The House voted 280-131 to pass H.R. 1153, the Mortgage Choice Act of 2017, a regulatory bill that was created in an effort to provide relief to mortgage lenders by excluding certain charges from the points and fees calculation.
In support of his bill, Rep. Bill Huizenga (R-Michigan), argues it would preserve consumer choice and potentially help more Americans achieve the dream of homeownership—specifically low- and moderate-incomes and first-time homebuyers.
“I re-introduced the Mortgage Choice Act, bipartisan legislation to modify and clarify the way ‘points and fees’ are calculated and help families across America to one-stop shop,” said Huizenga. “This legislation is narrowly focused to promote access to affordable mortgage credit without overturning the important consumer protections and sound underwriting required under Dodd-Frank’s “ability to repay” provisions.”
Huizenga continued, “These common-sense changes will help low and moderate income families as well as first-time homebuyers access affordable mortgage credit and experience the benefits of one-stop shopping by ensuring that safe, properly underwritten mortgages pass the qualified mortgage test.”
Under the new legislation, the Qualified Mortgages (QM) cannot have a points and fees value of more than 3 percent of the loan amount. Additionally, the bill would remove the following from the points and fees calculation:
- Title insurance purchased from a company affiliated with the lender (purchases from a non-affiliated title insurer currently do not count against points and fees)
- Escrowed homeowners insurance premiums
The legislation is a huge win for the affiliated business arrangement lobby and those referral sources who profit from closely-held captive business models.
It was supported by the National Association of Realtors, the Mortgage Bankers Association and RESPRO. The latter organization serves as the proxy for each of the real estate services trade organizations, such as the American Land Title Association, who cannot themselves take positions “for” or “against” controversial legislation that supports affiliated businesses to the detriment of independent businesses within the same industry. NAILTA contended that anything short of outright opposition to this legislation was a direct affront to all independent settlement service providers within the title insurance industry.
NAILTA is strongly opposed to the Mortgage Choice Act and has worked with policymakers at the state and federal level to help them understand the nuanced arguments presented by Mortgage Choice Act defenders.
“Congressman Huizenga’s bill is a thinly-disguised effort to benefit a very important lobby — the referral source groups aligned with RESPRO — who possess a very poor long-term business model,” said NAILTA President Rob Holman.
Holman continued, “The bill will have zero impact on low and moderate-income American real estate consumers and will not improve competition in the industry. The companies in support of this legislation are already lending at feverish paces without the bill to those constituents they allege will benefit from it.”
“The bill was designed to help those with lucrative captive real estate referral networks make more money from those arrangements while being able to prefer their own affiliates for a larger portion of that revenue,” said Holman.
NAILTA believes the Mortgage Choice Act is bad public policy and has authored several position papers on each legislative iteration of the bill.
Here is a link to that opposition:
The bill moves now to the Senate where passage remains uncertain.