Tonight the House passed the Mortgage Choice Act of 2013, H.R. 3211, which amends the Truth in Lending Act’s (TILA) definition of “points and fees” in connection with a mortgage transaction. The bill would make ABIA-supported changes to the way points and fees are calculated under the “qualified mortgage” (QM) definition in the Dodd-Frank Act, by exempting from the points and fees calculation affiliate title fees and premiums and escrow payments for insurance.
Under H.R. 3211 escrows for future payment of insurance would excluded from points and fees. Currently only escrow for taxes are excluded. Any insurance amount that is escrowed would benefit from the carve-out. If homeowners insurance is escrowed in a mortgage transaction, which it typically is, such insurance would not be included in the definition of "points and fees."
Fees or premiums for title examination, title insurance, or similar purposes paid to affiliates would be excluded from points and fees as long as the charge is reasonable and the creditor receives no direct or indirect compensation, except as retained by a creditor or affiliate as part of an affiliate business relationship (as defined in RESPA).
Sponsored by Bill Huizenga (R-MI) and co-sponsored by Ed Royce (R-CA), the bill passed under suspension of the rules and by voice vote at 6:30 this evening.
The text appears to have been unamended from when it was introduced last October. Senator Manchin (D-WV) has the companion bill in the Senate, S.1577. It has 8 cosponsors, and seems bi-partisan. Unfortunately, it does not appear that the Senate bill will move any time soon.
If you are a member of the ABIA and would like to learn more about our Qualified Mortgage rule Task Force, please contact us and visit our website.