Changing How "Points and Fees" are Calculated for Qualified Mortgages (H.R. 1153)
Do you support or oppose this bill?
What is H.R. 1153?
(Updated February 7, 2020)
This bill would modify the process for calculating "points and fees" for qualified mortgages by removing from the calculation insurance premiums held in escrow and — under certain circumstances — fees paid to companies affiliated with the lender. Points and fees cannot exceed 3 percent of a mortgage's total loan amount for the loan to be a qualified mortgages and include finance charges, compensation for the originator, real-estate fees, and loan-level prices adjustments. Exclusions to the qualified mortgage rule are already made for fees related to appraisals, title examination, inspections, flood zone determinations, and document preparation, among other items.
Argument in favor
This bipartisan bill would improve access to credit and qualified mortgages for low- and middle-income borrowers, which is a worthwhile goal.
Argument opposed
This bill weakens reforms enacted after the financial crisis that kept banks from offering low-income families high-fee loans they can't afford.
Impact
Low- and middle-income borrowers seeking to buy a house via a qualified mortgage; mortgage loan originators; U.S. banks and credit unions; and the Consumer Financial Protection Bureau.
Cost of H.R. 1153
The CBO estimates that enacting this bill would increase spending by less than $500,000 as the the Consumer Financial Protection Bureau would need to update its documents.
Additional Info
In-Depth: Sponsoring Rep. Bill Huizenga (R-MI) reintroduced this bill to modify the definition of points and fees for qualified mortgages after drafting a similar version passed the House on a 286-140 vote during the last Congress.
The National Association of Federally-Insured Credit Unions urged support for this bill, writing that it "endeavors to restore a full and open competitive market by clarifying the definition of fees and points" and "In doing so, the legislation will ensure consumers more [have] choices in credit providers and settlement service options."
Some House Democrats expressed opposition to this bill saying it "would return consumers to the days before the enactment of the Dodd-Frank Act, when the true cost of a loan -- inclusive of all costs and fees that the borrower would incur -- could be obscured on mortgage documents, and before all lenders had to make sure that borrowers actually had the ability to pay back the full cost of a mortgage when it was originated."
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