WASHINGTON — The House voted 303 to 121 on Wednesday to pass a bill that would delay enforcement of new mortgage disclosures that went into effect on Oct. 3.
The Homebuyers Assistance Act would shield lenders from private litigation as well as regulatory enforcement actions during a five-month period.
The legislation attracted significant Democratic support despite a veto threat by President Obama.
"This is a bipartisan bill. It provides security for those who act in good faith in trying to implement the most dramatic changes in our real estate disclosure laws in a decade," said House Financial Services Committee Chairman Jeb Hensarling.
The vote comes after the Consumer Financial Protection Bureau and other banking regulators declined to provide lenders with a formal "hold harmless" implementation period for the new mortgage disclosures. Under the Dodd-Frank Act, the CFPB was required to integrate the disclosures mandated by the Truth-in-Lending Act and the Real Estate Settlement Procedures Act into a single document (known as TRID).
The new disclosures required lenders to overhaul systems, and many lenders warned that they are at risk of making errors even while trying to comply with the new requirements. Regulators said they would take into account good-faith efforts to comply but stopped short of formally promising not to take enforcement actions.
Opponents of the bill claimed it goes too far.
"This bill would waive the enforcement of the CFPB's rule regarding the disclosures that lenders ought to provide to homebuyers," said Rep. Seth Moulton, D-Mass., during floor debate.
"The bill would permanently eliminate a borrower's ability to enforce his or her legal rights if a lender fails to disclosure or obscures important information for all loans originated over the next five months, so long the errors are made in good faith. A term this bill does not define and substantially narrows existing protections afforded under the TILA."
The bill now heads to the Senate for further action, but it faces an uphill battle. The Obama administration issued a veto threat against the bill on Tuesday, arguing it was unnecessary and harmful to consumers.
"The CFPB has already clearly stated that initial examinations will evaluate good faith efforts by lenders," the administration said in an official statement of policy. "The administration strongly opposes H.R. 3192, as it would unnecessarily delay implementation of important consumer protections designed to eradicate opaque lending practices that contribute to risky mortgages, hurt homeowners by removing the private right of action for violations, and undercut the nation’s financial stability."