[House Report 115-528]
[From the U.S. Government Publishing Office]
115th Congress } { Report
HOUSE OF REPRESENTATIVES
2d Session } { 115-528
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HOUSING OPPORTUNITIES MADE EASIER ACT
_______
January 29, 2018.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Hensarling, from the Committee on Financial Services, submitted the
following
R E P O R T
[To accompany H.R. 2255]
[Including cost estimate of the Congressional Budget Office]
The Committee on Financial Services, to whom was referred
the bill (H.R. 2255) to clarify that nonprofit organizations
may accept donated mortgage appraisals, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
Purpose and Summary
Introduced by Representative Trott, H.R. 2255, the
``Housing Opportunities Made Easier Act'' amends the Truth in
Lending Act (TILA) to deem mortgage appraisal services donated
by a fee appraiser to an organization that is eligible to
receive tax-deductible charitable contributions to be customary
and reasonable.
Background and Need for Legislation
Title XIV of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (Dodd Frank Act)(P.L. 111-203), also known as
the Mortgage Reform and Anti-Predatory Lending Act, made a
number of changes to the regulation of property appraisals. The
Dodd-Frank Act set new federal standards for the independence
of appraisers, mandated independence for appraisers, and
created rules for customary and reasonable fees.
Section 1472(i) of the Dodd-Frank Act directed the Bureau
of Consumer Financial Protection (CFPB) to establish reasonable
and customary fees for fee appraisers, professionals who
furnish appraisal services for a fee. The definition of fee
appraiser excludes employees of banks and appraisal management
companies. Under this provision, fee appraisers are to receive
payment that is ``customary and reasonable'' for appraisal
services performed in the market area of the property being
appraised. As the prudential financial regulators seek to
formulate these fees, Title XIV of Dodd-Frank requires them to
consider objective third-party information, such as government
agency fee schedules, academic studies, and independent private
sector surveys. As the prudential regulators collect the
necessary information to formulate customary and reasonable
fees, Section 1472(i) also directs relevant federal agencies\1\
to exclude fees that are connected to assignments ordered by
appraisal management companies. The CFPB promulgated rules to
implement the statute, which went into effect in 2014.\2\
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\1\Term ``agencies'' collectively refers to the Office of
Comptroller of the Currency (OCC), the Federal Reserve Board, the
Federal Deposit Insurance Corporation (FDIC), the National Credit Union
Association (NCUA), the Consumer Financial Protection Bureau (CFPB),
and the Federal Housing Finance Agency (FHFA).
\2\https://www.federalregister.gov/documents/2013/01/31/2013-01384/
disclosure-and-delivery-requirements-for-copies-of-appraisals-and-
other-written-valuations-under-the
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However, the CFPB's use of the terms ``customary'' and
``reasonable'' in its rule created an issue for non-profit
housing organizations, such as Habitat for Humanity, who enlist
individuals and groups in local communities all over the world
to help build or improve dwellings for low-income and
impoverished families. In many cases these organizations
require volunteer labor and monetary donations to complete
projects, help build homes and obtain affordable mortgages. In
2017 alone Habitat for Humanity assisted more than 30 thousand
low-income Americans construct or rehabilitate their dwellings.
This figure could have been substantially higher if
organizations such as Habitat for Humanity were permitted to
receive appraisals at no cost.\3\
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\3\https://www.habitat.org/sites/default/files/annual-report-
FY2017-web.pdf.
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As a result, the CFPB's definition for the cost of
appraisals has hindered certain non-profit housing
organizations' ability to provide cost effective residences for
the needy because the CFPB could interpret appraisal donations
as a violation of the law. With appraisal costs reaching up to
more than $1000 each, Habitat for Humanity has said that the
``provisions in [the Dodd-Frank Act], including appraisal
independence regulations, created unintended consequences for
Habitat for Humanity and other nonprofit organizations
providing responsible homeownership opportunities to families
without access to bank mortgages.''
Hearings
The Committee on Financial Services held a hearing
examining matters relating to H.R. 2255 on April 26, 2017 and
April 28, 2017.
