NAR President Testifies Before Congressional Panel About New Mortgage Fees

In response to the controversial new loan level pricing adjustments (LLPA) announced by the Federal Housing Finance Agency’s (FHFA), National Association of Realtors® President Kenny Parcell recently testified before the House Committee on Financial Services Subcommittee on Housing and Insurance on the fees’ unnecessary and confusing nature.

Parcell explained to the House that potential homebuyers face a lack of affordability and supply in the current market in pursuit of the American Dream.

“The average American homebuyer faces more barriers to achieving homeownership than ever before. Uncertainty in the U.S. economy, rising inflation, increasing mortgage rates, and lack of affordable inventory continue to devastate buyer confidence. This year, U.S. home purchase mortgage applications dropped to a 28-year-low as rates jumped,” Parcell said. “First-time homebuyers historically made up around 40 percent of the market, but that has dropped to 26 percent, the lowest on record,” Parcell said. “The best way to build wealth is through real estate.”

Parcel also explained that the fee increase puts another hurdle in front of borrowers, in tandem with the current low inventory and lack of affordability.

“Without addressing this issue, housing will remain out of reach for many. Possible solutions to supply include incentives to transfer commercial office buildings into residential units, mobilizing private funds to revitalize affordable homes, or incentivizing more owners to sell their homes by increasing the maximum amount of capital gains a homeowner can exclude on the sale of a principal residence,” Parcell testified.

Parcell also praised a recent announcement by FHFA rescinding a proposed LLPA fee based on a borrower’s debt-to-income ratio. The proposed LLPA fee, which would have taken effect August 1, stood to impact borrowers with debt-to-income (DTI) ratios greater than 40%. The FHFA also issued a Request for Information (RFI) on the LLPA increase on borrowers with better credit. 

“This is a huge victory for consumers as we opposed the DTI fee and believe public comment and further research from the industry, analysts, and concerned consumers will help the FHFA reconsider the pricing changes in hopes of lowering fees on all borrowers.”

Along with NAR, representatives from the Housing Policy Council (HPC), the Robert H. Smith School of Business at the University of Maryland, and the Urban Institute’s Housing Finance Policy Center Urban Institute were present for the hearing.

For more information, visit https://www.nar.realtor/.