Home Affordability Through Mortgage Simplification Act
- Sponsor
- Rep. Fitzgerald, Scott [R-WI-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Jun 25, 2026
Bottom line
The bill aims to reduce regulatory burdens and litigation risk for mortgage lenders by providing more flexibility in disclosure requirements and allowing for post-consummation corrections, potentially streamlining the mortgage closing process.
What it actually does
This bill amends the Truth in Lending Act (TILA) to streamline mortgage disclosure requirements, expand tolerances for closing costs and Annual Percentage Rate (APR) accuracy, and provide safe harbors for creditors. It introduces an aggregate variance standard for closing costs, limits when waiting periods for corrected disclosures are reset, allows consumers to waive waiting periods, and permits revised loan estimates for non-material changes without demonstrating changed circumstances. It also protects creditors from liability for settlement agent errors under certain conditions and establishes a cure period for first-time violations.
Proponents argue
Supporters argue that the bill reduces 'gotcha' litigation over minor, non-material errors, which currently drives up costs for lenders and ultimately for consumers. They contend it streamlines the mortgage process, making lending more efficient and less risky for creditors, thereby promoting home affordability.
Opponents contend
Critics might argue that the bill weakens essential consumer protections by expanding tolerances for errors and limiting creditor liability, potentially shifting more risk to borrowers. They could contend that the current regulations, while complex, are necessary to ensure transparency and prevent predatory practices in the mortgage market.
The bill is concise and can be read quickly, but understanding its full implications requires familiarity with existing mortgage disclosure regulations.
Section 2, amending TILA Section 128(g)(1)
Aggregate Variance Standard for Estimated Closing Costs
This provision establishes a new 'good faith' standard for loan estimates of closing costs. A creditor is deemed to have provided a good faith estimate if the total amount of closing costs paid by the borrower at consummation does not exceed the disclosed aggregate amount by more than $500 or 5% of all third-party fees (excluding origination charges). Individual fee variances are not considered violations if the aggregate standard is met. Origination charges remain subject to zero-tolerance, with a small exception for de minimis clerical errors up to $25, provided the error is documented and consumer restitution is preserved.
Supporters argue
Supporters argue this standard provides necessary flexibility for lenders, acknowledging that minor fluctuations in third-party fees are common and difficult to predict precisely. They contend it reduces 'gotcha' litigation over small, non-material discrepancies, which ultimately drives up costs for consumers.
Critics contend
Critics might argue that expanding the tolerance for closing cost variances, even if aggregate, could lead to less precise estimates and shift more financial uncertainty onto borrowers. They may contend that strict zero-tolerance rules are essential for transparency and consumer protection.
Tradeoffs
This provision balances the industry's need for flexibility in estimating third-party fees against consumer expectations for precise cost disclosures. It trades strict adherence to exact figures for a more practical, aggregate tolerance, while attempting to safeguard against intentional misrepresentation.
Section 2, amending TILA Section 128(g)(2) and (3)
Simplified Waiting Period Requirements and Consumer Waiver
This section limits the circumstances under which the 3-day waiting period for corrected mortgage disclosures must be reset. A reset is only required if the interest rate increases by more than 0.125 percentage points, the loan product changes, or a prepayment penalty is added. Additionally, it explicitly allows consumers to waive the 3-day closing disclosure waiting period for corrected disclosures.
Section 2, amending TILA Section 128(g)(4)
Safe Harbor for Revised Mortgage Loan Estimates
This provision creates a safe harbor allowing creditors to issue up to two revised loan estimates for 'non-material changes' without needing to demonstrate a 'changed circumstance' as currently required. These non-material changes must not increase the interest rate, change the loan product type, or increase any origination charge. Any such revised estimate must be delivered at least 7 days prior to consummation, and it only resets tolerances for the specific fees affected by the non-material change.
Section 2, amending TILA Section 128(g)(5)
Creditor Reliance on Settlement Agents
This provision states that a creditor will not be held liable for inaccuracies in a closing disclosure if those inaccuracies are solely attributable to a settlement agent, provided the creditor exercised 'reasonable diligence' in selecting the agent and maintained 'reasonable oversight procedures.' Importantly, this protection does not limit a consumer's right to restitution for actual financial harm. The Bureau of Consumer Financial Protection (BCFP) is mandated to issue rules within 180 days to define 'reasonable diligence' and 'reasonable oversight procedures.'