Committee Consideration
The Committee on Financial Services met in open session on
January 17, 2018 and January 18, 2018 and ordered H.R. 2255 to
be reported favorably by a recorded vote of 55 yeas to 0 nays
(Record vote no. FC-139), a quorum being present.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the record votes
on the motion to report legislation and amendments thereto. The
sole recorded vote was on a motion by Chairman Hensarling to
report the bill favorably to the House without amendment. The
motion was agreed to by a recorded vote of 55 yeas to 0 nays
(Record vote no. FC-139), a quorum being present.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Committee Oversight Findings
Pursuant to clause 3(c)(1) of rule XIII of the Rules of the
House of Representatives, the findings and recommendations of
the Committee based on oversight activities under clause
2(b)(1) of rule X of the Rules of the House of Representatives,
are incorporated in the descriptive portions of this report.
Performance Goals and Objectives
Pursuant to clause 3(c)(4) of rule XIII of the Rules of the
House of Representatives, the Committee states that H.R. 2255
will allow mortgage appraisal services donated by a fee
appraiser to an organization that is eligible to receive tax-
deductible charitable contributions to be deemed customary and
reasonable.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the Director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Congressional Budget Office Estimates
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
provided by the Congressional Budget Office pursuant to section
402 of the Congressional Budget Act of 1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, January 26, 2018.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 2255, the HOME
Act.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Stephen
Rabent.
Sincerely,
Keith Hall,
Director.
Enclosure.
H.R. 2255--HOME Act
Under current law, mortgage lenders are required to
compensate property appraisers at a customary and reasonable
rate for performing appraisal services. H.R. 2255 would deem
appraisal services donated to an organization that is eligible
to receive tax-deductible charitable contributions to be
customary and reasonable for purposes of that requirement.
Using information from the Consumer Financial Protection
Bureau (CFPB), CBO estimates that enacting H.R. 2255 would cost
$1 million over the 2018-2020 period for several agencies to
prepare an interagency rule amending their regulations to
reflect the new appraisal requirements.
Costs incurred by the Federal Deposit Insurance
Corporation, the National Credit Union Administration, the
Office of the Comptroller of the Currency, and the Federal
Housing Finance Agency are recorded in the budget as increases
in direct spending. Those agencies are authorized to collect
premiums and fees from the financial institutions they regulate
to fully cover such administrative expenses. The CFPB is
permanently authorized to spend amounts transferred from the
Federal Reserve. Because that activity is not subject to
appropriation, the CFPB's expenditures are recorded in the
budget as direct spending. In total, CBO estimates that
enacting H.R. 2255 would increase net direct spending by less
than $500,000 over the 2018-2020 period.
Costs to the Federal Reserve System reduce remittances to
the Treasury, which are recorded in the budget as revenues. CBO
estimates that enacting H.R. 2255 would decrease such revenues
by less than $500,000 over the 2018-2020 period.
The net effect on the deficit would be insignificant.
Because enacting H.R. 2255 would affect direct spending and
revenues, pay-as-you-go procedures apply.
CBO estimates that enacting H.R. 2255 would not
significantly increase net direct spending or on-budget
deficits in any of the four consecutive 10-year periods
beginning in 2028.
H.R. 2255 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act.
The CBO staff contact for this estimate is Stephen Rabent.
The estimate was approved by H. Samuel Papenfuss, Deputy
Assistant Director for Budget Analysis.
Federal Mandates Statement
This information is provided in accordance with section 423
of the Unfunded Mandates Reform Act of 1995.
The Committee has determined that the bill does not contain
Federal mandates on the private sector. The Committee has
determined that the bill does not impose a Federal
intergovernmental mandate on State, local, or tribal
governments.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act were created by this
legislation.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of the section
102(b)(3) of the Congressional Accountability Act.
Earmark Identification
With respect to clause 9 of rule XXI of the Rules of the
House of Representatives, the Committee has carefully reviewed
the provisions of the bill and states that the provisions of
the bill do not contain any congressional earmarks, limited tax
benefits, or limited tariff benefits within the meaning of the
rule.
