To cancel certain proposed changes to loan level price adjustments by the Federal National Mortgage Association and credit fees charged by the Federal Home Loan Mortgage Corporation.
- Sponsor
- Rep. Bice, Stephanie I. [R-OK-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Jan 9, 2025
Bottom line
H.R. 258 aims to reverse recent changes to mortgage fees imposed by Fannie Mae and Freddie Mac, thereby maintaining the previous fee structure for borrowers.
What it actually does
This bill prohibits the Federal Housing Finance Agency (FHFA), Fannie Mae, and Freddie Mac from implementing changes to their single-family mortgage pricing framework that were announced in January 2023. Specifically, it targets updates to loan level price adjustments (LLPAs) and credit fees, rendering any such changes, including those detailed in Fannie Mae Lender Letter LL-2023-01 and Freddie Mac Bulletin 2023-1, null and void. The effect is to revert to the prior pricing structure for mortgages backed by these government-sponsored enterprises.
Proponents argue
Proponents argue that the FHFA's proposed changes, particularly those that increased fees for borrowers with higher credit scores or larger down payments, unfairly penalized responsible homebuyers and could exacerbate housing affordability challenges. They contend that these changes distorted the market by effectively subsidizing riskier loans at the expense of lower-risk borrowers, and that canceling them would restore fairness and stability to the mortgage market.
Opponents contend
Opponents of this bill (i.e., proponents of the FHFA changes) would argue that the FHFA's adjustments were necessary to ensure the safety and soundness of Fannie Mae and Freddie Mac, better align fees with risk, and promote equitable access to credit for underserved communities. They might assert that canceling these changes would undermine the FHFA's regulatory authority, potentially increase risk to taxpayers, and hinder efforts to support a broader range of borrowers.
The bill text is extremely short and straightforward, allowing for quick comprehension of its direct action.
Section 1. CANCELLATION OF CHANGES.
Prohibition on FHFA Single-Family Pricing Framework Changes
This section explicitly forbids the Federal Housing Finance Agency (FHFA) and the government-sponsored enterprises, Fannie Mae and Freddie Mac, from implementing a specific set of changes to their single-family mortgage pricing framework. These changes, announced on January 19, 2023, and detailed in specific lender letters and bulletins, involved adjustments to loan level price adjustments (LLPAs) and credit fees. The bill declares that these proposed changes will have no legal effect, effectively rolling back the policy to its prior state.
Supporters argue
Supporters of this provision argue that it protects homebuyers from increased costs, particularly those with strong credit profiles who would have seen higher fees under the FHFA's proposed changes. They contend that the FHFA's adjustments created an unfair cross-subsidy, penalizing lower-risk borrowers to benefit higher-risk ones, and that this cancellation restores market fairness.
Critics contend
Opponents of this provision (i.e., those who supported the FHFA's original changes) would argue that it undermines the FHFA's prudential regulatory authority to manage risk and ensure the long-term stability of the GSEs. They might assert that the FHFA's fee adjustments were designed to better align fees with actual credit risk and to expand access to credit for underserved populations, and that canceling them could increase taxpayer exposure to risk or reduce access for certain borrowers.
Tradeoffs
The provision navigates the tension between ensuring housing affordability for certain borrower segments and maintaining the financial stability and risk management capabilities of government-sponsored enterprises. It also highlights the debate over whether mortgage fees should primarily reflect individual borrower risk or be used as a tool for broader housing policy goals, such as promoting equitable access to credit.