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12 Ways the Dodd-Frank Reform Bill May Affect Your Institution

Mar 30, 2018 by Brian Arnesen

On Wednesday, March 15th, the Senate passed the Dodd-Frank Reform Bill. While the bill must still be passed by the House and signed by the president, it is expected to pass.It's important to note that the bill may change as it goes through the House. The biggest takeaway from the bill is that institutions will still be required to report HMDA and CRA data to regulators.

Here is a quick rundown of the proposed changes as cited in the Senate’s version of the Dodd-Frank Reform Bill:

  1. HMDA Reporting Threshold Raised

    Banks and credit unions that originate less than 500 open-ended and 500 closed-end mortgages would be exempt from reporting the expanded 25 data fields that were implemented in the Dodd-Frank Act of 2010.

    Unfortunately, non-banks will still have to report the expanded HMDA data fields to the CFPB. Futhermore, regulators can still request the additional HMDA data at anytime from institutions that are under this threshold.

  2. Threshold for Systemically Important Financial institutions

    The SIFI asset threshold would be raised from $50 billion to $250 billion.

  3. Repeal of the Volcker Rule

    A provision would allow institutions with assets less than $10 billion to engage in proprietary trading and investments in hedge and equity funds.

  4. Alternative Credit Scoring

    Would mandate that the Federal Housing Finance Agency review credit-scoring alternative for Fannie and Freddie Mac mortgage purchases.

  5. Manufacture Housing Finance Recommendations

    A provision would allow manufactured housing retailers to give financing recommendations. Previously only employees that were licensed mortgage originators could give advice on loan terms.

  6. Capital Ratios for Custodial Banks

    Would allow funds that are held at a custodial bank and deposited at a central bank to be discounted for capital purposes.

  7. Transitional Loan Officer Licensing

    Loan officers who work at banks won’t need to obtain another license if they transition to a non-bank.

  8. Protecting Tenants at Foreclosure Act

    Mortgage servicers would have to honor tenants and leases even if their landlords default.

  9. Appraisal Waivers for Small Rural Mortgages

    Transactions valued at less than $400,000 in rural areas would not need an appraisal.

  10. Eliminate Escrow Accounts for High-Cost Mortgages

    Lenders with less than $10 billion in assets would no longer be required to have an escrow account in place when they make high-cost mortgages.

  11. Qualified Mortgage Exemption for Large Banks

    Banks with assets of up to $10 billion would no longer have to make qualified mortgages in order to receive safe harbor from ability to repay liability.

    Instead of using the designated underwriting standards for QM, banks and credit unions that agree to retain their mortgages for a set number of years will attain QM status.

  12. Expanded Loan Options for Credit Unions

    Credit union business loans would no longer have to be secured by a primary residence.

While these changes don’t bring the level of deregulation many people had hoped for, it is one of the first recent attempts to reform banking regulations that has received bipartisan support.

You will still be responsible for HMDA and CRA reporting, as well as adhering to fair lending regulations. Make sure you have the right tools to turn compliance into a profit center. Analyze your lending performance with Market Data from QuestSoft to see how you compare to your peers, while discovering new market opportunities.