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.


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