Affordable Homeownership Protection Act

4% Max Mortgage for Homes Under $500K—End Predatory Fees!

Caps rates at 4% for primary homes/land under limits, ties prices to build costs (exempting pre-1940 historic), refunds excess on old loans, limits late fees to 1 payment, & gives 90-day grace for moves. Saves homeowners $1000s/year, stops flipping abuse, & builds wealth equitably.

 

 

# H.R. ____

 

# A BILL

 

To establish comprehensive protections for consumer home loans, including maximum annual percentage rates, purchase price limitations, retroactive adjustments, late fee caps, interest rate stability measures, and relocation grace periods for primary residences with a purchase price of less than $500,000 or land with a purchase price of less than $150,000, limited to one such property per borrower, and for other purposes.

 

**Be it enacted by the House of Representatives and the Senate of the United States of America in Congress assembled,**

 

## SECTION 1. SHORT TITLE.

 

This Act may be cited as the "Affordable Homeownership Protection Act of 2025".

 

## SECTION 2. FINDINGS.

 

Congress finds the following:

 

(1) Access to affordable housing is fundamental to economic stability, family security, and community vitality in the United States.

 

(2) High interest rates, excessive late fees, and volatile rate adjustments on consumer home loans disproportionately affect low- and moderate-income households, particularly for primary residences priced under $500,000 and undeveloped land under $150,000, which represent essential opportunities for homeownership and rural development for middle-class families.

 

(3) Recent economic data indicates that average annual percentage rates (APRs) on sub-$500,000 home loans have exceeded 6 percent in many markets, with subprime borrowers facing rates above 8 percent, contributing to housing unaffordability, foreclosures, and wealth inequality; unchecked property price inflation driven by flipping and speculative rentals further exacerbates these issues.

 

(4) Establishing a federal cap on interest rates at 4 percent, applicable for the entire loan term, along with price limitations tied to original costs, protections against excessive late fees, prohibitions on unjustified rate spikes, and grace periods for relocations, will promote equitable access to homeownership, curb predatory lending, and complement consumer protections under the Truth in Lending Act (15 U.S.C. 1601 et seq.) and the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.).

 

(5) Retroactive application to existing qualifying loans, with phased adjustments, will provide immediate relief to burdened homeowners, while exemptions for historical properties and documented improvements ensure fairness without stifling legitimate market activity.

 

(6) This measure will not unduly burden responsible lenders, as it sets the cap at 4 percent, limits late fees to one month's payment, and allows rate adjustments only for additional property acquisitions, supporting sustainable lending while safeguarding consumers from lifelong financial burdens and real estate abuse for flipping or rental purposes.

 

## SECTION 3. DEFINITIONS.

 

In this Act:

 

(1) **APR**.—The term "APR" has the meaning given the term "annual percentage rate" in section 107(d) of the Truth in Lending Act (15 U.S.C. 1606(d)).

 

(2) **CONSUMER HOME LOAN**.—The term "consumer home loan" means a closed-end loan or line of credit extended to an individual primarily for personal, family, or household purposes, secured by a lien on—

 

(A) a primary residence (as defined in section 103(v)(10) of the Truth in Lending Act (15 U.S.C. 1602(v)(10))); or

 

(B) undeveloped land intended for the construction of a primary residence.

 

Such term excludes any loan primarily for business, commercial, or agricultural purposes.

 

(3) **COVERED PROPERTY**.—The term "covered property" means—

 

(A) a primary residence with a purchase price, including taxes and fees but excluding any seller concessions or rebates, of less than $500,000; or

 

(B) undeveloped land with a purchase price, including taxes and fees but excluding any seller concessions or rebates, of less than $150,000.

 

(4) **CREDITOR**.—The term "creditor" has the meaning given that term in section 103(g) of the Truth in Lending Act (15 U.S.C. 1602(g)).

 

(5) **PRIMARY RESIDENCE**.—The term "primary residence" has the meaning given that term in section 103(v)(10) of the Truth in Lending Act (15 U.S.C. 1602(v)(10)).

