Bills seek to roll back recent change to mortgage pricing

Two Republican members of Congress have introduced bills aimed at canceling the Federal Housing Finance Agency's latest adjustments to government-sponsored enterprise mortgage fees.

Rep. Andy Biggs, R.-Ariz. introduced H.R. 2928 and Rep. Stephanie Bice, R.-Okla, sponsored H.R. 2876, both of which seek to roll back the overhaul of the GSEs' loan-level price adjustments.

More than 30 Republican co-sponsors backed Biggs' bill. Bice's bill has 14. The text of Bice's bill was not available at deadline but the information available for both indicate that they would simply cancel the most recent fee changes.

Biggs and other Republican lawmakers have shown concern that the cross-subsidization involved in the new pricing leads to borrowers with lower credit scores getting breaks at the expense of those with better payment track records.

"The FHFA — led by a President Biden-appointed director — is punishing financially responsible mortgage borrowers," Biggs said in a press release, adding that, "If implemented, the latest FHFA fee change could result in thousands of dollars in additional fees for lower-risk homeowners over time, while encouraging and rewarding financial irresponsibility."

FHFA Director Sandra Thompson recently pushed back on such criticisms, saying in a statement that the practice has long been in Fannie Mae and Freddie Mac's statutory charters and that the recent changes are misunderstood. 

She said the FHFA is cross-subsidizing lower-income borrowers, not those with lower credit scores, and that while these are primarily offset with higher fees on other products like cash-out, high balance and second-home loans, not all borrowers with higher credit scores are penalized and some may even see their fees decrease or remain flat because the price changes are nuanced.

Currently, underwriting generally requires a borrower who gets a break due to their income to have other strong indicators of an ability to repay.

Thompson has questioned why the most recent revision to pricing has been met with opposition.

Lenders have characterized the most recent update of the pricing grids as more far reaching and complex than past revisions. 

Thompson has said the grids required extensive update because they were sorely in need of modernization.