Looking for equity for homebuyers, Congressman Ken Calvert (R-CA) recently presented the SAFE Act to safeguard conscientious buyers from unreasonable and increased fees on their mortgages.
“It’s blatantly unfair to impose increased fees on homebuyers simply because they have a higher credit score,” Calvert said in advocating for House Bill 3041. “With interest rates on the rise, these new higher fees will only make homebuying more expensive for American families. Raising rates on homebuyers with good credit scores is unnecessarily punitive and stands contrary to the risk-based approach commonly associated with our housing finance programs."
In a news release, he called for Congress to act and block changes impacting the credit-based fee-pricing model for single-family home mortgages that the Federal Housing Finance Agency (FHFA) announced in January.
"Congress should pass the SAFE Act now to stop these new high credit score fees on homebuyers and focus on strengthening traditional federal programs designed to help first-time, veteran and other homebuyers," Calvert said in the release issued May 2, the day he introduced SAFE Act.
A day prior, the FHFA put into effect new loan-level price adjustments (LLPA) on traditional mortgages. These adjustments require borrowers with higher credit scores to pay steeper upfront fees, while those with low credit scores pay less, Calvert said.
An example of how the new LLPA would impact borrowers, he said, is that someone with a 700 credit score and a 20% down payment will no longer pay an upfront fee amounting to 1.25% of the loan, equivalent to $7,500 on a $600,000 loan. They would now face an elevated fee of 1.375%, which represents $8,250 on the same loan.
A Riverside County native, Calvert represents the 41st Congressional District of Southern California and has been active for 17 years as an entrepreneur in restaurants and real estate, according to his biography.