H.R.53 - Responsible Borrower Protection Act of 2025 (119th Congress)
Summary
H.R.53, the Responsible Borrower Protection Act of 2025, aims to cancel proposed changes to credit fees charged by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). These changes, announced by the Federal Housing Finance Agency (FHFA) on January 19, 2023, relate to the single-family housing mortgage credit fee pricing framework. The bill seeks to prevent the implementation of Lender Letter LL-2023-01 and Bulletin 2023-1, effectively maintaining the existing credit fee structure.
The bill explicitly states that it should not be construed to prohibit risk-based pricing for credit fees. This suggests an intention to balance borrower protection with the financial stability of the enterprises. The Act is sponsored by Mr. Biggs of Arizona, along with several other representatives, and has been referred to the Committee on Financial Services.
In short, the bill intends to block changes to mortgage credit fees, maintaining the status quo and allowing risk-based pricing to continue.
Expected Effects
If enacted, H.R.53 would prevent Fannie Mae and Freddie Mac from implementing the proposed changes to their single-family mortgage credit fee pricing framework. This would mean that the credit fees charged to borrowers would remain at their current levels, as opposed to the updated structure announced by the FHFA.
The immediate effect would be to halt the implementation of Lender Letter LL-2023-01 and Bulletin 2023-1. The long-term effect would be to maintain the existing pricing structure, potentially impacting the cost of mortgages for borrowers and the profitability of the enterprises.
Ultimately, this could affect the housing market by influencing the affordability of mortgages and the risk profile of loans.
Potential Benefits
- Protects Borrowers from Potential Fee Increases: By canceling the proposed changes, the bill aims to prevent potential increases in credit fees for borrowers, making mortgages more affordable.
- Maintains Existing Market Conditions: Preserving the current credit fee structure could provide stability in the housing market by avoiding disruptions caused by the new pricing framework.
- Supports Homeownership: Affordable mortgages can encourage homeownership, particularly for first-time buyers and those with lower incomes.
- Ensures Risk-Based Pricing Continues: The bill explicitly allows for risk-based pricing, which helps to ensure that the enterprises can manage their risk exposure effectively.
- Provides Certainty: By blocking the proposed changes, the bill provides certainty to lenders and borrowers, allowing them to plan accordingly.
Most Benefited Areas:
Potential Disadvantages
- May Limit FHFA's Flexibility: The bill restricts the FHFA's ability to adjust credit fee pricing in response to changing market conditions or to address specific risks.
- Potential Impact on Enterprise Profitability: Preventing the implementation of the new pricing framework could affect the profitability of Fannie Mae and Freddie Mac, potentially impacting their ability to support the housing market.
- Could Stifle Innovation: By maintaining the status quo, the bill may discourage the enterprises from exploring innovative pricing strategies that could benefit both borrowers and lenders.
- Potential for Market Distortions: Freezing credit fees could lead to market distortions if the existing pricing structure does not accurately reflect the risks associated with different types of mortgages.
- Unintended Consequences: Any intervention in the housing market can have unintended consequences, and it is possible that this bill could lead to unforeseen challenges.
Constitutional Alignment
The bill appears to align with the constitutional framework, particularly Article I, Section 1, which grants all legislative powers to Congress. Congress has the authority to regulate commerce and financial matters, including the activities of government-sponsored enterprises like Fannie Mae and Freddie Mac.
The bill does not appear to infringe upon any specific individual rights or liberties protected by the Bill of Rights. It primarily addresses economic and financial regulations, which fall within the purview of congressional authority.
However, the extent to which the bill promotes the "general Welfare," as stated in the Preamble, is debatable and depends on one's perspective on the merits of the proposed changes to credit fees.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).