A bill modifying the definition of
points and fees under the Truth in Lending Act passed the House of
Representatives yesterday on a voice vote.
HR 3211, the Mortgage Choice Act of 2013, exempts from the Qualified Mortgage
(QA) cap on points and fees any affiliated title charges and escrow charges for
taxes and insurance. The bill was
introduced by Bill Huizenga (R-MI) and Gregory Meeks (D-NY).
The bill specifically exempts fees paid
to businesses affiliated with the lender, such as title companies, from the
computation of points and fees under the QM cap. Fees paid to unaffiliated businesses were
Passage of the bill had been strongly
advocated by the National Association of Federal Credit Unions (NAFCU) and the
Mortgage Bankers Association (MBA) among others and opposed by consumer
advocacy organizations such as the Center for Responsible Lending (CRL) and the
Consumer Federation of America (CFA).
NAFCU vice president of legislative
affairs Brad Thaler sent a letter to House leaders prior to the vote saying the
changes made by the bill "would greatly improve the definition of 'points and
fees' used to determine whether a loan meets the QM test, and would ensure that
those with low and moderate means would continue to be able to obtain their
mortgages from their credit union at a reasonable price."
In a letter sent to members of Congress earlier in the bill's
history, 19 consumer groups including CRL and CFA charged that title insurance fees are grossly
inflated and add $1,000 or more to the upfront
costs of many mortgages. "The approach taken in this bill, which is misleadingly named the Mortgage
Choice Act, leaves the door open for abuses that were typical
in the recent subprime crisis.
During the subprime
lending boom, borrowers
often paid excessive origination costs; Dodd-Frank's Qualified Mortgage provisions aim at restoring
a fair market." The letter said that passage of HR 3211 would
allow lenders to continue to steer borrowers toward title insurance at
David H Stevens, President and
CEO of MBA commended the House for approving the legislation. In a statement on behalf of the Association
Stevens said, "Proper implementation of the ability to repay and QM
requirements is crucial to allowing credit-worthy consumers to purchase or
refinance a home at affordable rates."