Since the qualified mortgage rules went into effect, one of the more interesting interpretations is that loan brokers are able to utilize an affiliate title company without impacting
While a technical reading of the language does support this interpretation, it would not be wise to risk the QM status of loans in the absence of a specific interpretation by the Consumer Financial Protection Bureau. Indeed, uniformly, brokers have not been given preferential treatment (to say the least) when it comes to regulations. It would thus be surprising—and wholly inconsistent with the expressed rationale for including payments to an affiliate in calculating points and feesto permit brokers to maintain these relationships without impacting the cap on points and fees, while prohibiting creditors from doing so. In fact, I can think of no reason for such a distinction, and the CFPB's authority is certainly broad enough to interpret the QM rules as requiring that all affiliate title relationships impact the 3% cap on points and fees.
From a practical standpoint, of course, the creditor takes all of the risk if it omits broker affiliated title fees from the QM calculation. Moreover, it receives none of the benefit (if indirectly it received any benefit the charges would plainly be included in the cap). Absent CFPB clarification confirming a distinction exists in the treatment of broker and creditor affiliated title companies, the best bet is to assume such a pointless distinction was not intended and act accordingly.
