H.R. 9459: Home Affordability Through Mortgage Simplification Act

This bill would change federal mortgage disclosure rules under the Truth in Lending Act to make some errors and timing issues easier to handle for lenders, while preserving consumers’ rights to recover actual financial harm.

Closing cost estimates

The bill would set a new standard for when a lender’s loan estimate of closing costs is considered to have been made in good faith. A lender would generally be allowed to differ from the estimate at closing by the greater of:

• $500, or
• 5% of third-party fees and charges, not counting origination charges.

It would also say that a single fee being off is not, by itself, a violation if the overall total is still within the allowed limit.

Origination charges and small clerical mistakes

Origination charges would still be subject to strict limits, but the bill would create a small exception for minor clerical or typographical errors of $25 or less, if the lender documents the mistake and still leaves the consumer able to recover for any actual financial harm caused.

Waiting period for corrected disclosures

The bill would narrow when a new waiting period must start after a corrected mortgage disclosure is issued. The waiting period would reset only if:

• the interest rate goes up by more than 0.125 percentage points,
• the loan product changes, or
• a prepayment penalty is added.

It would also allow a consumer to waive the 3-day waiting period for a corrected disclosure.

Revised loan estimates

The bill would let a creditor issue up to two revised loan estimates for non-material changes without needing to prove that a “changed circumstance” occurred, as long as the change does not:

• increase the interest rate,
• change the loan type, or
• increase any origination charge.

Those revised estimates would have to be delivered at least 7 days before closing, and only the fees tied to the specific change would be recalculated for tolerance purposes.

Settlement agent errors

If a closing disclosure error is caused only by the settlement agent, the lender would not be liable if it used reasonable care in choosing that agent and kept reasonable oversight procedures. The bill directs the Consumer Financial Protection Bureau to define what those standards mean, including vendor management and error detection practices.

Annual percentage rate rules

The bill would change the rule for APR accuracy. The APR would be treated as accurate if it is within 0.125 percentage points of the actual rate. If the APR is inaccurate, the lender could fix it after closing through an adjustment and restitution, so the borrower pays no more over the life of the loan than would have been paid at the disclosed rate.

Protection for lenders relying on CFPB guidance

The bill would say that a lender is not liable for a violation if it acted in good-faith reliance on guidance issued by the CFPB.

First-time violations and cure period

For a first-time violation, no civil penalty could be imposed if the lender cures the problem within 60 days after receiving written notice from a federal or state regulator. This would not affect a consumer’s right to restitution or other private remedies. A “first time violation” would mean the first written notice of a specific violation, with no prior notice of the same issue in the previous 36 months; a pattern affecting multiple loans from the same underlying error would count as one violation for this purpose.

Relevant Companies

• None found