or targeted segments of the portfolios of a bank subject to a determination under section 113A(a) of the Financial Stability Act of 2010 if— there is elevated risk; there is an increase in delinquency and loss rates; there are new lines of business; there are new acquisition channels; there is rapid growth; or an internal audit is inadequate. . Nothing in the amendment made by subsection

(a)shall be construed to prevent a balloon loan from qualifying for the safe harbor provided under section 129C(j) of the Truth in Lending Act, as added by subsection (a), if the balloon loan otherwise meets all of the requirements under subsection

(j)of that section, regardless of whether the balloon loan meets the requirements described under clauses

(i)through

(iv)of section 129C(b)(2)(E) of that Act ( 12 U.S.C. 129C(b)(2)(E) ).

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