Section 3, amending TILA Section 107(c)
APR Tolerance Expansion and Cure
This section expands the acceptable tolerance for Annual Percentage Rate (APR) accuracy. Under the new standard, an APR is considered accurate if it does not vary from the actual rate by more than 0.125 percentage points. Furthermore, it introduces a mechanism for creditors to 'cure' an inaccurate APR through a post-consummation adjustment and restitution, ensuring the consumer pays no more over the life of the loan than they would have at the disclosed rate.
Section 4, amending TILA Section 130(m) and (n)
Reliance on Bureau Guidance and Opportunity to Cure Violations
This section introduces two new protections for creditors. First, it states that no creditor shall be liable for a violation if they acted in good-faith reliance on guidance issued by the Bureau of Consumer Financial Protection (BCFP). Second, it establishes a 'notice and opportunity to cure' period: no civil penalty may be imposed for a 'first time violation' if the creditor cures it within 60 days of receiving written notice from a regulator. This cure period does not affect a consumer's right to restitution or private remedies. A 'first time violation' is defined as the first written notice of a specific violation within a 36-month period, where a single pattern affecting multiple loans counts as one violation.
A de minimis exception to the zero-tolerance rule for origination charges, allowing for bona fide, non-intentional clerical or typographical errors of not more than $25, provided the creditor documents the error and preserves the consumer's right to restitution.
Section 2, amending TILA Section 128(g)(1)(C)(ii)
Why it matters:This is a technical detail that modifies an existing strict rule. Its placement is standard legislative practice for amending specific regulatory nuances.
Case for: Proponents argue this exception is practical and fair, acknowledging that minor, unintentional clerical errors can occur without malicious intent and should not trigger severe penalties, especially when restitution is preserved for the consumer.
Case against: Critics might argue that any deviation from a 'zero-tolerance' rule, even for small amounts, could create a precedent for further erosion of strict consumer protections, potentially leading to a cumulative negative impact on borrowers.
Estimated impact: Allows for minor, unintentional clerical errors up to $25 in origination charges without violating zero-tolerance rules, potentially reducing technical violations for lenders while ensuring consumer financial harm is addressed.
Mandates the Bureau of Consumer Financial Protection (BCFP) to issue rules within 180 days to define 'reasonable diligence' and 'reasonable oversight procedures' as they apply to a creditor's reliance on settlement agents.
Section 2, amending TILA Section 128(g)(5)(C)
Why it matters:This is standard legislative practice for delegating the specifics of implementation to the relevant regulatory agency, rather than detailing them in the statute itself.
Case for: Proponents argue that delegating these definitions to the BCFP ensures that the standards are practical, adaptable to market changes, and developed with expert input, allowing for effective implementation of the safe harbor.
Case against: Critics might argue that leaving these crucial definitions to future rulemaking creates uncertainty and could allow the BCFP to set standards that either too broadly protect creditors or are overly burdensome for settlement agents, depending on the agency's interpretation.
Estimated impact: The practical effect of the safe harbor for creditor reliance on settlement agents will be entirely shaped by these forthcoming BCFP rules, impacting compliance costs and liability for both creditors and settlement agents.
Defines 'first time violation' for the purpose of the 'notice and opportunity to cure' provision. It means the first written notice from a regulator identifying a specific violation under TILA, for which no prior notice of the same violation was issued within the preceding 36-month period, and where a single pattern or practice affecting multiple loans constitutes one violation.
Section 4, amending TILA Section 130(n)(3)
Why it matters:This is standard legislative practice for providing precise legal definitions for terms used in the statute, ensuring clarity in application.
Case for: Proponents argue this definition provides clear boundaries for when the cure period applies, preventing abuse while still offering a chance for lenders to correct genuine first-time errors without immediate civil penalties.
Case against: Critics might argue that the definition could be interpreted to allow for a 'free pass' on certain types of violations every three years, potentially reducing the deterrent effect of penalties for recurring issues that are just slightly different in nature.
Estimated impact: This definition determines the scope and frequency with which mortgage creditors can utilize the 60-day cure period for TILA violations, impacting regulatory enforcement actions and lender compliance strategies.