QM Bill Introduced to Fix 3% Points and Fees Cap
Industry groups are backing a newly introduced bill that clarifies the 3% cap on points and fees in the qualified mortgage rule so that more loans will be able to meet the QM requirements.
The bill, sponsored by Reps. Bill Huizenga, R-Mich., and David Scott, D-Ga., would avoid double counting of lender-paid compensation in mortgage brokerage transactions and exclude fees paid to lender-affiliated title companies from the 3% cap.
The Consumer Mortgage Choice Act also addresses other issues industry groups have with the QM rule recently issued by the Consumer Financial Protection Bureau. The National Association of Realtors and Mortgage Bankers Association are supporting the Huizenga-Scott bill (H.R. 1077).
“In our review of the final rule, we have identified several concerns with the points and fees calculation that have the potential to limit the choices that borrowers have when selecting a mortgage and increasing the costs of getting those mortgages. This bill goes a long way toward addressing those concerns,” said MBA chairman Debra Still.
H.R. 1077 also removes loan-level price adjustments that Fannie Mae and Freddie Mac charge on loans from the 3% cap.
QM loans are expected to be the safest and least expensive that creditworthy borrowers can get. Lenders are expected to determine the borrower’s ability to repay the loan before approving a loan. And points and fees on a QM cannot exceed 3% of the loan amount.
Industry groups contend the current CFPB definition of points and fees could make hundreds of thousands of borrowers ineligible for QM loans.
CFPB officials could not be reached for comment.