House Financial Services Committee Chair Patrick McHenry (R-N.C.) delivered remarks on the floor of the House of Representatives in support of H.R. 3564, the Middle Class Borrower Protection Act.
The legislation was introduced by Housing and Insurance subcommittee chair Warren Davidson (R-Ohio). It seeks to reverse actions taken by the Biden Administration and the Federal Housing Finance Agency which modified its loan level pricing adjustment structure.
“If you want to protect middle class borrowers in your district from a new tax, you will support this bill,” McHenry said. “If you want to take action to address housing affordability, you will support this bill. And if you want more Americans to achieve the dream of home ownership, you'll vote for this bill.
The legislation is in response to a proposed change to the loan level pricing adjustment that was announced in January. The change will see an increase in upfront fees for borrowers with credit scores above 680 and down payments from 5 to 25 percent. The objective of this was to offset the lowering of fees for borrowers with lower credit scores who have lower down payments and higher interest rates on average.
Congresswoman Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, spoke in strong opposition to the bill.
Waters said the legislation “would affect two different types of fees that apply to mortgages backed by Fannie Mae and Freddie Mac, which make up the vast majority of mortgages today. First, this bill would extend a guarantee fee of 10 basis points for another year, costing ALL future homebuyers an additional $5 billion.
“Second, this bill would reverse recent changes to loan level price adjustments – or LLPAs – which are another type of fee on mortgages backed by Fannie and Freddie. The amount of this fee is risk-based, meaning that it varies depending on characteristics of the borrower and loan, such as income and down payment; whether the loan has a fixed or variable rate of interest; and whether the loan is a cash out refinance.”