The Consumer Financial Protection Bureau appears to be moving towards finalizing a restrictive points and fees cap under the qualified mortgage rule, so industry groups are taking their case to Congress in hopes of getting some relief.
The bureau is currently reviewing comment letters on counting compensation a wholesale lender pays a mortgage brokerage firm toward the 3% points and fees cap.
Ballard Spahr partner Richard Andreano expects the bureau will move ahead with that approach despite concerns it could restrict the wholesale/broker channel.
Counting all compensation paid by the wholesaler to the mortgage broker toward the 3% cap would leave little room for other finance charges and fees. As a result many mortgage brokerage transactions would not be QM eligible.
“There is a recognition among some of the regulators that such an approach could strain the broker channel,” Andreano said.
Meanwhile, the Mortgage Bankers Association and other industry groups are supporting a newly introduced
Any funds a borrower pays to a wholesale lender or mortgage broker would be counted toward the 3% cap.
The bill, sponsored by Reps. Bill Huizenga, R-Mich., and David Scott, D-Ga., also excludes compensation paid by a bank, mortgage banking firm or mortgage brokerage to an individual loan officer from the points and fees test.
In crafting the QM rule, “CFPB did a lot of things right,” said MBA chairman Debra Still. “They created a safe harbor so lenders feel comfortable to lend. They eliminated risky products,” she said. And the 3% cap will prevent lenders from charging high fees.
However, some provisions the CFPB is considering in the 3% cap will restrict access to credit, Still told NMN, “and that is what we are trying to address.”
