Representative Bill Huizenga, (R-MI) has introduced HR
1077, a bill To amend the Truth in Lending Act to improve upon the
definitions provided for points and fees in connection with a mortgage
transaction. The bill, which has
seven bi-partisan sponsors, has been referred to the House Committee on
Financial Services. As yet neither the text
of the bill nor a summary is available in the Library of Congress/Thomas database
but the Mortgage Bankers Association (MBA) has released a statement commending
the legislation.
According to the MBA statement the bill would "modify
the definition of points and fees in the Dodd-Frank Act's Ability to
Repay/Qualified Mortgage provisions to improve access to affordable mortgage
credit for qualified borrowers."
Debra W. Still, Chairman MBA said that under the current
Dodd-Frank rules, loans that have points and fees of more than three percent of
the loan amount cannot qualify as Qualified Mortgages (QM), a definition that
allows lenders to meet the ability to repay test. Loans that are not QM carry greater liability
for lenders and will thus be more expensive or less available for borrowers,
she said.
"Determining a borrower's 'ability to repay' is a critical part of
underwriting a safe and sustainable mortgage, and MBA has worked closely with
policymakers to craft a QM rule that works best for borrowers and lenders
alike," said Still. "In our review of the final rule, we have identified
several concerns with the points and fees calculation that have the potential
to limit the choices that borrowers have when selecting a mortgage and
increasing the costs of getting those mortgages. This bill goes a long
way toward addressing those concerns."
She said that H.R. 1077 would increase choices and
lower costs
for borrowers by modifying the points and fees
calculation to for a Qualified Mortgage definition. It would:
-
Add fees paid to lender-affiliated title entities to the current
exclusion for fees to unaffiliated entities;
-
Prevent double counting of loan officer compensation;
-
Clarify that amounts held in insurance escrow accounts should not
be included in the calculation;
-
Excludes lender charges necessary to cover Loan Level Price
Adjustments (LLPAs) charged by Fannie Mae and Freddie Mac; and
-
Excludes lender-paid compensation to a correspondent bank or
mortgage brokerage in a wholesale transaction.