This article discusses the introduction of a new bill meant to block changes to the LLPA (Loan Level Price Adjustment) Fee. The proposed bill is called the “Living American Wage Earner (LIVE) Act” and aims to protect prospective and current homeowners from significant loan rate increases.

The LLPA fee is applied to homebuyers (or those refinancing their homes) who have a loan-to-value ratio of 80% or above. This fee is meant to cover the risk a lender takes on in the event of a default. Currently, the fee may vary based on a number of factors like credit score, down payment size, and home state. The LIVE Act would institute a single LLPA fee across the country, no matter what a homebuyer’s situation is.

The introduction of the LIVE Act puts some of the Federal Housing Administration’s (FHA) power in jeopardy as the FHA is responsible for setting fees for loans with an LTV ratio of 90% or above. The LIVE Act would put FHA fees and other fees more in line with the market. The American Bankers Association supports the bill because it could make the homeownership process more uniform and easier to understand for borrowers.

Supporters of this bill argue that it will result in a uniform, more reasonable fee structure than the current variable fee structure. The elimination of additional fees on top of the flat one-rate fee, would protect potential and current homeowners from large rate increases and hidden fees. The bill is currently on its way to the House for review and debate about its potential implementation.

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