The U.S. House of Representatives has passed the Middle Class Borrower Protection Act of 2023, in an effort to support responsible home buyers.
The bipartisan legislation aims to counter the Biden administration's implementation of fees for creditworthy home buyers while those with riskier loans are subsidized.
U.S. Rep. Ken Calvert (R-CA) voted for the legislation.
"Home buyers should not be penalized for having good credit,” Calvert tweeted June 23. “I voted along with a bipartisan majority of the House to pass HR 3564, the Middle Class Borrower Protection Act, to eliminate the Biden administration's new fees on creditworthy home buyers to subsidize those with riskier loans."
Introduced by Subcommittee on Housing and Insurance Chairman Warren Davidson (R-OH), HR 3564 seeks to reverse the Loan Level Price Adjustment (LLPA) mortgage rule created by the Biden administration. Critics insist the program forces responsible home buyers with good credit subsidize those with riskier loans. The Middle Class Borrower Protection Act restores the previous LLPA mortgage structure.
The proposed legislation rolls back the changes made by the Federal Housing Finance Agency (FHFA) to the fees charged by Fannie Mae and Freddie Mac for conventional single-family mortgages. These changes, effective from May 1, introduced revised fee charts that adjusted percentages based on a mortgagor's credit score and down payment. The Middle Class Borrower Protection Act reinstates the fee structure that was in place prior to May 1.
The bill, which passed with a total of 230 yes votes and 189 no votes, also mandates that the Government Accountability Office (GAO) report on the FHFA's changes. It also prohibits further adjustments to the fee structure by the FHFA until 90 days after the publication of the GAO report. Any proposed adjustments must adhere to the Administrative Procedure Act requirements.
The Middle Class Borrower Protection Act also emphasizes that fee revisions be based on risk to the greatest extent feasible. It also prohibits FHFA, Fannie Mae and Freddie Mac from imposing loan-level pricing adjustment fees that are calculated based on the ratio of a mortgagor's debt to their income.
"Middle-class home buyers should not be penalized for responsibly managing their credit," U.S. Rep. John Rutherford (R-FL) said on Twitter.