Washington, D.C. – Kansas U.S. Senator Roger Marshall and Senator Mike Braun introduced the Middle Class Borrower Protection Act to 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.
In addition to Marshall and Braun, 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, Ted Cruz and Rick Scott introduced the legislation in the Senate. Last month, Rep. Warren Davidson introduced the companion legislation which passed the House of Representatives with bipartisan support.
“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,: said Senator Marshall.
“Helping Americans achieve the dream of homeownership shouldn’t require punishing homebuyers with good credit. Rather than subsidizing high-risk borrowers and punishing fiscal responsibility, the federal government needs to be focused on reducing housing costs to make homes more affordable for all Americans.”—Sen. Moran
“From his student loan bailout to punishing those Americans with a high credit score, President Biden’s policies punish millions of Americans for practicing fiscal responsibility. This legislation will prevent the Biden administration from forcing those with good credit scores to prop up those with bad ones," according to Senator Tom Cotton.
“The Biden administration is targeting hardworking Americans who save, diligently pay their bills, and build good credit in order to subsidize mortgages for higher-risk borrowers. I’m proud to join my colleagues in introducing this common-sense legislation that would reverse this misguided and unfair policy," said Senator John Thune.
"Making homeownership more accessible for more Americans is laudable. However, it shouldn’t mean penalizing other Americans, which is exactly what the Biden administration is doing. The Senate should follow the House and pass this legislation to shut down this unfair and misguided scheme to social-engineer the U.S. housing market," said Senator City Hyde-Smith.
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.