Braun
U.S. Senator Mike Braun (R-Ind.) and Sen. Roger Marshall (R-Kan.) introduced the Middle Class Borrower Protection Act to reverse a 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 decision-making that led to this change will not be repeated.
In addition to Braun and Marshall, U.S. Senators John Thune, Thom Tillis, Cindy Hyde-Smith, Jerry Moran, Tom Cotton, John Cornyn, John Barrasso, Ted Budd, Roger Wicker, Kevin Cramer, Marco Rubio and Ted Cruz introduced the legislation in the Senate. Last month, Rep. Warren Davidson introduced the companion legislation which passed the House of Representatives with bipartisan support.
“The average American has a credit score over 716,” Sen. Braun said. “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.”
Background
On May 1, 2023, the Federal Housing Finance Agency (FHFA) implemented 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.