U.S. Rep. Ken Calvert (R-CA) introduced legislation in the U.S. House of Representatives that seeks to protect homebuyers from paying higher fees on their mortgages.
His bill, the Secure Americans from Financial Exploitation (SAFE) Act (H.R. 3041), was introduced in response to loan-level price adjustments (LLPA) on conventional mortgages, recently implemented by the Federal Housing Finance Agency (FHFA). As a result, borrowers with higher credit scores will generally be forced to pay higher upfront fees, while borrowers with low credit scores will see their fees lowered.
So, a borrower with a credit score of 700 who made a 20 percent down payment would have paid an upfront fee equal to 1.25 percent of the loan amount — which would be $7,500 on a $600,000 loan. Under the new FHFA LLPA, the borrower’s fees would be raised to 1.375 percent, or a total of $8,250, on a $600,000 loan.
Calvert’s SAFE Act would block the implementation of the changes to the single-family housing mortgage credit fee pricing framework that FHFA announced on Jan. 19.
“It’s blatantly unfair to impose increased fees on homebuyers simply because they have a higher credit score,” Calvert said. “With interest rates on the rise, these new higher fees will only make homebuying more expensive for American families. Raising rates on homebuyers with good credit scores is unnecessarily punitive and stands contrary to the risk-based approach commonly associated with our housing finance programs. Congress should pass the SAFE Act now to stop these new high credit score fees on homebuyers and focus on strengthening traditional federal programs designed to help first-time, Veteran, and other homebuyers.”