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FOS Blog

29 Jun

Mortgage Lending Rule Modifications from Passing of Act 2155

Mortgage Lending Rule Modifications from Passing of Act 2155

Act 2155, Economic Growth, Regulatory Relief and Consumer Protection Act, was passed by the United State House of Representative on May 22, 2018.   This Act modifies provisions of the Dodd Frank Act and other various regulations within the financial industry.  The Act includes, but is not limited to, modifications to the Mortgage Lending Rule.  Below is a summary of the original rule and the modifications that are in effect since the passing of Act 2155:

  • Prior to Act 2155 – all banks were subject to the ability-to-repay requirement.
    • One way to comply was by originating a Qualified Mortgage (QM), thus, reducing their potential legal liability for residential mortgage lending activity
  • After Act 2155 was passed – Banks with less than $10 billion in assets, which keep loans in their portfolio, are now exempt from the ability to repay requirement.
    • Whether the borrower will be able to repay the loan is added incentive to lenders who keep loans within their portfolio. Thus, encouraging banks under the asset threshold to still provide additional scrutiny during underwriting.

Modification to the Mortgage Lending Rule is one of several modifications that have occurred since the House passed Act 2155.

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