MBA, Trade Groups Urge Passage of TILA/QM Adjustment Bill
The Mortgage Bankers Association and nearly a dozen industry trade groups called on the House to pass a pending bill that would provide consumers with greater choice in mortgage and settlement services.
H.R. 1153, the Mortgage Choice Act (https://www.congress.gov/bill/115th-congress/house-bill/1153), is set for consideration by the House. The bill would make two adjustments to the Truth in Lending Act definition of points and fees to ensure greater consumer choice in mortgage and settlement services under the Ability to Repay/Qualified Mortgage rule. An identical bill passed the House with greater than two-thirds vote in the last Congress.
The bipartisan bill is sponsored by Reps. Bill Huizenga, R-Mich.; Gregory Meeks, D-N.Y.; Ed Royce, R-Calif.; David Scott, D-Ga.; Steve Stivers, R-Ohio; Mike Doyle, D-Pa.; and David Joyce, R-Ohio.
The letter points out the QM rule sets the standard for consumer mortgages by providing significant compliance certainty to loans that do not have risky features and meet strict federal requirements. A key requirement is that points and fees for a QM may not exceed 3 percent of the loan amount. The problem arises from under current law and rules, what constitutes a “fee” or a “point” towards the points and fees cap varies greatly depending upon who is making the loan and what arrangements are made by consumers to obtain title insurance.
For example, if the consumer chooses a title insurance provider affiliated with the lender, the title insurance charges count, but if the insurance is purchased from an unaffiliated title agency, the title charges do not count. In addition, escrowed homeowners insurance premiums may count as “points and fees” due to ambiguous drafting in the law.
“The inclusion of either title insurance or escrowed homeowners’ premiums has caused many loans, especially those for low- and moderate-income consumers, to fail the QM test in situations where the consumer elected to use one stop-shopping,” the letter noted. “As a result, many otherwise qualified borrowers could not avail themselves of in house services and/or may have received a higher interest rate.”
H.R. 1153, the letter said, “endeavors to restore a full and open competitive market by clarifying the definition of fees and points. In doing so, the legislation will ensure consumers more choices in credit providers and settlement service options.”
Joining MBA in the letter: the Consumer Mortgage Coalition; Credit Union National Association; the Housing Policy Council of the Financial Services Roundtable; Leading Builders of America; Leading Real Estate Companies of the World; the National Association of Federally Insured Credit Unions; the National Association of Home Builders; The National Association of Realtors; Real Estate Services Providers Council, Inc.; and The Realty Alliance.
