05/02/2023
This is pretty out there and contrary to how buyers borrow money for decades....thus is very concerning that this could lead to anither 2008 financial crash. It doesn't make sense to me. What's your thoughts?
Let the White House know or your State Senator!
What Is The Issue
Starting today - Monday, May 1, 2023 - Fannie and Freddie (GSEs) will change their loan level pricing adjustments (LLPAs)—upfront fees they charge individual borrowers based on their credit score, down payment, or other risk factors.
The Federal Housing and Finance Agency (FHFA) directed the GSEs to reduce fees on most borrowers with credit scores below 680, but it also will raise fees on borrowers with credit scores above 680 and who make down payments of 10%-25%. Furthermore, FHFA imposed a new fee on borrowers with debt-to-income ratios (DTIs) greater than 40% and kept in place fees on borrowers in higher cost markets.
The bottom line is that some borrowers are going to experience increased fees on mortgages through Fannie and Freddie at a time when this makes little sense given current market conditions. Additionally, concerns about the use of the fee and how this will impact who seeks a mortgage through the GSEs are not clear and should be considered.
Here are some articles for more information on the topic:
https://www.nar.realtor/washington-report/fhfa-to-raise-fees-on-some-borrowers-reduce-fees-for-others
https://www.newswise.com/articles/fhfa-s-changes-to-mortgage-fees-increases-risk-in-the-housing-finance-system
https://www.fhfa.gov/Media/PublicAffairs/Pages/Statement-from-FHFA-Director-Sandra-Thompson-on-Mortgage-Pricing.aspx
Talking Points
1. The fee increases result in a responsibility tax on borrowers who are low risk with better credit scores and put more money down.
2. Given the volatility in the market, especially with mortgage rates, this is no time to add to the cost of financing a home.
3. What are the increased fees being used for by the GSEs and/or FHFA? These fees should not subsidize borrowers with lower credit scores and less money for down payments
In January of 2023, the Federal Housing Finance Agency (FHFA) directed the Fannie Mae and Freddie Mac (the GSEs) to change their loan level pricing adjustments (LLPAs). NAR continues to urge FHFA to rescind this measure.
