The House voted Friday 230-189 to scrap the Biden administration rule, with 14 Democrats voting with the GOP majority. The rule recalibrated the loan-level price adjustment fee charged by mortgage giants Fannie Mae and Freddie Mac in order to make homeownership for lower-income buyers and those with lower credit scores more viable. But Republicans contend that the rule is misguided because some with better credit scores will end up paying more in fees than before.
A second phase of the mortgage rule was set to take place in August, but the FHFA ended up scrapping that provision amid uproar. That withdrawn portion would have further assessed fees based on a buyer’s debt-to-income ratio, a controversial proposal that faced immediate backlash. FHFA Director Sandra Thompson recently appeared before the House Financial Services Committee and defended the rule change, receiving some backup from House Democrats who contend the move is a step in the right direction and would help prevent inequality.
Thompson said that the new fee structures are higher and lower in differing amounts and do not represent across-the-board fee increases for low-risk borrowers or fee decreases for all high-risk borrowers.