House passes QM refinement

by Ryan Smith11 Jun 2014
The House of Representatives has unanimously passed a bill that would refine the provision in the “qualified mortgage” rules that limits points and fees to 3%.

The 3% cap has been unpopular in the mortgage industry, with many brokers saying the cap was too restrictive for them to be able to originate loans that would count as qualified mortgages.

“The provision unfairly prevents brokers and affiliated lenders from making QM loans because their joint venture services are collectively counted against the cap, while individual services from large retail financial institutions are each capped separately,” said National Association of Realtors President Steve Brown.

The Mortgage Choice Act exempts from that cap any affiliated title charges and escrow charges for taxes and insurance.

“The Mortgage Choice Act treats affiliated and non-affiliated service providers the same way under the rule while still protecting borrowers from risky loan products,” Brown said. “Realtors will continue to advocate for this legislation to clarify the QM rules as it moves to the U.S. Senate.”

Mortgage Bankers Association President David Stevens said he also supported the bill.

“Proper implementation of the ability to repay and QM requirements is crucial to allowing credit-worthy consumers to purchase or refinance a home at affordable rates,” Stevens said.


  • by Griff | 6/11/2014 10:32:00 AM

    Leave it to the House to pass a bill for the big guys. Affiliated arrangements is the ONE thing that SHOULD be in the 3% cap. Amazing to me that we cannot get relief from the AMC's running appraisals, or 3% cap in general, but we can get relief on affiliated arrangements. Why shouldn't these arrangements be subject to the 3% rule,,, because they may cause issues with the one stop shopping that is not good for the consumer anyway.

  • by Gordon Schlicke | 6/11/2014 10:38:29 AM

    Relief can be had by accumulating enough money to buy the votes in Congress. Until an entire generation decides we've had enough it will remain that way.

  • by Michael | 6/11/2014 10:46:49 AM

    The 3% Rule is totally unfair and designed only for the purpose of protecting the consumer from his or her own stupid mistakes. What is coming next? Will the government begin controlling the auto industry and limiting them to only a 3% gross profit margin? How about the food industry? Maybe the clothing industry? Why not every business? Do we punish the Mom & Pop small business because they cannot price match Wal-Mart? Will Nordstrom's be punished for not pricing the same as Ross or the Dollar Store? Do you see where this is going?

    The better system is to educate the consumer. If the consumer is willing to pay whatever fees charged that is his or her prerogative. If the consumer is to lazy to do his or her research and ends up paying a higher price for a product or service ... shame on the consumer, not the business or industry.

    Well maybe educating the consumer is an impossibility ... our public schools have failed in this arena miserably for decades now haven't they.


Should CFPB have more supervision over credit agencies?