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H.R.1408, Mortgage Servicing Asset Capital Requirements Act of 2015 1 (April 9, 2015)

handle is hein.congrec/cbo2204 and id is 1 raw text is: CONGRESSIONAL BUDGET OFFICE COST ESTIMATE April 9, 2015 H.R. 1408 Mortgage Servicing Asset Capital Requirements Act of 2015 As ordered reported by the House Committee on Financial Services on March, 26, 2015 H.R. 1408 would direct four federal banking agencies-the Federal Reserve, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration (NCUA)-to study the capital requirements for mortgage servicing assets (MSAs). Changes to those requirements, which took effect in 2014 for three of the four agencies, also would be suspended for up to nine months after enactment. (Financial institutions regulated by the NCUA would be subject to similar rules beginning in 2019). Enacting H.R. 1408 would affect direct spending and revenues; therefore, pay-as-you-go procedures apply. However, CBO estimates that the net effect on the federal budget over the next 10 years would not be significant. Banks often sell mortgages in the secondary market while retaining the right to service the loans. Depending on the estimated market value of the servicing contract, a bank may record an asset on its balance sheet. MSAs are treated differently from other assets when calculating regulatory capital (that is, the amount used to determine whether a bank is meeting its capital requirements.) H.R. 1408 would direct the federal banking agencies to jointly study MSAs, including their risk to insured depository institutions, their history, their valuation, and the potential effect of capital requirements on the mortgage servicing business. The agencies would report to the Congress on their findings within six months of enactment. The legislation also would suspend recent changes to the capital requirements related to MSAs until three months after the report is issued. That delay would apply to all banks that are not global systemically important banks as identified by the Financial Stability Oversight Council.

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