Duplication of Federal Programs
In compliance with clause 3(c)(5) of rule XIII of the Rules
of the House of Representatives, the Committee states that no
provision of the bill establishes or reauthorizes: (1) a
program of the Federal Government known to be duplicative of
another Federal program; (2) a program included in any report
from the Government Accountability Office to Congress pursuant
to section 21 of Public Law 111-139; or (3) a program related
to a program identified in the most recent Catalog of Federal
Domestic Assistance, published pursuant to the Federal Program
Information Act (Pub. L. No. 95-220, as amended by Pub. L. No.
98-169).
Disclosure of Directed Rulemaking
Pursuant to section 3(i) of H. Res. 5, (115th Congress),
the following statement is made concerning directed
rulemakings: The Committee estimates that the bill requires no
directed rulemakings within the meaning of such section.
Section-by-Section Analysis of the Legislation
Section 1. Short title
This section cites H.R. 2255 as the ``Housing Opportunities
Made Easier Act'' or the ``HOME Act''.
Section 2. Exemption from Truth in Lending Act
This section amends the Truth in Lending Act (TILA) to
allow mortgage appraisal services donated by fee appraisers to
an organization that is eligible to receive tax-deductible
charitable contributions as defined by Section 170(c)(2) of the
Internal Revenue Code of 1986, be deemed customary and
reasonable.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 129E OF THE TRUTH IN LENDING ACT
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Sec. 129E. Appraisal independence requirements
(a) In General.--It shall be unlawful, in extending credit or
in providing any services for a consumer credit transaction
secured by the principal dwelling of the consumer, to engage in
any act or practice that violates appraisal independence as
described in or pursuant to regulations prescribed under this
section.
(b) Appraisal Independence.--For purposes of subsection (a),
acts or practices that violate appraisal independence shall
include--
(1) any appraisal of a property offered as security
for repayment of the consumer credit transaction that
is conducted in connection with such transaction in
which a person with an interest in the underlying
transaction compensates, coerces, extorts, colludes,
instructs, induces, bribes, or intimidates a person,
appraisal management company, firm, or other entity
conducting or involved in an appraisal, or attempts, to
compensate, coerce, extort, collude, instruct, induce,
bribe, or intimidate such a person, for the purpose of
causing the appraised value assigned, under the
appraisal, to the property to be based on any factor
other than the independent judgment of the appraiser;
(2) mischaracterizing, or suborning any
mischaracterization of, the appraised value of the
property securing the extension of the credit;
(3) seeking to influence an appraiser or otherwise to
encourage a targeted value in order to facilitate the
making or pricing of the transaction; and
(4) withholding or threatening to withhold timely
payment for an appraisal report or for appraisal
services rendered when the appraisal report or services
are provided for in accordance with the contract
between the parties.
(c) Exceptions.--The requirements of subsection (b) shall not
be construed as prohibiting a mortgage lender, mortgage broker,
mortgage banker, real estate broker, appraisal management
company, employee of an appraisal management company, consumer,
or any other person with an interest in a real estate
transaction from asking an appraiser to undertake 1 or more of
the following:
(1) Consider additional, appropriate property
information, including the consideration of additional
comparable properties to make or support an appraisal.
(2) Provide further detail, substantiation, or
explanation for the appraiser's value conclusion.
(3) Correct errors in the appraisal report.
(d) Prohibitions on Conflicts of Interest.--No certified or
licensed appraiser conducting, and no appraisal management
company procuring or facilitating, an appraisal in connection
with a consumer credit transaction secured by the principal
dwelling of a consumer may have a direct or indirect interest,
financial or otherwise, in the property or transaction
involving the appraisal.
(e) Mandatory Reporting.--Any mortgage lender, mortgage
broker, mortgage banker, real estate broker, appraisal
management company, employee of an appraisal management
company, or any other person involved in a real estate
transaction involving an appraisal in connection with a
consumer credit transaction secured by the principal dwelling
of a consumer who has a reasonable basis to believe an
appraiser is failing to comply with the Uniform Standards of
Professional Appraisal Practice, is violating applicable laws,
or is otherwise engaging in unethical or unprofessional
conduct, shall refer the matter to the applicable State
appraiser certifying and licensing agency.
(f) No Extension of Credit.--In connection with a consumer
credit transaction secured by a consumer's principal dwelling,
a creditor who knows, at or before loan consummation, of a
violation of the appraisal independence standards established
in subsections (b) or (d) shall not extend credit based on such
appraisal unless the creditor documents that the creditor has
acted with reasonable diligence to determine that the appraisal
does not materially misstate or misrepresent the value of such
dwelling.
