The GOP-led House approved a measure to revoke a Biden administration rule that Republicans say is unduly harsh to those with high credit scores.
The House voted 230-189 on Friday to scrap the Federal Housing Finance Agency's (FHFA) rule, which recalibrated the loan-level price adjustment fee charged by mortgage giants Fannie Mae and Freddie Mac.
The rule became effective May 1 and revised the FHFA fee charts that provide percentage adjustments based on credit score and down payment, the Washington Examiner reported.
The rule, intended to make homeownership for lower-income buyers and those with lower credit scores more viable, was misguided, Republicans say, because some people with better credit scores will end up paying more in fees than before.
Fourteen Democrats voted with the GOP majority.
"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," House Financial Services Committee Chairman Patrick McHenry, R-N.C., said from the House floor.
"This bill would ensure that doesn't happen under this new Biden administration rule set."
H.R. 3564, offered by Housing and Insurance Subcommittee Chairman Warren Davidson, R-Ohio, reverses the Biden administration's changes to FHFA's Loan Level Pricing Adjustment structure, which acts as a tax on creditworthy homebuyers to subsidize those with lower credit scores.
Davidson said that under the new fee structure, those with credit scores of 680 or above would pay a higher price for their mortgage, and those with a score under the threshold would pay less than before the change.
Davidson said the move was not income-based, as the Biden administration's rule could penalize lower-income buyers who have good credit scores while rewarding some wealthier buyers who have higher incomes but low credit scores.
"People with low income who live within their means and pay their bills on time wind up with good credit scores," Davidson said.
Although Davidson's bill passed the House, it has a less certain future in the Democrat-controlled Senate.
Even if it were to pass in the Senate, President Joe Biden likely would veto the legislation.
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