Published: July 2014

Homeowners could see an increase in fees if mortgage rule is weakened

S. 1577—the “Mortgage Choice Act of 2013” reintroduces some of the higher fees borrowers faced in the lead up to the mortgage crisis; fees that the new mortgage rules were designed to prevent. Specifically, this bill creates a loophole that would allow many more risky, high-cost loans to qualify as Qualified Mortgage (QM) loans by creating exceptions to the points and fees threshold. Consumer Action joins advocates in urging Congress to refrain from weakening the QM standard by rejecting this bill.

The current Qualified Mortgage (QM) protections, introduced as a result of the mortgage crisis of 2008 and established in Dodd-Frank Wall Street Reform and Consumer Protection Act, represent an appropriate step to directly address recent problems for home loan borrowers without impacting access to credit. S.1577 -  the “Mortgage Choice Act of 2013”  allows loans that Fannie Mae and Freddie Mac deem as risky under current standards to be counted as QM. The bill would also remove the 3% cap on residential-mortgage origination points and fees charged by title companies that are owned by the lender issuing the same loan. This results in a conflict of interest and prevents consumers from getting the best prices possible on title insurance. 

Creating a title insurance loophole in the statute would eliminate an important protection that keeps costs to borrowers from escalating further.  We urge the Senate to vote down the "Mortgage Choice Act of 2013."



Lead Organization

Americans for Financial Reform (AFR)

Other Organizations

Americans for Financial Reform | California Reinvestment Coalition | Center for Responsible Lending | Connecticut Fair Housing Center | Consumer Action | Consumer Federation of America | Empire Justice Center | National Association of Consumer Advocates | National Consumer Law Center (on behalf of its low-income clients) | National Fair Housing Alliance | National People’s Action | The Leadership Conference on Civil and Human Rights

More Information

For more information, please visit AFR's website.

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Homeowners could see an increase in fees if mortgage rule is weakened   (Oppose_S._1577--the_Mortgage_Choice_Act_of_2013.pdf)




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