Barr Introduces Legislation to Help Homebuyers, Prevent Bailouts

Press Release

Congressman Andy Barr (KY-6) introduced legislation that would ease the regulatory requirements on home loans, so long as the mortgage lender holds the loan on its books rather than selling it into the secondary market. H.R. 1210, the Portfolio Lending and Mortgage Access Act, would relax the overly burdensome, one size fits all Qualified Mortgage Rule imposed by the Consumer Financial Protection Bureau. The bill promotes affordable home financing and discourages the risky practices which led to the 2008 financial crisis and the resulting taxpayer bailouts of Fannie Mae, Freddie Mac, and large systemically important financial institutions.

"The aim of this legislation is simple: banks and credit unions should be given more discretion to originate mortgages as long as they agree to retain the risk of that loan," said Congressman Barr. "This reform would promote responsible lending practices that would help more Kentucky homebuyers qualify for a mortgage, and protect hardworking taxpayers from future bailouts."

The Portfolio Lending and Mortgage Access Act, provides that when a residential mortgage loan is held by the loan originator, it is considered a "Qualified Mortgage" and therefore satisfies the "ability-to-repay" requirement in Dodd-Frank. When a mortgage lender keeps a loan in its portfolio, the lender retains the risk of a borrower's default. This better aligns the interest of the lender to properly underwrite the loan with the borrower's ability to repay it. The result is expanded access to mortgage credit without additional risk to the financial system or the taxpayer.

To date, the legislation has 17 cosponsors and has been endorsed by the American Bankers Association, the Independent Community Bankers of America, and the Kentucky Bankers Association.

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