How the new housing bill could make it easier to get a mortgage

The landmark housing bill winding its way through Congress could change the banking system and make it easier for small banks to return to mortgage lending.The House and Senate announced a compromise for the 21st Century Road to Housing Act this week, just days before the average rate on 30-year fixed home loans decreased to 6.47%, according to Freddie Mac.The lawmakers have settled on 45 provisions across 381 pages with major implications for housing.This comes after months of wrangling for a bill that ultimately ends up with all sides meeting in the middle.Rep. French Hill (R-Arkansas), chair of the House Financial Services Committee, said a late compromise on the bill involved settling on some bank deregulation provisions favored by the House.“I appreciate the Senate including a three-year sunset on the [Community Development Block Grant Disaster Recovery] program and adopting key House priorities including nine community banking bills and the House’s language limiting institutional investors from outcompeting American families in the housing market,” he said.In the end, nine of 12 House banking provisions made it into the final bill.

Many of these consider the current state of banking, especially as smaller banks have reduced their roles in the market.Explains Realtor.com senior economist Joel Berner, small banks are a rarer sight in mortgage lending these days, thanks in part to stringent compliance rules imposed following the Great Recession.“They don’t have the armies of compliance officers that large banks do.Similarly, technological capabilities are easier to wield at a larger scale,” Berner said.

The infrastructure required to process a loan application in hours is expensive, so larger players tend to dominate the space.Morning Report delivers the latest news, videos, photos and more.

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