(g) Rules and Interpretive Guidelines.--
(1) In general.--Except as provided under paragraph
(2), the Board, the Comptroller of the Currency, the
Federal Deposit Insurance Corporation, the National
Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau may jointly issue rules,
interpretive guidelines, and general statements of
policy with respect to acts or practices that violate
appraisal independence in the provision of mortgage
lending services for a consumer credit transaction
secured by the principal dwelling of the consumer and
mortgage brokerage services for such a transaction,
within the meaning of subsections (a), (b), (c), (d),
(e), (f), (h), and (i).
(2) Interim final regulations.--The Board shall, for
purposes of this section, prescribe interim final
regulations no later than 90 days after the date of
enactment of this section defining with specificity
acts or practices that violate appraisal independence
in the provision of mortgage lending services for a
consumer credit transaction secured by the principal
dwelling of the consumer or mortgage brokerage services
for such a transaction and defining any terms in this
section or such regulations. Rules prescribed by the
Board under this paragraph shall be deemed to be rules
prescribed by the agencies jointly under paragraph (1).
(h) Appraisal Report Portability.--Consistent with the
requirements of this section, the Board, the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, the
National Credit Union Administration Board, the Federal Housing
Finance Agency, and the Bureau may jointly issue regulations
that address the issue of appraisal report portability,
including regulations that ensure the portability of the
appraisal report between lenders for a consumer credit
transaction secured by a 1-4 unit single family residence that
is the principal dwelling of the consumer, or mortgage
brokerage services for such a transaction.
(i) Customary and Reasonable Fee.--
(1) In general.--Lenders and their agents shall
compensate fee appraisers at a rate that is customary
and reasonable for appraisal services performed in the
market area of the property being appraised. Evidence
for such fees may be established by objective third-
party information, such as government agency fee
schedules, academic studies, and independent private
sector surveys. Fee studies shall exclude assignments
ordered by known appraisal management companies.
(2) Fee appraiser definition.--For purposes of this
section, the term ``fee appraiser'' means a person who
is not an employee of the mortgage loan originator or
appraisal management company engaging the appraiser and
is--
(A) a State licensed or certified appraiser
who receives a fee for performing an appraisal
and certifies that the appraisal has been
prepared in accordance with the Uniform
Standards of Professional Appraisal Practice;
or
(B) a company not subject to the requirements
of section 1124 of the Financial Institutions
Reform, Recovery, and Enforcement Act of 1989
(12 U.S.C. 3331 et seq.) that utilizes the
services of State licensed or certified
appraisers and receives a fee for performing
appraisals in accordance with the Uniform
Standards of Professional Appraisal Practice.
(3) Exception for complex assignments.--In the case
of an appraisal involving a complex assignment, the
customary and reasonable fee may reflect the increased
time, difficulty, and scope of the work required for
such an appraisal and include an amount over and above
the customary and reasonable fee for non-complex
assignments.
(4) Rule of construction related to appraisal
donations.--For purposes of paragraph (1), if a fee
appraiser voluntarily donates appraisal services to an
organization described in section 170(c)(2) of the
Internal Revenue Code of 1986, such voluntary donation
shall be deemed customary and reasonable.
(j) Sunset.--Effective on the date the interim final
regulations are promulgated pursuant to subsection (g), the
Home Valuation Code of Conduct announced by the Federal Housing
Finance Agency on December 23, 2008, shall have no force or
effect.
(k) Penalties.--
(1) First violation.--In addition to the enforcement
provisions referred to in section 130, each person who
violates this section shall forfeit and pay a civil
penalty of not more than $10,000 for each day any such
violation continues.
(2) Subsequent violations.--In the case of any person
on whom a civil penalty has been imposed under
paragraph (1), paragraph (1) shall be applied by
substituting ``$20,000'' for ``$10,000'' with respect
to all subsequent violations.
(3) Assessment.--The agency referred to in subsection
(a) or (c) of section 108 with respect to any person
described in paragraph (1) shall assess any penalty
under this subsection to which such person is subject.
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