MBA Applauds Bill to Clarify QM Points and Fees

Representative Bill Huizenga, (R-MI) has introduced HRrn1077, a bill To amend the Truth in Lending Act to improve upon therndefinitions provided for points and fees in connection with a mortgagerntransaction.  The bill, which hasrnseven bi-partisan sponsors, has been referred to the House Committee onrnFinancial Services.  As yet neither the textrnof the bill nor a summary is available in the Library of Congress/Thomas databasernbut the Mortgage Bankers Association (MBA) has released a statement commendingrnthe legislation.  </p

According to the MBA statement the bill would “modifyrnthe definition of points and fees in the Dodd-Frank Act’s Ability tornRepay/Qualified Mortgage provisions to improve access to affordable mortgagerncredit for qualified borrowers.”</p

Debra W. Still, Chairman MBA said that under the currentrnDodd-Frank rules, loans that have points and fees of more than three percent ofrnthe loan amount cannot qualify as Qualified Mortgages (QM), a definition thatrnallows lenders to meet the ability to repay test.  Loans that are not QM carry greater liabilityrnfor lenders and will thus be more expensive or less available for borrowers,rnshe said.      </p

“Determining a borrower’s ‘ability to repay’ is a critical part ofrnunderwriting a safe and sustainable mortgage, and MBA has worked closely withrnpolicymakers to craft a QM rule that works best for borrowers and lendersrnalike,” said Still.  “In our review of the final rule, we have identifiedrnseveral concerns with the points and fees calculation that have the potentialrnto limit the choices that borrowers have when selecting a mortgage andrnincreasing the costs of getting those mortgages.  This bill goes a longrnway toward addressing those concerns.”   </p

She said that H.R. 1077 would increase choices andrnlower costsrnfor borrowers by modifying the points and feesrncalculation to for a Qualified Mortgage definition.  It would:</p<ul class="unIndentedList"<liAdd fees paid to lender-affiliated title entities to the currentrnexclusion for fees to unaffiliated entities; </li<liPrevent double counting of loan officer compensation;</li<liClarify that amounts held in insurance escrow accounts should notrnbe included in the calculation;</li<liExcludes lender charges necessary to cover Loan Level PricernAdjustments (LLPAs) charged by Fannie Mae and Freddie Mac; and</li<liExcludes lender-paid compensation to a correspondent bank orrnmortgage brokerage in a wholesale transaction.</li

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