This bill would amend the Truth in Lending Act to change the definition of "points" and "fees" and how they’re applied to qualified mortgages under the Consumer Financial Protection Bureau (CFPB) regulations.
For those of you who don't have a mortgage: Under the CFPB, a "qualified mortgage" has facets that make the loan more affordable for borrowers, because those borrowers have demonstrated in one way or another that they can repay the loan. As the CBO explains in an analysis of this bill:
"Certain costs that are incidental to the loan amount and are paid by the borrower — for example, title insurance fees, guarantee fees, and service charges — are limited to no more than 3 percent of the total loan amount."
This bill would remove from that 3 percent limit calculation (the points and fees that we mentioned before): insurance premiums held in escrow, sometimes creditor company (or mortgage originator) fees, and loan level price adjustment payments set by Fannie Mae, Freddie Mac, the Federal Housing Administration, or other related government sponsored enterprise.
Within 90 days after this legislation’s enactment the CFPB would issue final regulations to carry out the amendments in this bill, which would be effective upon issuance.