The Mortgage Bankers Association supports a proposed House Bill that, if enacted, would revamp how points and fees are calculated under the Dodd-Frank Act/Ability-to-Repay Rule.
The bill would allow more loans to qualify as QM mortgages under the ability to repay rule, ensuring more access to affordable credit in the housing market, said MBA Chairperson Debra Still.
Under the Dodd-Frank Act, loans with points and fees exceeding 3% of a loan do not qualify as a “qualified mortgage,” the MBA pointed out in an advisory to the industry.
The end result of this construction is a situation where loans above the 3% point-and-fee threshold lose out on the qualified mortgage designation, making them more expensive due to the extra liabilities attached to them.
But a new proposed bill, titled the Consumer Mortgage Choice Act, was introduced by lawmakers this month to adjust the points and fees calculation, giving more lenders access to the qualified mortgage distinction.
The bill, if passed and enacted, would oust fees paid to lender-affiliated title entities; prevent double counting of loan officer compensation; and exclude amounts held in escrow for mortgage insurance from the calculation along with any lender charges that are necessary to cover loan level price adjustments charged by Fannie and Freddie.
The bill also would exclude any lender-paid compensation to a correspondent bank or mortgage brokerage in a wholesale transaction from the points and fees calculation.
Rep. Bill Huizenga, R-Mich., introduced the bipartisan legislation as H.R. 1077.
The bill is sponsored by the following U.S. Representatives: David Scott (D-GA), Ed Royce (R-CA), William Lacy Clay (D-MO), Steve Stivers (R-OH), Gregory Meeks (D-NY), Spencer Bachus (R-AL) and Gary Peters (D-MI).