The Federal Housing Finance Agency (FHFA) recently announced a delay in the implementation of updated loan level price adjustments (LLPAs) for lenders and servicers.The LLPAs are fees that lenders assess for loans with high loan-to-value (LTV) or debt-to-income (DTI) ratios.

The updated LLPA fees were previously set to go into effect on April 1, 2021, but have since been delayed until September. The delay is partially due to the FHFA needing “additional time to analyze and consider stakeholder comments about the proposed rule,” as well as the extended implementation timeline for products entered into the Uniform Mortgage Data Program (UMDP).

The updated LLPAs that were proposed will still apply to conventional, conforming, mortgage-backed securities backed by single-family loans. These loans, however, are subject to more stringent credit and risk requirements. The set of adjusted LLPA fees will vary by loan amount, LTV and DTI ratios, product terms, loan purpose, and number of units.

Though the FHFA is delaying the implementation of the LLPAs until September, lenders and servicers will be able to gain greater clarity about the proposed rule as September draws nearer. This should help lenders and servicers gain early insight into the likely effects on their businesses. In the meantime, the FHFA will continue reviewing feedback and making any necessary adjustments.

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