FHFA, the oversight agency for Fannie Mac and Freddie Mac, announced a continuing loan structure that generally favors first-time and lower-income buyers.
WASHINGTON – The Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to reduce the Loan Level Price Matrix (LLPAs) in 2022 for most homebuyers, though LLPAs may be a bit higher for homebuyers in some higher-cost markets.
Since the “matrix” creates a loan-fee system that varies by buyer and location in the U.S., there’s no guarantee that a single buyer will benefit from the change, but first-time buyers and those with lower incomes generally will in metro areas across the U.S.
Fannie Mae and Freddie Mac charge both a market-wide flat guarantee fee as well as upfront fees (LLPAs) tailored to credit scores and down payments for individual borrowers. FHFA sent Lender Letter (LL-2023-01) to the two government-sponsored enterprises on Thursday.
Fannie Mae also published its LLPA online, which notes the fee differences between types of loans for single-family homes.
National Association of Realtors® (NAR) President Kenny Parcell issued a statement in response to the announcement of changes that showed Realtor support for the move.
“We appreciate FHFA’s efforts to revise the structure for loan level pricing adjustments, as well as making the 2022 changes permanent,” Parcell says. “NAR and our members were supportive of most of the changes made to LLPAs this past fall, and we will continue to advocate for LLPA reform as the housing market continues to struggle with the sharpest blow to affordability in decades.”
Parcell says the changes “make permanent reduced or eliminated fees for first-time homebuyers and those with low or moderate incomes. Furthermore, these changes include significant reduced fees for many borrowers with lower credit scores but strong down payments.”
However the savings aren’t across-the-board The fees are raised on some borrowers with good credit scores and moderate down payments, hitting middle-wealth homebuyers. FHFA also included new fees on borrowers with higher debt-to-income scores.
“NAR will review other changes in the new LLPA structure and share our concerns with the FHFA,” adds Parcell.
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