Rep. Bill Huizenga (R-Mich.) reintroduced the Mortgage Choice Act, a bill supported by ABA in the previous Congress. The bill previously passed the House with bipartisan support but was not acted upon in the Senate.
Huizenga's bill would clarify the 3% cap on points and fees in the Qualified Mortgage standard to exclude lender-paid compensation to a bank in a wholesale transaction. Inclusion of this compensation can cause a loan made through the wholesale channel to exceed the 3% cap on points and fees, while a loan made by a retail lender with the same interest rate and out-of-pocket costs would not.
As ABA noted last year, many community banks, particularly those in rural areas, originate mortgages exclusively through the wholesale channel. This bill would help level the playing field for them.