Joint industry trade letter to HFSC urging support for H.R. 3211, the Mortgage Choice Act

(MAY 5, 2014) 

Dear Representative:

The undersigned organizations urge you to vote for H.R. 3211, the Mortgage Choice Act, when it is considered by the Financial Services Committee on May 7, 2014.

H.R. 3211 is bipartisan legislation introduced by Representatives Bill Huizenga (R-MI), David Scott (D-GA), Ed Royce (R-CA), Gregory Meeks (D-NY), Spencer Bachus (R-AL), Mike Doyle (D-PA), Steve Stivers (R-OH), Gary Peters (D-MI), Patrick Murphy (D-FL), and Betty McCollum (D-MN). It would make two adjustments to the Truth in Lending Act (TILA) definition of fees and points to ensure greater consumer choice in mortgage and settlement services under the Ability to Repay/Qualified Mortgage (QM) rule.

The QM rule sets the standard for consumer mortgages by providing significant compliance certainty to loans that do not have risky features and meet strict federal requirements. A key requirement is that points and fees for a QM may not exceed 3 percent of the loan amount. The problem arises from the fact that, under current law and rules, what constitutes a “fee” or a “point” towards the cap varies greatly depending upon who is making the loan and what arrangements are made by consumers to obtain 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. In addition, escrowed homeowners insurance premiums may count as “points and fees” due to ambiguous drafting in the law. The inclusion of title insurance and escrowed homeowners’ premiums will cause many loans, especially those for low- and moderate-income consumers, to fail the QM test. As a result, many otherwise qualified borrowers will not get access to safe and affordable mortgage credit.

H.R. 3211 endeavors to restore a full and open competitive market by clarifying the definition of fees and points. In doing so, the legislation will ensure consumers have greater access to mortgage credit and also more choices in credit providers.

We urge the Committee to approve the Mortgage Choice Act and send it to the House floor.


Community Mortgage Lenders Association Consumer Mortgage Coalition
Credit Union National Association Leading Builders of America

The Mortgage Bankers Association
National Association of Federal Credit Unions
National Association of Homebuilders ®
The National Association of REALTORS
Real Estate Services Providers Council, Inc. (RESPRO ) The Realty Alliance








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