House acts on mortgage lending title fees, continued validity of loan rates (updated)

Legislation on title fee calculations in mortgage lending, and clarifying that bank and credit union loan rates remain valid whether sold or reassigned to a third party, was adopted by the House Wednesday in two separate bills.

Under H.R. 3978, the “TRID Improvement Act of 2017,” the Real Estate Settlement Procedures Act of 1974 (RESPA) and the “Know Before You Owe” requirements under Truth in Lending-RESPA (TRID) would be amended to require the Consumer Financial Protection Bureau (CFPB) to allow for the calculation of the discounted rate title insurance companies may provide to consumers when they purchase lender’s and owner’s title insurance simultaneously.

The bill was passed by the House on a vote of 271-145.

Under H.R. 3299, the “Protecting Consumers Access to Credit Act of 2017,” the Federal Deposit Insurance and Federal Credit Union Acts would be amended to clarify that bank and credit union loans that are valid as to their maximum rate of interest in accordance with federal law when made remain valid with respect to that rate regardless of whether a bank has subsequently sold or assigned the loan to a third party.

H.R. 3299 was adopted on a vote of 245-171.

The legislation would overturn the “Midland Funding, LLC v. Madden” decision on “valid when made” contracts. That decision found federal preemption principles generally applicable to national banks under the National Bank Act did not extend to nonbank assignees of a bank loan where the bank no longer held an interest in the loan, and federal law therefore did not preempt New York state usury limitations.