Middle Class Borrower Protection Act of 2023

IIB 118TH CONGRESS 1ST SESSION H. R. 3564 IN THE SENATE OF THE UNITED STATES JULY 10, 2023 Received; read twice and referred to the Committee on Banking, Housing, and Urban Affairs AN ACT To cancel recent changes made by the Federal Housing Fi- nance Agency to the up-front loan level pricing adjust- ments charged by Fannie Mae and Freddie Mac for guarantee of single-family mortgages, and for other pur- poses. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 2 HR 3564 RFS SECTION 1. SHORT TITLE. 1 This Act may be cited as the ‘‘Middle Class Borrower 2 Protection Act of 2023’’. 3 SEC. 2. REPEAL OF RECALIBRATED SINGLE-FAMILY PRIC- 4 ING FRAMEWORK. 5 Not later than the expiration of the 60-day period 6 beginning on the date of the enactment of this Act, the 7 Director of the Federal Housing Finance Agency shall re- 8 vise the recalibrated single-family pricing framework 9 charged by the enterprises for guarantee of mortgages on 10 single-family housing so that such fees are identical to the 11 fees of the standard single-family pricing framework in ef- 12 fect immediately before May 1, 2023. 13 SEC. 3. RESTRICTIONS ON FHFA ADJUSTMENTS TO SINGLE- 14 FAMILY PRICING FRAMEWORK. 15 (a) TEMPORARY PROHIBITION ON FURTHER AD- 16 JUSTMENTS TO SINGLE-FAMILY PRICING FRAMEWORK.— 17 During the period beginning upon the date of the revision 18 of the recalibrated single-family pricing framework pursu- 19 ant to section 2 and ending 90 days after the submission 20 to the Congress of the report required under section 5, 21 the Director may not further revise the single-family pric- 22 ing framework from such framework in effect pursuant 23 to the revision required by section 2. 24 (b) ADMINISTRATIVE PROCEDURES FOR ADOPTION 25 OF ADJUSTMENTS TO THE SINGLE-FAMILY PRICING 26 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 3 HR 3564 RFS FRAMEWORK.—After expiration of the period referred to 1 in subsection (a), when proposing adjustments to the sin- 2 gle-family pricing framework, the Director shall follow 3 procedures that are as close as practicable to those re- 4 quirements for a Federal agency issuing a rule under 5 chapter 5 of title 5, United States Code (commonly re- 6 ferred to as the ‘‘Administrative Procedure Act’’). 7 (c) FHFA REQUIREMENT FOR THE USE OF RISK- 8 BASED PRICING.—Section 1367(b)(2) of the Federal 9 Housing Enterprises Financial Safety and Soundness Act 10 of 1992 (12 U.S.C. 4617(b)(2)) is amended by adding at 11 the end the following new subparagraph: 12 ‘‘(L) ADDITIONAL POWERS AS CONSER- 13 VATOR.—The Agency shall, as conservator for 14 an enterprise, to the greatest extent feasible re- 15 quire that any modifications, including in- 16 creases, decreases, or eliminations, approved to 17 a loan-level pricing adjustment fee, as such 18 term is defined in section 6 of the Middle Class 19 Borrower Protection Act of 2023, charged by 20 an enterprise shall be based on the risk posed 21 by the mortgage loan to the enterprise.’’. 22 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 4 HR 3564 RFS SEC. 4. PROHIBITION OF LOAN-LEVEL PRICE ADJUST- 1 MENTS BASED ON DEBT-TO-INCOME RATIO. 2 The Director and the enterprises shall not impose any 3 loan-level pricing adjustment fee that is based on the ratio 4 of the debt of the mortgagor to the income of the mort- 5 gagor. 6 SEC. 5. GAO STUDY. 7 (a) STUDY.—The Comptroller General of the United 8 States shall conduct a study of the revisions made by the 9 Federal Housing Finance Agency to the standard single- 10 family pricing framework under the recalibrated single- 11 family pricing framework to— 12 (1) analyze— 13 (A) the methodology, policy considerations, 14 and any other objectives used by the Federal 15 Housing Finance Agency as the basis for such 16 revisions, including the authority cited by the 17 Director under the Federal Housing Enter- 18 prises Financial Safety and Soundness Act of 19 1992 (12 U.S.C. 4501 et seq.) to require such 20 revisions; 21 (B) the data, econometric modeling, and 22 other inputs supplied by the enterprises during 23 the revisions