The Federal Housing Finance Agency (FHFA) Director Mark Calabria spoke out recently to address misinformation regarding a recent set of changes to loan-level price adjustments (LLPAs). Director Calabria defended the FHFA’s decision to make changes to LLPAs while also noting the agency’s efforts to support the housing market.
Director Calabria noted that the FHFA launched the LLPAs in 2009 to keep the market healthy and secure, safeguarding against lenders taking excess risk in the wake of the financial crisis. Through the LLPAs, Fannie Mae and Freddie Mac are able to manage the risk of individual loans and mitigate hitting taxpayers if losses are incurred. Over the years, the FHFA has made minor changes to the LLPAs to ensure continued security in the housing market.
The most recent set of changes to LLPAs took place in December 2020, wherein Fannie Mae and Freddie Mac reduced the LLPAs on some mortgage product types. In explaining the decision, Director Calabria noted that the primary motivation for the changes was to ensure that the mortgage industry can continue to quickly and reliably serve borrowers in all markets. He argued that the reduction in LLPAs bolsters the important work that the enterprises perform in helping stabilize the housing market.
Director Calabria closed his statement by noting that the FHFA will continue to monitor the state of the industry and the overall market in order to support the Fannie Mae and Freddie Mac mission of providing liquidity, stability, and affordability to the whole housing market. By protecting the taxpayers, the FHFA’s commitment to making adjustments to the LLPAs help ensure that the mortgage industry remains accessible to all borrowers.
You can read this full article at: https://www.housingwire.com/articles/fhfa-director-thompson-speaks-out-to-correct-llpa-misinformation/(subscription required)
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