On January 5, 2022, the Federal Housing Finance Agency implemented additional upfront fees for some high-balance and second-home loans sold to Fannie Mae and Freddie Mac. Fees for high-balance loans will rise by 0.25% to 0.75%, depending on the loan-to-value ratio. The upfront fees for second home loans will rise between 1.125% and 3.875%, depending on the loan-to-value ratio.
According to a news release from the agency, the new pricing mechanism will go into effect on April 1, 2022, to “reduce market and pipeline disruption.” The FHFA Acting Director Sandra Thompson said in a statement that the increase in fees is another action the agency is taking to improve the safety and soundness of government-funded enterprises while also ensuring lenders provide loan access for first-time homebuyers and low- and moderate-income borrowers.
President of the Mortgage Bankers Association, Bob Broeksmit, praised the new fees’ April delivery date, which provides lenders more than 90 days to modify their rate sheets. However, he also stated that he does not expect this announcement to be the final word on pricing adjustments. Instead, it will pave the way for lower loan-level price changes for first-time borrowers and those who face higher costs due to their loan-to-value ratio or credit score.
With the affordability of loans as the new target for the agency, lenders have been witnessing several changes in regulations and policies since the year 2021. In August 2021, The Federal Housing Finance Agency proposed new affordability targets for the Government-Sponsored Enterprises, including purchase loan goals for low-income and minority communities, as well as a large increase in the low-income, refinance goal.
As these hikes and other changes occur, lenders need to be aware of these changes as they happen within the industry and their unending impacts on the business at large. To read more, click the link below:
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