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April 2, 2012
On Thursday March 29, 2012, Congressmen Bill Huizenga (R-MI), Ed Royce (R-CA), Lacy Clay (D-MO), and David Scott (D-GA) introduced "The Consumer Mortgage Choice Act." The legislation fixes issues with the Dodd-Frank Wall Street Reform Act's Qualified Mortgage (QM) provisions. Specifically, the manner in which fees and points are calculated is different for mortgage firms that are affiliated with real estate and title companies than for those that are not. Mortgage companies with affiliates must count title charges and certain escrow charges such as insurance when calculating fees and points under the 3% cap on fees and points in the QM test. It has been estimated that doing so would deny the choice of using an affiliated company to a large percentage of consumers and lead to less competition amongst mortgage lenders and settlement service providers.
The legislation also fixes an issue with double counting of compensation to originators when calculating the fees and points. The bill number is H.R. 4323. Hearings are expected later in the Spring and NAR and its industry partners are working to line up cosponsors as well as companion legislation in the Senate.