The House of Representatives recently passed a bill that amends the Truth in Lending Act to say that escrow charges and title charges should not be considered “points and fees” when calculating a mortgage.
The Mortgage Choice Act, sponsored by Rep. Bill Huizenga (R-MI), passed by a vote of 280 to 131. It was co-sponsored by Rep. Gregory Meeks (D-NY).
Huizenga said the bill would help low and moderate income individuals attain a qualified mortgage.
“This legislation is narrowly focused to promote access to affordable mortgage credit without overturning the important consumer protections and sound underwriting required under Dodd-Frank’s ‘ability to repay’ provisions,” Huizenga said. “These common-sense changes will help low and moderate income families as well as first-time homebuyers access affordable mortgage credit and experience the benefits of one-stop shopping by ensuring that safe, properly underwritten mortgages pass the qualified mortgage test.”
Rep. Jeb Hensarling (R-TX), chairman of the Financial Services Committee, said the bill fixes what he called a flawed definition of points and fees.
“The result is that many mortgage loans – particularly those for low and moderate-income borrowers – would not meet the standards of a Qualified Mortgage and thus not get made,” Hensarling said.
It changes the way points and fees are calculated by excluding fees paid for affiliated title charges and escrow charges for insurance and taxes. This change allows more loans to meet the “Qualified Mortgage” standard.
The National Association of Federally Insured Credit Unions voiced its support for the legislation.
“NAFCU thanks Reps. [Bill] Huizenga and [Gregory] Meeks for introducing this legislation to reduce credit unions’ regulatory burden and increase consumer choice in the mortgage market,” NAFCU President and CEO Dan Berger said. “Consumers deserve affordable mortgage options and this bill, by fostering more competition, will help ensure that.
The bill now heads to the Senate for consideration.