House approves changes to TILA 'points' and 'fees' definitions
April 14, 2015
WASHINGTON (4/15/15)--By a vote of 286-140, the U.S. House approved The Mortgage Choice Act (H.R. 685) late Tuesday, a CUNA-supported piece of legislation introduced by Rep. Bill Huizenga (R-Mich.) in February.
The 2015 bill is identical to a version introduced in the 113th Congress and addresses concerns CUNA raised with the Financial Services Committee during June 2013 testimony examining how the Dodd-Frank Act hampers home ownership.
If enacted, the bill would adjust the definition of fees and points in the Truth-in-Lending Act to ensure greater consumer choice in mortgage and settlement services.
Currently under the Ability-to-Repay/Qualified Mortgage rule, points and fees may not exceed 3% of a loan amount. What currently constitutes a "fee" and a "point" counted toward the cap varies depends on who makes the loan, and what arrangement a borrower makes to obtain title insurance.
The House bill clarifies those definitions, as well as excludes title insurance and escrowed homeowner insurance premiums from points and fees, making sure those amounts are not counted toward the 3%.