This bill deals with residential mortgage loans held in a portfolio. It would change the Truth in Lending Act to state that any residential loans held in portfolio by the loan originator automatically attain the qualified mortgage (QM) safe harbor designation.
According to the Mortgage Almanac,
a portfolio lender is a bank or other lending institution that makes mortgage loans with the intention of holding the loans in their investment portfolios. Portfolio lenders can often offer consumers greater flexibility in the loan granting process, as well as down the road, than lenders who make mortgage loans with the intention of selling them - either immediately or at some time during the term.
Today, portfolio lenders are more likely to be smaller community banks-often privately held-that have more discretion in the way they do business than larger, stockholder-driven institutions. These banks can make lending decisions based on the intangibles as well as the tangibles of a transaction. For example, a long term banking relationship with a customer might influence a positive loan decision, even in a situation where there had been a period of poor credit.