Republican Governors Ask Biden Administration to Reverse Course on Proposed Loan Level Pricing Adjustment

WASHINGTON, D.C. – Eighteen Republican governors, led by Georgia Governor Brian Kemp and Missouri Governor Mike Parson, submitted a letter to the Biden Administration and the Federal Housing Agency asking to reverse course on changes to the proposed loan level pricing adjustment, “LLPA,” structure on behalf of those around the country who are working hard to achieve the American Dream of homeownership.

The text reads as follows:

Dear President Biden and Director Thompson,

We write to you in regard to the mandated May 1, 2023, changes to the loan level pricing adjustment (“LLPA”) structure employed by Fannie Mae and Freddie Mac and ask that you reverse course on behalf of hardworking Americans across the country.

In short, the new LLPA framework will inevitably increase mortgage costs for lower-risk individuals and handicap those borrowers with larger down payments. Further, the changes provide no incentive to borrowers to maintain good credit and will confuse borrowers at all credit levels. Disincentivizing good credit behavior and penalizing responsible Americans during an inflation crisis – which required the Federal Reserve to increase interest rates 10 consecutive times in a year – is wrong and unreasonable.

Your actions are threatening the American housing system. By upending the existing financing model that relies on individual financial responsibility, you are increasing uncertainty in the housing market and our nation’s economy. As noted by Senate Republicans on April 26, the LLPA mandates will “distort the cost of lending in U.S. housing markets, making the entire system less efficient and costlier for all Americans.”

As governors, we promote hard work, accountability, fairness, and opportunity for all our citizens. The LLPA mandates blatantly contradict these goals. Therefore, we request you rescind the updated LLPA immediately. If you are unwilling to do so, Congress must take action.

• Led by Governor Brian Kemp (GA) and Governor Mike Parson (MO), additional signatories include: Governor Kay Ivey (AL), Governor Sarah Sanders (AR), Governor Brad Little (ID), Governor Eric Holcomb (IN), Governor Kim Reynolds (IA), Governor Tate Reeves (MS), Governor Greg Gianforte (MT), Governor Jim Pillen (NE), Governor Joe Lombardo (NV), Governor Chris Sununu (NH), Governor Mike DeWine (OH), Governor Kristi Noem (SD), Governor Bill Lee (TN), Governor Greg Abbott (TX), Governor Spencer Cox (UT), and Governor Mark Gordon (WY).

Read the full letter here.