House Passes Mortgage Choice Act – Again


The Mortgage Choice Act of 2015, which was reintroduced earlier this year after dying in the last congressional session, passed in the House of Representatives late Tuesday by a vote of 286 to 140.

The bipartisan measure, which amends and clarifies the qualified mortgage definition in the Dodd-Frank Act, is engineered to improve access to credit and qualified mortgages for low- and moderate-income borrowers while at the same time protecting consumers from bad loans. It also adjusts the Truth in Lending Act definition of points and fees by exempting points and fees on any affiliated title charges and escrow charges for taxes and insurance from the qualified mortgage cap on points and fees.

The measure unanimously passed in the House by a voice vote last July, but never made it to the Senate floor.

‘A qualified mortgage is the gold standard of home loans,’ says Rep. Bill Huizenga, R-Mich., who first introduced the act in September 2013. ‘Hardworking families should not be denied access to a qualified mortgage because of technicalities that are largely out of their control. The Mortgage Choice Act enacts commonsense reforms to Dodd Frank making it possible for low- and middle-income families to achieve a portion of the American Dream. I am glad to see strong bipartisan support for the effort to make homeownership an attainable goal.’

The proposal has thus far received broad support from the mortgage industry, garnering positive feedback from the Mortgage Bankers Association, the National Association of Federal Credit Unions, the Mortgage Lenders Association, the Consumer Mortgage Coalition, the Credit Union National Association, the National Association of Home Builders, the Real Estate Services Providers Council, the Realty Alliance and the National Association of Realtors.

Speaker of The House John Boehner also applauded the measure, saying, in a statement, ‘Affordable housing is vital for low and middle income families and workers, but far too often, Washington's regulatory overreach and red tape gets in the way of their American dream. By increasing access and promoting choice for consumers, this legislation will help more hardworking Americans get ahead and achieve financial independence.’

Financial Services Committee Chairman Jeb Hensarling also lauded the proposal, saying, ‘If we follow the logic of the far left, McDonald's could serve you a burger but they could no longer serve you fries. You would have to go across the street to Burger King for your fries there. I guess National Tire and Battery would have to be National Tire. They couldn't sell you a battery anymore. Consumers would be protected and not have their choices recognized. I guess the phone company could no longer offer you a discount on Internet and cable and phone put together because, my Lord, those are affiliationsâ�¦’

The bill, however, is not without its opponents. Some fear it could create a loophole that would allow lenders to charge excessive fees to borrowers because there would be no cap on how much lenders can charge on title insurance.

It has also received criticism from some House Democrats who say it relaxes key provisions of the Dodd-Frank Act designed to prevent lenders from making ‘risky’ loans.

During a hearing in May 2014, Rep. Maxine Waters, D-Calif., expressed reservations about the bill, saying that while it might be well intentioned, it ‘could open up cracks that will be used to significantly undermine consumer protection in the mortgage market, while increasing the administrative burden on financial regulators, some of which are already cash-strapped.’

The measure now moves on to the Senate.

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