WASHINGTON -- Prior to leaving office, Sen. Tim Johnson, D-S.D., told the Consumer Financial Protection Bureau that Congress never intended to count compensation paid to mortgage brokerage firms in the 3% points and fees test for "qualified mortgages."
The former Senate Banking Committee chairman noted in a Dec. 21 letter that there was a drafting error in Dodd-Frank Act of 2010 regarding the calculation of points and fees.
"The calculation of points and fees for purposes of determining what was a Qualified Mortgage was not intended to include creditor payments to the loan originator organization (brokerage entities), provided such payments are already included in the rate established and offered by the creditor," Johnson says in the letter to the CFPB.
Mortgage brokers have been claiming for some time that the treatment of brokerage's compensation under the QM rule unfairly penalizes brokers.
"It is appropriate for the CFPB to exercise its authority to correct this error," the senator says in the letter to CFPB director Richard Cordray.
The letter indicates that the CFPB has known about this drafting error for some time. Sen. Johnson did not run for re-election last year.
National Mortgage News received a copy of the letter from a National Association of Mortgage Brokers.
So far, the CFPB has not responded to a request for comment or a request to verify that they received or seen the Dec. 21 letter.
