Home Affordability Through Mortgage Simplification Act
Sponsored By: Representative Fitzgerald, Scott [R-WI-5]
Introduced
Summary
This bill would modernize mortgage disclosures by setting clear tolerance tests, safe harbors, and cure rules to reduce last-minute surprises and legal risk for loans and closings.
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- Homebuyers: Would let a loan estimate be considered in good faith unless closing costs exceed the disclosed amount by more than the greater of $500 or 5 percent of third-party fees. It narrows when corrected disclosures reset the 3-day waiting period and lets a consumer waive that waiting period for certain corrections.
- Lenders and creditors: Would expand the allowable APR variance to 0.125 percentage points and let creditors cure APR errors by adjusting charges so borrowers pay no more over the life of the loan. It creates safe harbors for up to two revised loan estimates for non-material changes and preserves zero-tolerance for origination charges with a $25 de minimis clerical exception.
- Settlement agents and regulators: Would limit creditor liability for closing disclosure errors caused solely by settlement agents if the creditor used reasonable diligence and oversight. It would also give the Bureau of Consumer Financial Protection 180 days to define those vendor-management standards and to revise related rules.
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Bill Overview
Analyzed Economic Effects
5 provisions identified: 1 benefits, 0 costs, 4 mixed.
60-day cure window for first violations
This bill would bar civil penalties for a first-time TILA violation if the creditor cures the violation within 60 days after written notice from a Federal or State regulator. Consumers' private remedies and rights to restitution would be preserved. A "first time violation" would mean no prior written notice of the same violation in the previous 36 months, and a single pattern or practice affecting many loans from the same error would count as one violation.
Limits lender liability for agents
This bill would say a creditor is not liable for errors in a closing disclosure that come solely from a settlement agent if the creditor exercised reasonable diligence in hiring the agent and kept reasonable oversight. The Consumer Financial Protection Bureau would have 180 days after enactment to define "reasonable diligence" and "reasonable oversight procedures" and to update related disclosure rules. The bill would also bar creditor liability for actions taken in good-faith reliance on CFPB guidance, while keeping consumers' right to restitution for actual financial harm.
Fewer closing delays for small changes
This bill would limit when a corrected closing disclosure restarts the waiting clock. The waiting period would reset only if the interest rate rises by more than 0.125 percentage points, the loan product changes, or a prepayment penalty is added. A consumer could waive a 3-day waiting period for certain corrected disclosures. Lenders could issue up to two revised loan estimates for non-material changes without showing a changed circumstance, if delivered at least 7 days before closing, and those revisions would only reset tolerances for fees affected by the specific change.
Higher APR tolerance and cure
This bill would treat a disclosed APR as accurate if it is within 0.125 percentage points of the actual rate. If the APR error is larger, a lender would be allowed to fix it after closing by adjusting the loan and making restitution so the consumer pays no more over the life of the loan than at the disclosed APR. The rule both gives lenders a narrow tolerance and preserves consumer make-whole rights.
Easier closing-cost tolerance
This bill would allow a lender's disclosed closing costs to be treated as in good faith if actual closing costs do not exceed the disclosed total by more than the greater of $500 or 5% of third-party fees. Origination charges would be excluded from that aggregate test and stay subject to zero-tolerance rules. Clerical or typographical errors of $25 or less would not trigger zero-tolerance if documented, and consumers would still be able to get restitution for real financial harm. A single fee that goes over the estimate would not be a violation unless it makes the whole total exceed the allowed variance.
Sponsors & CoSponsors
Sponsor
Fitzgerald, Scott [R-WI-5]
WI • R
Cosponsors
There are no cosponsors for this bill.
Roll Call Votes
No roll call votes available for this bill.
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