Republicans are demanding details on the Federal Housing Finance Agency’s new mortgage rate pricing shifts that could force people with good credit ratings to pay increased fees to subsidize high-risk mortgages.

The FHFA, the regulator of Fannie Mae and Freddie Mac, announced changes last week to the loan-level price adjustment, or LLPA, matrix as part of the Biden administration’s efforts to boost first-time and low-income borrowers and close the racial homeownership gap. The LLPA rate shifts would make mortgage fees cheaper for low-credit and low-down-payment borrowers, which critics claim would lead to spikes in monthly payments for high-credit homebuyers.

A group of 18 GOP senators warned in a letter Wednesday to FHFA Director Sandra Thompson that the changes “will invert the common-sense risk financing structure at the GSEs in an effort to decrease mortgage rates for riskier individuals with low credit scores and forcibly raise rates for those with higher scores. This shortsighted and counterproductive policy demonstrates a profound misunderstanding of the necessity of accurately tailoring housing finance products to credit risk and establishes a perverse incentive that punishes hardworking Americans for their fiscal prudence.” 

“The housing market should not be exploited as a means to pander to targeted demographics that you have chosen, nor an instrument to secure political favoritism,” stated the letter, led by Sens. Roger Marshall and Thom Tillis. Read Full Story

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