 

(6) **ORIGINAL COST.**—The term "original cost" means the sum of—

 

(A) the documented acquisition cost of the land (including taxes and fees at the time of purchase); and

 

(B) the documented construction cost of any structures on the property (including labor, materials, and permits, as evidenced by building records, invoices, or appraisals from the time of completion).

 

(7) **SIGNIFICANT IMPROVEMENTS.**—The term "significant improvements" means additions or renovations to the land or buildings that increase the property's functional square footage by at least 20 percent or add appraised value exceeding 25 percent of the original cost, as verified by a licensed appraiser or building inspector, including but not limited to expansions, major structural upgrades, or substantial accessibility modifications.

 

(8) **YEAR OF CONSTRUCTION.**—The term "year of construction" means the date the primary structure on the property was initially completed and occupied, as determined by public records, historical surveys, or title documents.

 

(9) **LATE FEE.**—The term "late fee" means any charge imposed by a creditor for a payment that is not received by the due date specified in the loan agreement.

 

(10) **RATE SPIKE.**—The term "rate spike" means any increase in the APR on a consumer home loan exceeding 0.5 percent from the initial contracted rate.

 

## SECTION 4. MAXIMUM ANNUAL PERCENTAGE RATE FOR CERTAIN CONSUMER HOME LOANS.

 

(a) **IN GENERAL.**—No creditor may impose a finance charge on a consumer home loan secured by a covered property that results in an APR exceeding 4 percent at any time during the term of the loan.

 

(b) **ONE-PROPERTY LIMIT.**—The protections of this section shall apply only to one covered property per borrower, as determined by the borrower's principal residence at the time of loan origination. Subsequent refinancings or loans on additional properties shall not qualify unless they replace the original qualifying loan on the borrower's sole primary residence.

 

(c) **EXCEPTIONS.**—

 

(1) **COMMERCIAL PURPOSES.**—Subsection (a) shall not apply to any extension of credit primarily for business, commercial, or agricultural purposes.

 

(2) **GOVERNMENT LENDING.**—Subsection (a) shall not apply to credit extended by any agency or instrumentality of the United States, a State, or a political subdivision of a State, including loans insured or guaranteed under the National Housing Act (12 U.S.C. 1701 et seq.).

 

(d) **RULE OF CONSTRUCTION.**—Nothing in this section shall be construed to limit the authority of any State to establish, maintain, or enforce any law or regulation relating to interest rates on consumer home loans that is more protective of consumers than the requirements of this section.

 

## SECTION 5. PURCHASE PRICE LIMITATIONS FOR ELIGIBILITY UNDER RATE CAP.

 

(a) **IN GENERAL.**—A consumer home loan secured by a covered property shall be eligible for the maximum annual percentage rate protections under section 4(a) only if the purchase price of the property (including taxes and fees but excluding seller concessions) does not exceed 3.5 times the original cost of the land acquisition and construction.

 

(b) **EXCEPTION FOR SIGNIFICANT IMPROVEMENTS.**—

 

(1) **APPLICABILITY.**—Subsection (a) shall not apply to properties with a year of construction after 1940 if the borrower provides significant proof of improvements, including—

 

(A) certified documentation from a licensed appraiser or building inspector attesting to the nature, cost, and value added by such improvements; and

 

(B) receipts or records demonstrating expenditures on the improvements equal to at least 20 percent of the original cost.

 

(2) **VERIFICATION PROCESS.**—The creditor shall verify compliance with this subsection prior to loan origination and retain such documentation for at least 5 years.

 

(c) **EXEMPTION FOR HISTORICAL PROPERTIES.**—Subsection (a) shall not apply to properties with a year of construction on or before 1940, regardless of improvements, to preserve their historical value.

 

(d) **NONCOMPLIANCE.**—If a loan subject to this section is originated in violation of subsection (a) without qualifying under subsection (b) or (c), the interest rate cap under section 4(a) shall be void, and the loan shall be subject to applicable State usury laws.

