A Call for Common-Sense Mortgage Regulation

This week, the Credit Union National Association (CUNA) along with other trade organizations called for regulatory relief language to remain in the conference committee version of the 2019 financial services and general government appropriations bill in a letter. Particularly, CUNA called for the Mortgage Choice Act (H.R. 1153) to remain in the bill.

“H.R. 1153 endeavors to restore a full and open competitive market by clarifying the definition of fees and points,” the letter reads. “In doing so, the legislation will ensure consumers more choices in credit providers and settlement service options.”

CUNA notes that H.R. 1153 would make some small adjustment to the Truth in Lending Act, specifically, its definition of “points and fees”. Currently, the Truth in Lending Act states that fees cannot exceed 3 percent of the loan amount in order to be counted as a Qualified Mortgage.

The letter notes that the definition of “points” and “fees” is dependent on both who is making the loan and how the consumer is obtaining title insurance.

“If the consumer chooses a title insurance provider that is affiliated with the lender, the title insurance charges count, but if the insurance is purchased from an unaffiliated title agency,the title charges do not count,” the letter reads.

The letter also notes that escrowed homeowners insurance premiums also count as point and fees in some circumstances.

The letter reads: “The inclusion of either title insurance or escrowed homeowners’ premiums have caused many loans, especially those for low- and moderate-income consumers, to fail the QM test in situations where the consumer elected to use one-stop-shopping for their settlement services.”

In addition to CUNA, the letter is signed by a number of trade associations including the Consumer Mortgage Coalition, Housing Policy Council of the Financial Services Roundtable, National Association of Realtors, MBA, Real Estate Services Providers Council and the Realty Alliance.

The complete letter can be found here.