The U.S. House of Representatives passed a bipartisan bill Tuesday that would make important changes to the way points and fees are calculated under the qualified mortgage (QM) definition in the Dodd-Frank Act. The QM rule is the primary means for mortgage lenders to satisfy their “ability to repay” requirements. Dodd-Frank provides that a QM may not have points and fees in excess of 3 percent of the loan amount. Under Dodd-Frank’s current definition, points and fees may include fees paid to lender-affiliated title companies, but not those that are unaffiliated with lenders. Some lenders have said that including affiliated title fees in the 3 percent cap makes it difficult to issue small loans that are compliant with the regulations. As a result, some lenders are reportedly directing borrowers to nonaffiliated title companies in an effort to skirt the cap and avoid lawsuits. The Mortgage Choice Act, or H.R. 685, seeks to provide equal treatment for affiliated title fees ...
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