Bankers, mortgage lenders, and real estate brokerage firms are expected to win some relief soon from a provision of the Consumer Financial Protection Bureau’s qualified mortgage (QM) rule that restricts fees paid to affiliates.

Under the regulation, all such fees are included in a points and fees test that say they cannot exceed 3 percent of the loan and still qualify for QM status. But industry observers say it appears likely that the CFPB will loosen its interpretation of affiliated fees and allow transactions that are passed through an affiliate to a third-party provider to be excluded from the test.

Richard J. Andreano, Jr., Practice Leader of Ballard Spahr’s Mortgage Banking Group, said he expects the CFPB to address the issue in a forthcoming proposal that will “clean up some technical issues” with the QM rule.

There appears to be a conflict between the rule and a provision of the Dodd-Frank Act that said fees “retained by” affiliates should be part of the points and fees test for QM. In issuing the rule, the CFPB used language from a previous Federal Reserve Board rule that instead included any fees “paid to” the affiliate as part of the test. Many observers believe that the rule will be clarified to echo the Dodd-Frank language.

“CFPB has concluded it should be ‘retained by,’” Mr. Andreano said at a recent real estate conference.

The issue has led many integrated firms to drop certain affiliates to avoid the 3 percent limit. Other firms have even discounted their fees to avoid the restriction or have referred homebuyers to nonaffiliated firms.

Related Practice

Mortgage Banking