NAR President Testifies About New Mortgage Fees Before Congressional Panel

Parcell tells House Subcommittee fees are unnecessary, confusing, and hurt affordability.

WASHINGTON (May 17, 2023) —National Association of Realtors® President Kenny Parcell testified before the House Committee on Financial Services Subcommittee on Housing and Insurance today about the Federal Housing Finance Agency's (FHFA) new loan level pricing adjustments (LLPA) fee increase on borrowers with fair to good credit profiles. 

Parcell, a Realtor® for 27 years from Spanish Fork, Utah, said the fees were unnecessary and confusing, and 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% of the market, but that has dropped to 26%, the lowest on record," Parcell said. "The best way to build wealth is through real estate." 

"This fee increase on some borrowers is another hurdle to owning a home. But the biggest impediment remains the lack of housing affordability and supply," Parcell testified. "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 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 Aug. 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. 

The National Association of Realtors® is America's largest trade association, representing more than 1.5 million members involved in all aspects of the residential and commercial real estate industries. The term Realtor® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of Realtors® and subscribes to its strict Code of Ethics

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