2016 Legislative Agenda

State and Federal Issues

Following are issues that the Texas Bankers Association will be watching closely at the state and federal levels.

State issues

Home Equity Lending:

  • After years of resistance, the Texas Association of Realtors, along with lending trade groups and the title insurance industry, have indicated a desire to work on meaningful home equity reform legislation in 2017.
  • Desired changes to be included in the draft legislation include: doing away with the "once a home equity loan, always a home equity loan" rule, which would allow for the seasoned refinance of a home equity loan into a traditional mortgage and, with regards to the 3% fee cap, specifically enumerating the fees imposed by creditors as falling within the cap and any third-party fees falling outside of the cap.

Construction Lending and Lien Law Rewrite:

  • For the past few years, various construction industry groups--Association of General Contractors Texas Building Branch, Texas Construction Association, Associated Builders & Contractors of Texas--have pushed for the complete rewrite of Chapter 53, Property Code, the law governing mechanic's, contractor's and material man's liens. These groups have been unable to arrive at consensus language on this rewrite, but they recently reached out to the lending industry for our support. Due to the complexity of this area of the law, TBA, IBAT, TMBA, the Texas Apartment Associatio, the Texas Association of Builders, the Texas Land Title Association and the Building Owners and Managers Association of Texas declined to offer support or comments on the current working draft until Aug. 15.
  • Similarly, contractors and subcontractors groups continue to push for legislation that would require a lender to notify a project's general contractor in the event of a project owner's default. TBA continues to believe this would lead to a severe curtailment of construction lending by community banks.

Elder Financial Abuse:

  • Both the Speaker of the House and the Lieutenant Governor have issued interim charges on the issue of the financial exploitation of the elderly.
  • Texas banks, which have few tools available to protect elderly customers whom they suspect are being financially exploited, must provide input to lawmakers as they develop statutes designed to protect this abuse.

New Accounts:

  • In 2015, advocates were successful in amending the law governing the Uniform Single-Party Account Selection Form in an effort to make more Texans aware of Payable on Death Accounts.
  • The resulting statute is unnecessarily confusing and unworkable, so additional work must be done on Se. 113.051, Estates Code, to provide banks with statutory guidance that actually helps Texas consumers.

2016 Elections

Federal Issues

Hensarling Dodd-Frank Reform Bill:

If a bank maintains 10% Tier 1 capital and is CAMEL 1 or 2, then the bank receives exemptions from DFA and Basel III. Additionally, the bill would:

  • Repeal FSOC and replace with a new bankruptcy chapter.
  • Replace single CFPB director with bipartisan commission.
  • Place CFPB under Congressional appropriations process.
  • Require CFPB to seek permission before gathering personal information.
  • Enhance SEC penalties for financial fraud.
  • Allow for QM loans held in portfolio, TAILORed regulation based on the size of the bank, appeals of examiner determinations and timely responses after exams.
  • Repeal of Volcker rule.
  • Repeal of Durbin interchange provision.

Other Issues Pending at the Federal Level:

  • Patent troll venue reform.
  • Regulatory relief through the appropriations process.
  • SAFE Act amendments to allow for more mobility for mortgage lenders.
  • Marchant Sub S bills: Increase from 100 to500 shareholders and allow banks organized as LLCs to be treated as a bank under Sec. 581 of the IRC allowing for tax efficiencies similar to Sub S banks.

2016 Presidential Election and the Prospects for Banking Reform