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‘Mortgage Choice Act of 2013’ Passes House Vote

A bill designed to amend mortgage fee calculations under new industry rules cleared a major hurdle Monday, passing the House despite reservations from critics who say it may reopen the door to irresponsible lending.

Introduced last year by a bipartisan group of representatives led by Rep. Bill Huizenga (R-Michigan), H.R. 3211 (the "Mortgage Choice Act of 2013") would amend the Truth in Lending Act (TILA) to exempt fees from affiliated title companies from counting toward the 3 percent point and fee threshold established in the Qualified Mortgage (QM) rule implemented earlier this year. It would also clarify the treatment of insurance and taxes held in escrow.

In a speech before the House vote, Huizenga argued the current definition of points and fees used for the QM test is "confusing and problematic," asserting, "[M]any affiliated loans, particularly those made to low and moderate-income borrowers, would not qualify as QMs [as a result] and would be unlikely to be made or would only be made available at much higher rates due to heightened liability risks."

Not everyone agrees with the bill's approach. In a statement released Monday, the Center for Responsible Lending (CRL) said H.R. 3211 could "upset the careful balance struck by the Consumer Financial Protection Bureau" in its creation of mortgage rules designed to protect consumers.

"It's deeply concerning how quickly we forget the devastating impact that abusive lending practices had on the housing market and the larger economy," said Kenneth W. Edwards, VP of federal affairs at CRL. "Countless houses lost, innumerable families affected—and after a long, hard-fought battle to pass the necessary reforms to protect our homes, we find ourselves here again."

Still, Monday's news garnered praise from industry groups, including the National Association of Realtors, the National Association of Federal Credit Unions, and the Mortgage Bankers Association, among others.


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