 

(e) **RULE OF CONSTRUCTION.**—Nothing in this section shall be construed to limit the authority of any State to impose stricter price controls or historical preservation requirements for consumer home loans.

 

## SECTION 6. RETROACTIVE INTEREST RATE ADJUSTMENTS FOR EXISTING CONSUMER HOME LOANS.

 

(a) **IN GENERAL.**—The maximum annual percentage rate protections under section 4(a) and the purchase price limitations under section 5 shall apply to consumer home loans originated prior to the effective date of this Act if the secured property qualifies as a covered property under section 3(3) as of such effective date.

 

(b) **PHASED RATE ADJUSTMENT REQUIREMENT.**—

 

(1) **INITIAL REDUCTION.**—Within 90 days of the effective date of this Act, the creditor shall reduce the APR on a qualifying existing loan to no more than 75 percent of the difference between the original APR and 4 percent (i.e., a partial adjustment toward the 4 percent cap).

 

(2) **FULL COMPLIANCE.**—The creditor shall achieve full compliance with the 4 percent APR cap under section 4(a) no later than one year after such effective date, with any remaining reduction applied in equal monthly increments over the intervening period.

 

(3) **NOTICE AND IMPLEMENTATION.**—Creditors shall notify affected borrowers in writing within 30 days of the effective date, detailing the adjustment schedule, new payment amounts, and any refund for overpaid interest accrued since origination. Adjusted payments shall be reflected in the borrower's next billing cycle following each reduction.

 

(c) **QUALIFICATION VERIFICATION.**—For existing loans, qualification under subsections (a) and (b) shall be determined using the purchase price at origination (adjusted for any documented refinancings) and current property records. Borrowers may submit evidence of eligibility to the creditor or the Bureau of Consumer Financial Protection if disputed.

 

(d) **EXCEPTIONS.**—

 

(1) **NON-QUALIFYING LOANS.**—This section shall not apply to existing loans secured by properties that do not meet the covered property criteria under section 3(3) or the price limitations under section 5.

 

(2) **LENDER INSOLVENCY.**—Adjustments shall be deferred if the creditor is subject to receivership or bankruptcy proceedings, but shall resume upon resolution.

 

(e) **REMEDIES FOR NONCOMPLIANCE.**—Failure to comply with the adjustment requirements under subsection (b) shall constitute a violation of this Act, subject to the enforcement provisions under section 9, including mandatory refunds of excess interest at 150 percent of the overcharge and potential loan rescission.

 

## SECTION 7. LATE FEE PROTECTIONS.

 

(a) **IN GENERAL.**—No creditor may impose a late fee on a consumer home loan subject to this Act that, in the aggregate for any 12-month period, exceeds one month's scheduled principal and interest payment amount under the loan.

 

(b) **ADDITIONAL LIMITS.**—Any single late fee shall not exceed 5 percent of the overdue payment amount, and no late fees may be compounded or assessed on previously imposed late fees.

 

(c) **WAIVER FOR HARDSHIP.**—Upon written request from the borrower demonstrating financial hardship (such as job loss or medical emergency), a creditor must waive any late fee for the applicable period.

 

(d) **RULE OF CONSTRUCTION.**—Nothing in this section shall be construed to limit the authority of any State to establish stricter late fee limitations.

 

## SECTION 8. INTEREST RATE STABILITY AND RELOCATION GRACE PERIOD.

 

(a) **PROHIBITION ON RATE SPIKES.**—Except as provided in subsection (b), no creditor may impose a rate spike on a consumer home loan subject to this Act. Rate spikes are permitted solely in connection with the borrower's purchase of an additional home for personal use or investment purposes, and only to the extent necessary to reflect increased risk from multiple secured properties, not to exceed 2 percent above the original APR.

