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House Passes Measure to Assist the Underbanked

The House Financial Services Committee has passed seven bipartisan bills related to the financial services industry, two directly tied to housing finance, The Homebuyer Assistance Act (HR 3008) and The Financial Inclusion in Banking Act (HR 1711).

HR 1711, a bipartisan bill led by Rep. David Scott, seeks to empower the Office of Community Affairs within the Consumer Financial Protection Bureau (CFPB) to lead coordination with other agencies to research obstacles to accessible banking resources and identify best practices to increase consumer participation in underinvested communities.

“For too long the federal government has turned a blind eye to the hardships faced by unbanked consumers, many of whom have been systemically locked out of participation in our banking system,” said Rep. Scott. “From exorbitant fees charged to cash each paycheck to the false choices offered by predatory lenders, unbanked consumers are routinely left to depend on exploitative services that tend to take money away from the people who can least afford it. The Financial Inclusion in Banking Act will begin the work to identify and advance solutions needed to close the longstanding gaps in banking access for underinvested groups and ensure every American has a fair shot at the opportunity, capacity and resources needed to build wealth and achieve financial stability.”

The Financial Inclusion in Banking Act would direct the CFPB’s Office of Community Affairs to:

  • Conduct research identifying hurdles under- and un-banked consumers face when maintaining a sustainable relationship with depository institutions.
  • Lead coordination within the CFPB, with trade associations, consumer groups, civil rights groups, and with other federal agencies and departments in assessing factors impeding financial inclusion.
  • Identify strategies to increase financial education.
  • Submit a report to Congress every two years highlighting legislative and regulatory recommendations to promote participation in the traditional banking system.

HR 3008, sponsored by Rep. Brad Sherman, Chair of the House Subcommittee on Investor Protection and Capital Markets, and Rep. Van Taylor, makes it easier for homebuyers to purchase a home with a Federal Housing Administration (FHA) mortgage. The Homebuyer Assistance Act of 2021 would reduce a number of hurdles which appraisers currently face before they are allowed to perform appraisals for home purchases financed by an FHA mortgage. Federal standards set for FHA appraisers would be brought in line with the federal minimum requirements already in place for other home mortgages, particularly those purchased by Fannie Mae and Freddie Mac.

“The process of purchasing a home is already difficult enough for first-time, low-income, and minority homebuyers. They do not need the added challenge of finding a certified appraiser,” said Rep. Sherman. “This legislation is a commonsense revision to current appraisal requirements which will make FHA mortgages accessible to more Americans.”

The Homebuyer Assistance Act would help address the current shortage of certified appraisers that some parts of the country are currently facing. In response to a 2017 survey, nearly 75% of appraisers cited regulatory burdens as a leading reason they would leave the field. Moreover, this lack of appraisers for FHA-insured mortgages has a disproportionately large impact on first-time homebuyers, low- and moderate-income households, and people of color. More than 83% of FHA mortgages for the purchase of a home in 2020 were obtained by first-time homebuyers and over one third of all FHA loans were obtained by minority households.

About Author: Eric C. Peck

Eric C. Peck has 20-plus years’ experience covering the mortgage industry, he most recently served as Editor-in-Chief for The Mortgage Press and National Mortgage Professional Magazine. Peck graduated from the New York Institute of Technology where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career with Videography Magazine before landing in the mortgage space. Peck has edited three published books and has served as Copy Editor for Entrepreneur.com.
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