Mortgage Choice Act of 2013

Bill: 113-s-1577
Sponsor: full_name: Sen. Manchin, Joe, III [D-WV]
Introduced: 2013-10-28
Policy area: Housing and Community Development
Subjects: Administrative law and regulatory procedures

Consumer Financial Protection Bureau

Housing finance and home ownership

User charges and fees
Latest action: action_date: 2014-09-16
text: Committee on Banking, Housing, and Urban Affairs. Hearings held.

Summaries:
action_date: 2013-10-28
action_desc: Introduced in Senate
text: <p>Mortgage Choice Act of 2013 - Amends the Truth in Lending Act with respect to requirements for disclosure to a consumer of points and fees information about a consumer credit transaction, secured by the consumer's principal dwelling, but which is not a residential mortgage transaction, a reverse mortgage transaction, or a transaction under an open end credit plan, when the total points and fees the consumer must pay at or before closing will exceed 8% percent of the total loan amount or $400, whichever is greater. (Such consumer credit transactions might include an equity credit line to which consumer purchases or leases may be charged.)</p> <p>Excludes from the computation of such points and fees any escrow for future payment of insurance.</p> <p>Modifies the criteria for exclusion from the computation of points and fees of certain reasonable charges elsewhere exempted from the computation of the finance charge in extensions of credit secured by an interest in real property. Excludes from points and fees any such reasonable charges even though a creditor receives compensation, but only in so far as the creditor or its affiliate retains the compensation as a result of their participation in an affiliated business arrangement. </p> <p>(An "affiliated business arrangement" is one in which: (1) a person who is in a position to refer business incident to or a part of a real estate settlement service involving a federally related mortgage loan, or an associate of such person, has either an affiliate relationship with or a direct or beneficial ownership interest of more than 1% in a provider of settlement services; and (2) either of such persons directly or indirectly refers such business to that provider or affirmatively influences the provider's selection.)</p> <p>Revises the additional requirement that such a reasonable charge be paid to a third party unaffiliated with the creditor. Requires the charge to be: (1) a bona fide third party charge not retained by the mortgage originator, creditor, or an affiliate; or (2) a fee or premium for title examination, title insurance, or similar purposes. </p> <p>Modifies the conditions under which federal departments and agencies may exempt refinancings under a streamlined refinancing from an income verification requirement that, at the time a refinancing is consummated, the consumer has a reasonable ability to repay the loan and all applicable taxes, insurance, and assessments. Repeals the exception for bona fide third party charges not retained by the mortgage originator, creditor, or an affiliate from the requirement that total points and fees not exceed 3% of the total new loan amount. (Thus subjects such charges to the same 3% ceiling.)</p>

tv_txt: II 113th CONGRESS 1st Session S. 1577 IN THE SENATE OF THE UNITED STATES October 28, 2013 Mr. Manchin (for himself, Mr. Johanns , Mr. Levin , Ms. Stabenow , Mr. Toomey , and Mr. Kirk ) introduced the following bill; which was read twice and referred to the Committee on Banking, Housing, and Urban Affairs A BILL To amend the Truth in Lending Act to improve upon the definitions provided for points and fees in connection with a mortgage transaction.

1. Short title This Act may be cited as the Mortgage Choice Act of 2013 . 2. Definition of points and fees (a) Amendment to section 103 of TILA Section 103(bb)(4) of the Truth in Lending Act ( 15 U.S.C. 1602(bb)(4) ) is amended— (1) by striking paragraph (1)(B) and inserting paragraph (1)(A) and section 129C ; (2) in subparagraph (C)— (A) by inserting and insurance after taxes ; (B) in clause (ii), by inserting , except as retained by a creditor or its affiliate as a result of their participation in an affiliated business arrangement (as defined in section 2(7) of the Real Estate Settlement Procedures Act of 1974 ( 12 U.S.C. 2602(7) ) after compensation ; and (C) by striking clause (iii) and inserting the following: (iii) the charge is— (I) a bona fide third-party charge not retained by the mortgage originator, creditor, or an affiliate of the creditor or mortgage originator; or (II) a charge set forth in section 106(e)(1); ; and (3) in subparagraph (D)— (A) by striking accident, ; and (B) by striking or any payments and inserting and any payments . (b) Amendment to section 129 C of TILA Section 129C of the Truth in Lending Act ( 15 U.S.C. 1639c ) is amended— (1) in subsection (a)(5)(C), by striking 103 and all that follows through or mortgage originator and inserting 103(bb)(4) ; and (2) in subsection (b)(2)(C)(i), by striking 103 and all that follows through or mortgage originator) and inserting 103(bb)(4) . 3. Rulemaking Not later than the end of the 90-day period beginning on the date of the enactment of this Act, the Bureau of Consumer Financial Protection shall issue final regulations to carry out the amendments made by this Act, and such regulations shall be effective upon issuance.