 

(b) **LIMITS ON REAL ESTATE ABUSE.**—The protections under subsection (a) shall not apply if the creditor demonstrates, by clear and convincing evidence, that the borrower is engaging in real estate flipping (defined as purchasing and reselling a property within 12 months for profit exceeding 20 percent) or converting the primary residence to a rental property without intent to return. Such activities shall result in immediate termination of the loan's protections under this Act, reverting to market rates.

 

(c) **RELOCATION GRACE PERIOD.**—Upon the borrower's relocation due to job transfer, military orders, or family circumstances (verified by employer letter or official documentation), the creditor shall provide a 90-day grace period during which no rate spike, late fee, or foreclosure action may be initiated while the borrower sells or transfers the property. During this period, payments shall be deferred without accrual of additional interest.

 

(d) **NOTICE REQUIREMENT.**—Creditors must provide borrowers with annual statements affirming compliance with this section, including any potential triggers for rate adjustments.

 

(e) **RULE OF CONSTRUCTION.**—Nothing in this section shall be construed to limit the authority of any State to impose additional restrictions on rate adjustments or real estate practices.

 

## SECTION 9. ENFORCEMENT.

 

(a) **CIVIL ENFORCEMENT.**—

 

(1) **AUTHORITY OF BUREAU.**—The Bureau of Consumer Financial Protection shall have authority under section 105(a) of the Consumer Financial Protection Act of 2010 (12 U.S.C. 5561(a)) to enforce this Act with respect to any person subject to its jurisdiction.

 

(2) **FEDERAL TRADE COMMISSION.**—The Federal Trade Commission shall enforce this Act with respect to any person subject to the Federal Trade Commission Act (15 U.S.C. 41 et seq.), consistent with section 1115 of such Act (15 U.S.C. 45m).

 

(b) **PRIVATE RIGHT OF ACTION.**—Any person aggrieved by a violation of sections 4 through 8 may bring a civil action in an appropriate district court of the United States for actual damages, statutory damages of not less than $1,000 or greater than $10,000 per violation, punitive damages, equitable relief, and reasonable attorney's fees and costs.

 

(c) **REMEDIES.**—In addition to any other remedies available under law, a court may order rescission of the loan, refund of excess finance charges or late fees, termination of any security interest created by the loan, and, if applicable, retroactive application of the interest rate cap denial under section 5(d) or mandatory phased rate reductions under section 6(b).

 

## SECTION 10. DISCLOSURES.

 

Creditors extending consumer home loans subject to this Act shall include in the disclosures required under section 128 of the Truth in Lending Act (15 U.S.C. 1638) and section 4 of the Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2603) a clear and conspicuous statement that the APR is subject to the maximum rate established under section 4 for the entire loan term, including the purchase price limitations and exceptions under section 5, the retroactive adjustment rights under section 6, late fee caps under section 7, and rate stability provisions under section 8.

 

## SECTION 11. REGULATIONS.

 

(a) **IN GENERAL.**—The Bureau of Consumer Financial Protection shall issue final regulations to implement this Act not later than 180 days after the date of enactment of this Act.

 

(b) **CONTENTS.**—Such regulations shall include—

 

(1) guidance on determining the purchase price of a covered property and verifying the borrower's primary residence status;

 

(2) procedures for calculating compliance with the APR cap over the loan term, including adjustments for variable-rate features;

 

(3) rules for tracking the one-property limit per borrower;

 

(4) criteria for determining and documenting original costs and significant improvements under section 5;

 

(5) standards for verifying year of construction and historical exemptions;

 

(6) model certification forms for borrower-submitted proof of improvements;

 

(7) procedures for identifying and verifying qualifying existing loans under section 6;

 

(8) formulas for calculating phased APR reductions and interest refunds under section 6(b);

 

(9) model notices for borrower notifications required under section 6(b)(3);

 

(10) guidelines for calculating and waiving late fees under section 7;

 

(11) protocols for documenting relocations and applying grace periods under section 8(c); and

 

(12) model forms for the disclosures required under section 10.

 

## SECTION 12. EFFECTIVE DATE.

 

This Act shall take effect 90 days after the date of enactment.