HFSC Chairman Patrick McHenry Opposes Biden Administration Mortgage Plan

The chairman of the House Financial Services Committee aims to reverse a Biden Administration mortgage plan.

Rep. Patrick McHenry (R-North Carolina) said Friday (June 23) on the House floor that the Administration’s changes to the Federal House Finance Agency’s (FHFA’s) Loan Level Pricing Adjustment Structure subsidizes home buyers with lower credit scores by taxing those with higher scores.

McHenry spoke in support of the Middle Class Borrower Protection Act (HR 3564), a bill by Housing and Insurance Subcommittee Chairman Warren Davidson (R-Ohio) that would reverse those changes, which went into effect May 1.

“What I would say to my colleagues is: is it right to raise the cost of borrowing for families that have worked hard and saved up to buy a home in order to subsidize those who are less creditworthy? I don’t think so,” McHenry said.

Under the Biden Administration proposal, almost half of borrowers will have to pay an additional $1.8 billion in new fees over the next two years so that those with lower credit scores can pay less, McHenry said.

“It will make housing less affordable — not more,” McHenry said. “It puts taxpayers at risk by threatening the safety and soundness of our housing finance system, and we have a chance to change that today and do the right thing.”

The FHFA said in a Jan. 19 press release that it was updating the upfront fee matrices for purchase, rate-term refinance and cash-out refinance loans beginning May 1 to “maintain support for single-family purchase borrowers limited by wealth or income.”

“By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises [Fannie Mae and Freddie Mac] advance their mission of facilitating equitable and sustainable access to homeownership,” FHFA Director Sandra L. Thompson said in the release.

The agency had announced in October 2022 that it was eliminating upfront fees for certain borrowers — including certain first-time homebuyers, low-income borrowers and underserved communities — and affordable mortgage programs.

At the same time, it said it was implementing increases to the upfront fees for most cash-out refinance loans, FHFA said in an Oct. 24, 2022, press release.