process; 24 (C) the extent to which such revisions com- 25 ply with the objectives of the Enterprise Regu- 26 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 5 HR 3564 RFS latory Capital Framework, including the inter- 1 action with and treatment of any private mort- 2 gage insurance required in connection with a 3 residential mortgage transaction; and 4 (D) the economic impact of such revisions 5 on various classes of lenders and borrowers af- 6 fected by such revisions; 7 (2) determine the extent to which such revi- 8 sions— 9 (A) were conducted on the basis of, and 10 how they might deviate from, the principle of 11 risk-based pricing; 12 (B) deviate from the data, econometric 13 modeling, and other inputs supplied by the en- 14 terprises during the revisions process; 15 (C) achieve the objectives of the Enterprise 16 Regulatory Capital Framework, including if 17 such revisions have resulted in either a negative 18 profitability gap or negative rate of return on 19 the targeted rate of return on capital for any 20 business segment under the recalibrated single- 21 family pricing framework; 22 (D) represent any increased risks to the 23 safety and soundness of the enterprises; and 24 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 6 HR 3564 RFS (3) assess the benefits that would accrue to 1 first-time, low-income homebuyers based on the re- 2 calibrated single-family pricing framework taking ef- 3 fect. 4 (4) assess the impacts that the recalibrated sin- 5 gle-family pricing framework taking effect would 6 have on affordable housing preservation, rural hous- 7 ing, and manufactured housing. 8 (b) REPORT.—The Comptroller General shall submit 9 a report to the Congress setting forth the findings and 10 conclusions of the study, and make the report publicly 11 available online on a website of the Department, not later 12 than the expiration of the 14-month period beginning on 13 the date of the enactment of this Act. 14 SEC. 6. DEFINITIONS. 15 In this Act: 16 (1) DIRECTOR.—The term ‘‘Director’’ means 17 the Director of the Federal Housing Finance Agen- 18 cy. 19 (2) ENTERPRISE.—The term ‘‘enterprise’’ has 20 the meaning given such term in section 1303 of the 21 Federal Housing Enterprises Financial Safety and 22 Soundness Act of 1992 (12 U.S.C. 4502). 23 (3) LOAN-LEVEL PRICING ADJUSTMENT FEE.— 24 The term ‘‘loan-level pricing adjustment fee’’ means 25 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 7 HR 3564 RFS an up-front fee paid by lenders when a mortgage 1 loan is acquired by an enterprise. 2 (4) RECALIBRATED SINGLE-FAMILY PRICING 3 FRAMEWORK.—The term ‘‘recalibrated single-family 4 pricing framework’’ means the loan-level pricing ad- 5 justment fee structure as referred to in the an- 6 nouncement of the Federal Housing Finance Agency 7 on January 19, 2023, relating to ‘‘Updates to the 8 Enterprises’ Single-Family Pricing Framework’’, 9 and set forth in Federal National Mortgage Associa- 10 tion Lender Letter LL-2023-01 and Federal Home 11 Loan Mortgage Corporation Bulletin 2023-1. 12 (5) RISK-BASED PRICING.—The term ‘‘risk- 13 based pricing’’ means the calibration of fees based 14 on the expected credit losses to an enterprise of each 15 single-family mortgage category as defined by an en- 16 terprise based on the credit score and loan-to-value 17 ratio characteristics of a mortgage. 18 (6) STANDARD SINGLE-FAMILY PRICING FRAME- 19 WORK.—The term ‘‘standard single-family pricing 20 framework’’ means the loan-level pricing adjustment 21 fee structure in effect on April 30, 2023. 22 SEC. 7. ENTERPRISE GUARANTEE FEES. 23 Subsection (f) of section 1327 of the Federal Housing 24 Enterprises Financial Safety and Soundness Act of 1992 25 VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS 8 HR 3564 RFS (12 U.S.C. 4547(f)) is amended by striking ‘‘October 1, 1 2032’’ and inserting ‘‘October 1, 2033’’. 2 Passed the House of Representatives June 23, 2023. Attest: CHERYL L. JOHNSON, Clerk. VerDate Sep 11 2014 00:30 Jul 11, 2023 Jkt 039200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H3564.RFS H3564 kjohnson on DSK79L0C42PROD with BILLS