[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3299 Referred in Senate (RFS)]
<DOC>
115th CONGRESS
2d Session
H. R. 3299
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 15, 2018
Received; read twice and referred to the Committee on Banking, Housing,
and Urban Affairs
_______________________________________________________________________
AN ACT
To amend the Revised Statutes, the Home Owners' Loan Act, the Federal
Credit Union Act, and the Federal Deposit Insurance Act to require the
rate of interest on certain loans remain unchanged after transfer of
the loan, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Protecting Consumers' Access to
Credit Act of 2017''.
SEC. 2. FINDINGS.
Congress finds that--
(1) the contractual doctrine of valid when made which, as
applied to lending agreements, provides that a loan that is
valid at inception cannot become usurious upon subsequent sale
or transfer to another person;
(2) this important and longstanding principle derives from
the common law and its application has been a cornerstone of
United States banking law for nearly 200 years, as provided in
the case Nichols v. Fearson, 32 U.S. (7 Pet.) 103, 106 (1833),
where the Supreme Court famously declared: ``Yet the rule of
law is everywhere acknowledged, that a contract free from usury
in its inception, shall not be invalidated by any subsequent
usurious transactions upon it.'';
(3) in 2016, the Solicitor General, in consultation with
all Federal banking regulators, filed an amicus brief in the
case of Midland Funding, LLC v. Madden, 136 S. Ct. 2505 (2016)
(mem.), denying cert. to 786 F.3d 246 (2d Cir. 2015), that
described the United States Court of Appeals for the Second
Circuit in that case ``incorrect'' with an ``analysis
reflect[ing] a misunderstanding'' of section 85 of the National
Bank Act and Supreme Court precedent, because it contradicted
the contractual doctrine of valid when made;
(4) the valid-when-made doctrine, by bringing certainty to
the legal treatment of all valid loans that are transferred,
greatly enhances liquidity in the credit markets by widening
the potential pool of loan buyers and reducing the cost of
credit to borrowers at the time of origination;
(5) a joint academic study from professors at Stanford,
Fordham, and Columbia universities concluded that the Madden v.
Midland decision has already disproportionately affected low-
and moderate-income individuals in the United States with lower
FICO scores; and
(6) if the valid-when-made doctrine is not reaffirmed soon
by Congress, the lack of access to safe and affordable
financial services will force households in the United States
with the fewest resources to seek financial products that are
nontransparent, fail to inform consumers about the terms of
credit available, and do not comply with State and Federal laws
(including regulations).
SEC. 3. RATE OF INTEREST AFTER TRANSFER OF LOAN.
(a) Amendment to the Revised Statutes.--Section 5197 of the Revised
Statutes (12 U.S.C. 85) is amended by adding at the end the following:
``A loan that is valid when made as to its maximum rate of interest in
accordance with this section shall remain valid with respect to such
rate regardless of whether the loan is subsequently sold, assigned, or
otherwise transferred to a third party, and may be enforced by such
third party notwithstanding any State law to the contrary.''.
(b) Amendment to the Home Owners' Loan Act.--Section 4(g) of the
Home Owners' Loan Act (12 U.S.C. 1463(g)) is amended by adding at the
end the following:
``(3) A loan that is valid when made as to its maximum rate of
interest in accordance with this subsection shall remain valid with
respect to such rate regardless of whether the loan is subsequently
sold, assigned, or otherwise transferred to a third party, and may be
enforced by such third party notwithstanding any State law to the
contrary.''.
(c) Amendment to the Federal Credit Union Act.--Section 205(g) of
the Federal Credit Union Act (12 U.S.C. 1785(g)) is amended by adding
at the end the following:
``(3) A loan that is valid when made as to its maximum rate of
interest in accordance with this subsection shall remain valid with
respect to such rate regardless of whether the loan is subsequently
sold, assigned, or otherwise transferred to a third party, and may be
enforced by such third party notwithstanding any State law to the
contrary.''.
(d) Amendment to the Federal Deposit Insurance Act.--Section 27 of
the Federal Deposit Insurance Act (12 U.S.C. 1831d) is amended by
adding at the end the following:
``(c) A loan that is valid when made as to its maximum rate of
interest in accordance with this section shall remain valid with
respect to such rate regardless of whether the loan is subsequently
sold, assigned, or otherwise transferred to a third party, and may be
enforced by such third party notwithstanding any State law to the
contrary.''.
SEC. 4. RULE OF CONSTRUCTION.
Nothing in this Act may be construed as limiting the authority or
jurisdiction of the Office of the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the Board of Governors of the
Federal Reserve System, the Bureau of Consumer Financial Protection, or
the National Credit Union Administration.
Passed the House of Representatives February 14, 2018.
Attest:
KAREN L. HAAS,
Clerk.