House passes bill to modify TILA “points and fees” definition

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H.R. 3211, which amends the Truth in Lending Act’s definition of “points and fees,” was passed by a voice vote in the House of Representatives on June 9, 2014.

The “points and fees” definition is used to determine whether a mortgage loan triggers application of the TILA high-cost mortgage loan provisions under the points and fees test, and whether a loan satisfies the points and fees limitation to be a qualified mortgage loan under the TILA ability to repay provisions. The bill amends the definition to clarify that amounts escrowed for insurance are excluded, and to reverse the existing requirement that title charges must be included in points and fees if paid to an affiliate of the creditor. As amended, title charges are excluded from points and fees, whether paid to an affiliate of the creditor or a non-affiliated company, as long as the charges are reasonable and the creditor receives no direct or indirect compensation from the charges (except as permissible returns under the RESPA affiliated business arrangement provisions).

The focus now turns to the Senate, in which a companion bill (S. 1577) is under consideration.

 


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