Industry efforts to pass legislation that would exclude originator compensation from the statutory points and fees test in the qualified mortgage rule are off to a slow start on Capitol Hill.
Rep. Bill Huizenga, R-Mich., introduced a bill to amend the QM points and fees test in late March. To date, there are just three co-sponsors.
Also, the House Financial Services Committee has not scheduled a hearing on the bill (H.R. 4323). But the committee may hold a hearing on the Consumer Mortgage Choice Act in May or June, a spokesman for Rep. Huizenga said.
The Consumer Financial Protection Bureau (CFPB) is expected to issue a final QM rule this summer, possibly by the end of June.
However, the QM rule is not slated to go into effect until January, which will give mortgage bankers, brokers, Realtors and other industry groups more time to lobby and pass a legislative fix.
A loan cannot meet the requirements of a qualified mortgage if the lender charges points and fees that exceed 3% of the loan amount. Included in the Dodd-Frank Act points and fee test are originator compensation, escrows and fees charged by the lender’s affiliated title company. The Huizenga bill would strip those three components out of the test.
“This cannot be and should not be part of that calculation of points and fees,” according to John Hudson, who chairs the government affairs committee at the National Association of Mortgage Brokers.
If they are, “it is going to be too easy to hit that cap” and “cut a lot of homebuyers out of the process,” he said during a webcast urging his fellow brokers to call their congressmen about the Huizenga bill.
Loans that don’t meet the QM requirements will be difficult to sell or securitize. Without a legislative fix, the Mortgage Bankers Association claims the QM rule will make it difficult for lenders to originate loans with balances under $150,000.