Habitat for Humanity seeks Dodd-Frank relief

Habitat for Humanity seeks Dodd-Frank relief
© Getty

Add an unexpected group to the list of critics seeking relief from the Dodd-Frank Wall Street reform law: Habitat for Humanity.

The housing nonprofit is fighting for an exemption from the Dodd-Frank regulation that requires housing appraisers to receive "customary and reasonable" compensation.

ADVERTISEMENT

The regulation was aimed at boosting housing market protection by making sure mortgage companies and banks wouldn't receive faulty financial advice from cheap appraisers.

But Habitat for Humanity — which relies on appraisers who volunteer their services for free — says it's created a regulatory headache for their more than 1,400 U.S. affiliates who fear they're bucking Dodd-Frank in accepting free appraisal services.

"Dodd-Frank reforms were passed with the good intentions of protecting consumers and taxpayers and of stopping predatory lending that targeted lower-income families and contributed to the foreclosure crisis," said Christopher Ptomey, Habitat for Humanity International's director of government relations.

"However, provisions in the law ... created unintended consequences for Habitat for Humanity."

The Consumer Financial Protection Bureau (CFPB) officials signaled to Habitat that they're exempt from the regulation, but the group isn't taking any chances.

Senate Banking Committee Chairman Richard Shelby (R-Ala.) included a provision in his financial overhaul bill that would exempt Habitat from the regulation. Sen. Rob PortmanRobert (Rob) Jones PortmanSherrod Brown asks Trump Fed pick why he referred to Cleveland, Cincinnati as 'armpits of America' Senate Republicans tested on Trump support after Mueller GOP senator wears shirt honoring Otto Warmbier at Korean DMZ MORE (R-Ohio) reintroduced legislation earlier this month aimed at addressing the same issue.

"Common sense," was how Shelby put it. “[It's] one of the many ways that this legislation helps consumers and rightly addresses the unintended consequences of Dodd-Frank."

Even Sen. Sherrod BrownSherrod Campbell BrownOn The Money: Treasury misses second Dem deadline on Trump tax returns | Waters renews calls for impeachment | Dem wants Fed pick to apologize for calling Ohio cities 'armpits of America' | Stocks reach record high after long recovery Sherrod Brown asks Trump Fed pick why he referred to Cleveland, Cincinnati as 'armpits of America' Only four Dem senators have endorsed 2020 candidates MORE (D-Ohio) said the issue "merits further discussion."

But Brown criticized Shelby for including such a provision in his overhaul, which progressives like Brown oppose for other reasons.

"It shouldn't be included in a sweeping package of Wall Street reform rollbacks that would threaten safety, soundness and consumer protection," Brown said. "Opening the door to risky, high-cost mortgages seems to counter Habitat's mission."

Habitat’s Ptomey, however, said the group "greatly appreciates Sen. Shelby's efforts to include protection for donated appraisals."

CFPB officials declined comment for this story but provided a 2014 letter that CFPB assistant director for regulations Kelly Thompson Cochran sent to Habitat officials.

The letter seemingly indicates that appraisers who volunteer their services are not in violation of Dodd-Frank regulations.

"When a state-licensed or certified appraiser voluntarily chooses to donate appraisal services for a consumer credit transaction and to perform an appraisal without receiving a fee," Chochran wrote in the 2014 letter, "we do not believe the appraiser is acting [in the same intent as the regulation]."

Still, the regulatory confusion has drawn criticism from the housing industry.

"The fact that the Consumer Financial Protection Bureau has been unwilling to clarify issues such as this is troubling," the Appraisal Institute, which represents real estate appraisers, wrote in a comment letter to Shelby and Brown on the issue.