Biden Admin Backtracks on Some Mortgage Fee Hikes Amid Pushback

Just the News: The Biden administration is walking back a plan that would have raised rates on homebuyers based on their debt-to-income ratio in the face of significant backlash.

The Federal Housing Finance Agency confirmed that “rescinded the upfront fees based on borrowers’ [debt-to-income] ratios for loans acquired by Fannie Mae and Freddie Mac,” the Washington Times reported. Under the scheme, borrowers going through either agency would have faced a 0.375% fee if their house payment and other debts exceeded 40% of their monthly income.

FHFA Director Sandra Thompson indicated that the agency would “provide additional transparency” on the fee changes and release details of its plan in the near future. Though the FHFA has walked back its DTI fee scheme, it has retained plans to impose a separate fee on homebuyers with good credit scores.

FHFA cracks under political pressure and reverses new mortgage fee pic.twitter.com/MMz2AGkfjk

— Byron Lazine (@ByronLazine) May 11, 2023

That scheme has drawn particular scrutiny from Republicans, who have argued that subsidizing poor credit homebuyers at the expense of those with stronger credit punishes the financially responsible.

A group of House lawmakers in late April put forward legislationto block the rule change.

“If implemented, the latest FHFA fee change could result in thousands of dollars in additional fees for lower-risk homeowners over time, while encouraging and rewarding financial irresponsibility,” Arizona Republican Rep. Andy Biggs warned at the time. “The FHFA — led by a President Biden-appointed director — is punishing financially responsible mortgage borrowers.”