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(iv) updating regulations regarding banks' reasonable compliance with ATR and QM underwriting requirements by removing unnecessarily burdensome elements; (v) modernizing the right to rescission for mortgage lending, for example, by enabling increased secure electronic and digital forms and processes; (vi) streamlining the requirements applicable to rate-and-term refinancing under Regulation X mortgage servicing rules; and (vii) exempting rate-and-term refinancing (including cash-out refinancing) from rescission rights. (b) The Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System (Federal Reserve), the Director of the CFPB, the Chairman of the National Credit Union Administration (NCUA) Board, the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC), and the Comptroller of the Currency shall consider, as appropriate and consistent with applicable law, revising supervisory guidance to ensure that: (i) examiners evaluate mortgage lending based on the effectiveness of the lender's policies regarding a consumer's ability to repay and prudent underwriting, rather than the existing focus on process and technical compliance; and (ii) good‑faith, technical compliance errors are subject to correction‑first supervisory treatment, with enforcement reserved for borrower harm or repeated misconduct.
Sec. 3. Modernization of Home Mortgage Disclosure Act (HMDA) Data Collection and Disclosure. (a) The CFPB shall consider, as appropriate and consistent with applicable law, proposing amendments to Regulation C to raise the asset threshold for exemption from HMDA data collection and reporting requirements for smaller banks, to exclude inquiries from the scope of HMDA, and to ensure that disclosures protect privacy and reduce burdens, including insufficiently tailored, expensive, and complex software and training needed for reporting financial institutions.
Sec. 4. Capital and Liquidity Alignment. (a) The Vice Chairman for Supervision of the Federal Reserve, the Chairman of the NCUA Board, the Chairperson of the Board of Directors of the FDIC, the Comptroller of the Currency, and the Director of the Federal Housing Finance Agency (FHFA) shall consider, as appropriate and consistent with applicable law: (i) revising capital regulations, consistent with appropriate risk-management requirements, to tailor risk weights for all banks, including community banks and other smaller banks, for portfolio mortgages, servicing rights, and warehouse lines of credit to the material credit risk of the exposure; (ii) modernizing collateral valuation and transfer systems between the Federal Reserve and Federal Home Loan Banks (FHLBs); (iii) expanding access to longer‑dated FHLB advances tied to residential mortgage assets; (iv) creating targeted FHLB liquidity programs for entry‑level housing, owner‑occupied purchase loans, and small residential builders; (v) accelerating collateral boarding and valuation processes through standardized data and digital documentation; and
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