Bill Seeks to Amend Truth in Lending Act

A bill to amend the Truth in Lending Act to modify the definitions of a mortgage originator and a high-cost mortgage moved to the Senate Banking, Housing, and Urban Affairs Committee on Tuesday. The bill, known as the “Preserving Access to Manufactured Act,” was reintroduced by U.S. Senators Joe Donnelly (D-IN), Pat Toomey (R-PA), Joe Manchin (D-WV), and Tom Cotton (R-AR) and according to the senators the legislation would protect the ability of manufactured home customers to buy, sell, and refinance homes, while maintaining important consumer protections.

“The decision to purchase a home is one of the most significant investments Hoosier families make. We should do everything we can to preserve access to affordable housing, including manufactured housing,” Sen Donnelly said in a press release. “I am grateful Senators Toomey, Manchin, and Cotton are joining me in this bipartisan effort to fix an issue impacting families trying to buy manufactured homes.”

In 2013, the Consumer Financial Protection Bureau (CFPB) issued guidelines to expand the range of loan products that can be considered high-cost mortgages under the Home Ownership and Equity Protection Act (HOEPA). According to the senators, the CFPB guidelines went into effect in January 2014 with the CFPB failing to recognize how unique manufactured home loans can be. After the guidelines were released a large percentage of small-balance loans used for the purchase of affordable manufactured housing were classified as high cost loans. As a result, lender liabilities associated with making and obtaining HOEPA high cost mortgage has increased. This could lead to a loss of credit available to those seeking to purchase manufactured housing.

“Manufactured housing plays an important role in homeownership options, which have unfortunately been constrained by excessive regulations by the CFPB,” Sen. Cotton said. “As we’ve seen, unintended consequences of these regulations have limited the housing and mortgaging choices of hard-working Americans in many rural areas, like my home state of Arkansas. I was proud to support this bill last year on the House Financial Services Committee, and I’m glad to join my colleagues on the Senate Banking Committee in pushing for this small but important measure of regulatory relief.”

According to the senators, the “Preserving Access to Manufactured Housing Act” would help adjust HOEPA thresholds so fewer manufactured home loans are classified as high-cost. Under the HOEPA guidelines, if a transaction is for less than $50,000 and the home is considered personal property, then the interest rate on a mortgage cannot exceed Average Prime Offer Rate (APOR) by more than 8.5 percent or else it is considered ‘high-cost’ and subject to added liability and disclosure. The bill would increase that threshold to APOR by 10 percent for transactions under $75,000.