The Senate on Wednesday confirmed Brian Montgomery as Federal Housing Administration commissioner in a 74-23 vote.
Montgomery, who most recently served as vice chairman of the business advisory firm Collingwood Group, was previously FHA commissioner from 2005 to 2009.
However, Montgomery’s nomination was opposed by several Democrats, including Sens. Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts, over concerns that he is too close to the mortgage industry. Despite his having already run the agency in the George W. Bush administration, Montgomery's nomination had languished since the fall.
His confirmation was lauded by industry groups, including the American Bankers Association and the Community Home Lenders Association.
“Montgomery’s previous experience as FHA commissioner in the Bush administration makes him exceptionally qualified for this role, and we’re pleased that he has chosen to return to public service and bring his knowledge and expertise back to HUD,” said ABA President and CEO Rob Nichols.
CHLA Executive Director Scott Olson urged Montgomery to preserve access to mortgage credit for low- and moderate-income, first-time, and underserved borrowers. “Consistent with the continued strong performance of the FHA single-family loan program, CHLA urges actions to lower premiums and end the life of loan policy, and to complete unfinished business in areas like revising condo rules," Olson said.
The Senate also moved to invoke cloture on Jelena McWilliams’ nomination to head the Federal Deposit Insurance Corp. in a 72-25 vote.
The U.S. House of Representatives on Tuesday passed S.2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), by a vote of 258 to 159. Having passed the U.S. Senate on March 14 by a vote of 67 to 31, the Act now goes to President Donald J. Trump, who is expected to sign it into law. Although the Act does not make the sweeping changes to the Dodd-Frank Act contemplated by other proposals, it nevertheless provides welcome regulatory relief to both smaller and larger financial institutions.
The Act makes a number of changes to provisions of Dodd-Frank and other federal laws regarding consumer mortgages, credit reporting, and loans to veterans and students. It also reduces the regulatory burdens on financial institutions—particularly financial institutions with total assets of less than $10 billion. Bank holding companies with up to $3 billion in total assets would be permitted to comply with less-restrictive debt-to-equity limitations instead of consolidated capital requirements. This change should promote growth by smaller bank holding companies, organically or by acquisition. Larger institutions should benefit from the higher asset thresholds that would apply to systemically important banks subject to enhanced prudential standards. The higher thresholds may lead to increased merger activity between and among regional and super regional banks.
The following is a summary of some of the Act's key provisions applicable to financial institutions:
Improving Consumer Access to Mortgage Credit
As critics of the Senate banking bill have rallied in recent weeks, an important argument has begun to gain traction: The legislation would make it easier for banks to discriminate.
Opponents have pointed to a provision that, at first glance, seems straightforward enough — a carve-out for small lenders from certain mortgage data reporting requirements.
But the debate around this measure is more complicated than many realize. Every policy change comes with both benefits and costs — and this particular fight highlights how difficult weighing those costs and benefits can really be, even when it comes to what can seem like a harmless tweak.
The Senate bill calls for exempting banks and credit unions that provide fewer than 500 mortgages a year from having to report on a series of expanded data points required by the Home Mortgage Disclosure Act.
Among the many provisions in the Senate's extensive regulatory relief bill are a number of changes that will directly affect mortgage lenders and servicers.
The Senate is racing toward a final vote on S.2155, which includes several items that address the mortgage industry's calls for regulatory relief, as well as other calls for relief from post-crisis Dodd-Frank Act restrictions in adjacent financial-services businesses, like credit scoring.
Some of the proposed changes in the legislation sponsored by Banking Committee Chairman Mike Crapo, R-Idaho, target rules that drew broad-based complaints from the mortgage industry. But others address narrower concerns from specific sub-sets of the business, and at least one is not a relief measure, but rather restores an expired post-crisis servicing restriction.
The regulatory relief that the Crapo bill offers is aimed primarily at loosening restrictions on lenders rather than servicers, particularly if they are smaller and are nonbanks or credit unions.
Mick Mulvaney's recasting of the Consumer Financial Protection Bureau marks a new day for the agency, but a substantial part of his authority to unwind rules — particularly on mortgages — was already part of the agency's tool chest before he arrived.
Last summer, the bureau under then-Director Richard Cordray sought comment on the effectiveness of its mortgage underwriting and servicing rules, both issued in 2013. The assessments are part of a Dodd-Frank Act requirement that the agency conduct five-year "look-backs" to tell whether "significant" rules are working out as intended.
Observers said the look-backs will likely aid Mulvaney, appointed as the CFPB's acting director in late November, in his stated plans to ease bureau rules. The assessment process could result in significant changes to the mortgage rules, many said.
"The look-back review gives Mulvaney an opportunity to undo a lot of the legacy of Cordray, and I don't think anyone realizes it," said Ed Mills, a managing director at Raymond James. "This is fertile ground for revising the rules and gives Mulvaney the chance to make more significant changes."
Technically, the CFPB's five-year look-back reviews only require that the bureau issue a request for public comment and a report, and it is basically up to the agency which rules are "significant" enough to get a look-back. So far, rules slated for a look-back are not limited to mortgage policies; for example, the agency launched one in March for its remittance rule.