[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[S. 2296 Introduced in Senate (IS)]
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118th CONGRESS
1st Session
S. 2296
To cancel recent changes made by the Federal Housing Finance Agency to
the up-front loan level pricing adjustments charged by Fannie Mae and
Freddie Mac for guarantee of single-family mortgages, and for other
purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 13, 2023
Mr. Braun (for himself, Mr. Marshall, Mr. Tillis, Mrs. Hyde-Smith, Mr.
Moran, Mr. Cotton, Mr. Cornyn, Mr. Barrasso, Mr. Budd, Mr. Wicker, Mr.
Cramer, Mr. Thune, Mr. Rubio, Mr. Cruz, and Mr. Scott of Florida)
introduced the following bill; which was read twice and referred to the
Committee on Banking, Housing, and Urban Affairs
_______________________________________________________________________
A BILL
To cancel recent changes made by the Federal Housing Finance Agency to
the up-front loan level pricing adjustments charged by Fannie Mae and
Freddie Mac for guarantee of single-family mortgages, and for other
purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Middle Class Borrower Protection Act
of 2023''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(2) Enterprise.--The term ``enterprise'' has the meaning
given the term in section 1303 of the Federal Housing
Enterprises Financial Safety and Soundness Act of 1992 (12
U.S.C. 4502).
(3) Loan-level pricing adjustment fee.--The term ``loan-
level pricing adjustment fee'' means an up-front fee paid by
lenders when a mortgage loan is acquired by an enterprise.
(4) Recalibrated single-family pricing framework.--The term
``recalibrated single-family pricing framework'' means the
loan-level pricing adjustment fee structure as referred to in
the announcement of the Federal Housing Finance Agency on
January 19, 2023, relating to ``Updates to the Enterprises'
Single-Family Pricing Framework'', and set forth in Federal
National Mortgage Association Lender Letter LL-2023-01 and
Federal Home Loan Mortgage Corporation Bulletin 2023-1.
(5) Risk-based pricing.--The term ``risk-based pricing''
means the calibration of fees based on the expected credit
losses to an enterprise of each single-family mortgage category
as defined by an enterprise based on the credit score and loan-
to-value ratio characteristics of a mortgage.
(6) Standard single-family pricing framework.--The term
``standard single-family pricing framework'' means the loan-
level pricing adjustment fee structure in effect on April 30,
2023.
SEC. 3. REPEAL OF RECALIBRATED SINGLE-FAMILY PRICING FRAMEWORK.
Not later than 60 days after the date of the enactment of this
Act, the Director shall revise the recalibrated single-family pricing
framework charged by the enterprises for the guarantee of mortgages on
single-family housing so that such fees are identical to the fees of
the standard single-family pricing framework in effect immediately
before May 1, 2023.
SEC. 4. RESTRICTIONS ON FHFA ADJUSTMENTS TO SINGLE-FAMILY PRICING
FRAMEWORK.
(a) Temporary Prohibition on Further Adjustments to Single-Family
Pricing Framework.--During the period beginning on the date of the
revision of the recalibrated single-family pricing framework pursuant
to section 3 and ending on the date that is 90 days after the date on
which the Comptroller General of the United States submits to Congress
the report required under section 6, the Director may not further
revise the single-family pricing framework from the framework in effect
pursuant to the revision required by section 3.
(b) Administrative Procedures for Adoption of Adjustments to the
Single-Family Pricing Framework.--After the expiration of the period
described in subsection (a), when proposing adjustments to the single-
family pricing framework, the Director shall follow procedures that are
as close as practicable to those requirements for a Federal agency
issuing a rule under chapter 5 of title 5, United States Code (commonly
referred to as the ``Administrative Procedure Act'').
(c) FHFA Requirement for the Use of Risk-Based Pricing.--Section
1367(b)(2) of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4617(b)(2)) is amended by adding at
the end the following:
``(L) Additional powers as conservator.--The Agency
shall, as conservator for an enterprise, to the
greatest extent feasible, require that any
modifications, including increases, decreases, or
eliminations, approved to a loan-level pricing
adjustment fee, as is defined in section 2 of the
Middle Class Borrower Protection Act of 2023, charged
by an enterprise shall be based on the risk posed by
the mortgage loan to the enterprise.''.
SEC. 5. PROHIBITION OF LOAN-LEVEL PRICE ADJUSTMENTS BASED ON DEBT-TO-
INCOME RATIO.
The Director and the enterprises shall not impose any loan-level
pricing adjustment fee that is based on the ratio of the debt of the
mortgagor to the income of the mortgagor.
SEC. 6. GAO STUDY.
(a) Study.--The Comptroller General of the United States shall
conduct a study of the revisions made by the Federal Housing Finance
Agency to the standard single-family pricing framework under the
recalibrated single-family pricing framework to--
(1) analyze--
(A) the methodology, policy considerations, and any
other objectives used by the Federal Housing Finance
Agency as the basis for those revisions, including the
authority cited by the Director under the Federal
Housing Enterprises Financial Safety and Soundness Act
of 1992 (12 U.S.C. 4501 et seq.) to require those
revisions;
(B) the data, econometric modeling, and other
inputs supplied by the enterprises during the revision
process;
(C) the extent to which the revisions comply with
the objectives of the Enterprise Regulatory Capital
Framework, including the interaction with and treatment
of any private mortgage insurance required in
connection with a residential mortgage transaction; and
(D) the economic impact of the revisions on various
classes of lenders and borrowers affected by the
revisions;
(2) determine the extent to which the revisions--
(A) were conducted on the basis of, and how they
might deviate from, the principle of risk-based
pricing;
(B) deviate from the data, econometric modeling,
and other inputs supplied by the enterprises during the
revision process;
(C) achieve the objectives of the Enterprise
Regulatory Capital Framework, including if the
revisions have resulted in either a negative
profitability gap or negative rate of return on the
targeted rate of return on capital for any business
segment under the recalibrated single-family pricing
framework; and
(D) represent any increased risks to the safety and
soundness of the enterprises;
(3) assess the benefits that would accrue to first-time,
low-income homebuyers based on the recalibrated single-family
pricing framework taking effect; and
(4) assess the impacts that the recalibrated single-family
pricing framework taking effect would have on affordable
housing preservation, rural housing, and manufactured housing.
(b) Report.--Not later than 14 months after the date of enactment
of this Act, the Comptroller General of the United States shall submit
to Congress and make publicly available on a website of the Government
Accountability Office a report setting forth the findings and
conclusions of the study conducted under subsection (a).
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