U.S. House Passes Bill To Reverse Mortgage Fee Changes


The U.S. House of Representatives has passed the Middle-Class Borrower Protection Act which would reverse recent changes to fees charged by Fannie Mae and Freddie Mac.

Republicans have been fighting changes to the loan-level price adjustment matrix which were announced earlier this year and scheduled to go into effect on May 1. Rep. Warren Davidson, R-Ohio, who introduced the act, has repeatedly said that the new fee structure is “a socialist redistribution of wealth.”

“It’s a scheme created by the Federal Housing Finance Agency that forces financially responsible homebuyers with good credit to subsidize those with bad credit. Responsible action should never be penalized, and irresponsible action shouldn’t be subsidized. Under this rule, a majority of new homebuyers will pay higher fees to offset the costs of riskier borrowers,” Davidson said in a video posted on social media Friday morning.

Davidson said anyone with a credit score above 680 will be forced to pay nearly $15,000 more over the life of their mortgage under the updated matrix. The act would institute a one-year freeze on the FHFA’s ability to make new fee changes.

Davidson is the chairman of the Subcommittee on Housing and Insurance for the House Financial Services Committee.

Rep. Patrick McHenry, R-NC, chairman of the House Financial Services Committee, delivered remarks in support of the Middle-Class Borrower Protection Act prior to its passage in the U.S. House on Friday.

“What I would say to my colleagues is, ‘Is it right to raise the cost of borrowing for families that have worked hard and saved up to buy a home in order to subsidize those who are less creditworthy?’ I don’t think so. This bill would ensure that doesn’t happen under this new Biden administration rule set,” McHenry said.

The act passed 230-189 and is now on its way to the U.S. Senate.

House Majority Whip Tom Emmer, R-MN, who was an original cosponsor of the bill, issued a statement celebrating the act’s passage.

“Americans are already struggling after years of President Biden’s failing economy. Homeownership already feels out of reach and now this administration wants to subsidize individuals with a history of financial irresponsibility and penalize Americans who have worked hard to build strong credit,” Emmer said. “We were proud to cosponsor Representative Davidson’s legislation to ensure the United States never adopts a credit redistribution scheme.”

The advocacy group Americans for Tax Reform in Washington, DC, also supports H.R. 3564, saying the mortgage fee changes “will only exacerbate risk in the housing market and could potentially result in risky behavior that is reminiscent of the 2008 housing crisis.”

Opponents of the Middle-Class Borrower Protection Act say changes to the loan-level price adjustment matrix bring more equity to the homebuying process.

Leaders at the Center for Responsible Lending, an advocacy group with offices in Washington, DC, Durham, NC, and Oakland, Calif., produced a fact sheet about the bill saying it would “make it more expensive for middle-class consumers to become homeowners using conventional mortgage loans and more difficult for many consumers to enter America’s middle class by obtaining affordable, conventional mortgage credit.”

Vice President and Federal Policy Director Mitria Spotser said in a statement that FHFA leaders were deliberate and thoughtful in updating the pricing framework for conventional mortgages.

“The same cannot be said of the House of Representatives,” Spotser said. “This legislation would make it more expensive for lower-wealth, credit-worthy borrowers to purchase a home. For Americans who make up or seek to enter the middle class, this bill would make it harder to build wealth. The Senate should reject this bill.”

House Minority Leader Hakeem Jeffries, D-NY, told Fox Business that the FHFA updates help the middle class.

“President Biden and House and Senate Democrats are actually standing up for the middle class and those who aspire to be part of it and trying to make sure that the things traditionally associated with a middle-class lifestyle like affordable homeownership, are sustained in the United States of America,” Jeffries stated.

FHFA Director Sandra Thompson has defended the series of steps they took to update the Enterprises’ pricing framework.

Thompson testified before the House Financial Services Committee on May 23.

“In the new pricing grids, borrowers with strong credit profiles are not being penalized at the expense of borrowers with weaker credit profiles. Put another way, even with reduced fees borrowers with lower credit scores and lower down payments will continue to pay higher overall mortgage costs than borrowers with higher credit scores and higher down payments,” Thompson said.

Read More Articles:

Hot Topic: Converting Office Spaces Into Residential Places

Luxury Markets: What Do The Wealthy Really Want In Their Homes?

Office Demand: Should Mortgage Professionals Be Back In Person?