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3% Cap Bill Introduced in the Senate

May 17, 2013

On Tuesday May 14, 2013 Senator Joe Manchin (D-WV) and Senator Mike Johanns (R-NE) introduced S. 949 "The Consumer Mortgage Choice Act" in the United States Senate. The legislation addresses discrimination in the calculation of fees and points under the 3% cap on fees and points in the Qualified Mortgage rules.

The legislation is a companion to H.R. 1077, introduced by Representative Bill Huizenga (R-MI) and David Scott (D-GA) in the House of Representatives this March. The legislation is critical, particularly to real estate firms with affiliates and small and mid size lenders and mortgage brokers. Without it, perhaps one third to one half of the loans they make would not meet the qualified mortgage test and would either not be made or would have to be made by large lenders who do not have to count the same items in their fees and points calculations under the test.

The QM rule is set to take effect in January of 2014.