Washington, D.C. — Today, Senator Ted Budd (R-NC) helped introduce the Middle Class Borrower Protection Act.
The legislation would reverse a harmful Biden administration provision that increases mortgage rates for many middle class Americans.
In May, the Biden Administration implemented changes to the Loan-Level Price Adjustment (LLPA) that punishes responsible home buyers with good credit to subsidize those with bad credit. This bill would restore the LLPA to its former state and ensure that the irresponsible decision-making that led to this change will not be repeated.
The bill was led by Senators Mike Braun (R-IN) and Roger Marshall (R-KS).
Senator Budd said in a statement:
“The Biden administration continues to double-down on misguided policies that only make life more difficult for the majority of hard-working Americans. We should not be punishing fiscally responsible home buyers in order to bail out those with poor credit. This rule is fundamentally unfair and must be overturned.”
Senator Braun said:
“The average American has a credit score over 716. The Biden administration is making home ownership more difficult for everyday Americans by raising rates for most people with a credit score over 680 to subsidize riskier borrowers. I urge my colleagues in the Senate to quickly vote to overturn this unfair rule that penalizes fiscal responsibility.”
Senator Marshall said:
“It is ludicrous to punish fiscally responsible buyers by charging them a higher fee in order to give risky borrowers loan-level price adjustments. Our bill will reverse this misguided choice and require the FHFA to follow the established rules and administrative procedures when making changes like this. This is unfair to every American who has worked hard and managed their finances responsibly – they shouldn’t have to pay more and be penalized for the choices of others.”
On May 1, 2023, the Federal Housing Finance Agency (FHFA) implemented misguided changes to the Loan Level Pricing Adjustments (LLPA), which are one-time, upfront fees charged to lenders when Fannie Mae and Freddie Mac (GSE’s) purchase their loans. These fees get passed to the borrowers in the form of higher interest rates. The change to the LLPA effectively raises rates for those with credit scores above 680 to subsidize relatively lower rates for those with credit scores below that threshold.