A bill designed to provide home buyers more options for more competitive mortgage interest rates has gained House Financial Services Committee approval.
Officials said the Mortgage Fairness Act, introduced by Rep. Bill Posey (R-FL), removes the Consumer Financial Protection Bureau’s (CFPB) cap on items already accounted for in interest rates.
“The Consumer Financial Protection Bureau’s application of the qualified mortgage rule has distorted the wholesale lender market and caused confusion for consumers and mortgage providers,” Posey said. “The Mortgage Fairness Act adds clarity to the qualified mortgage rule by eliminating this market distortion to provide more options for homebuyers, particularly benefiting low and middle-income consumers.”
Posey said the rule harms the wholesale lender market by restricting competition in the geographic areas of the United States with lower loan amounts.
“It is alarming to me that some veterans who utilize their Department of Veterans Affairs mortgage benefits must pay a higher price for their mortgage, and in some cases, cannot even use their earned benefits,” he said. “That’s unacceptable.”
Officials said the qualified mortgage rule includes a 3 percent cap on costs for most mortgages, noting it has created unintended consequences.
By including lender paid compensation in the fees and points cap, the CFPB’s application of the rule imposes a double-penalty on lenders who offer services through mortgage broker companies and pay the mortgage fees via inclusion in the mortgage rate.
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