FHFA cancels loan fees slated to become effective in August. Based on feedback, it says implementation is “challenging.” NAR calls it a good decision.
WASHINGTON – The Federal Housing Finance Agency (FHFA) says it has rescinded the upfront fees once slated to go into effect in August.
The fees – based on borrowers’ DTI ratios (debt-to-income) for loans acquired by Fannie Mae and Freddie Mac – were already delayed in a March FHFA announcement, saying it needed more time to “engage with industry stakeholders and better understand their concerns.”
“I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee,” says Director Sandra L. Thompson. “FHFA will provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue.”
“We are pleased that our advocacy efforts on behalf of our 1.5 million members and their clients were successful,” says National Association of Realtors® (NAR) President Kenny Parcell said following the announcement. “We applaud the FHFA for listening to the industry’s concerns by choosing to drop this fee on borrowers with higher debt-to-income ratios. It would have imposed a cost on borrowers at a time in the market when affordability is already stretched and only made them riskier.
“We look forward to a thoughtful and deliberate process for the public, industry and the regulators to clarify misconceptions and to arrive at the best policy for homebuyers and the market.”
Under the Enterprise Regulatory Capital Framework finalized in 2020, Fannie Mae and Freddie Mac must have capitalization requirements to ensure “they are well positioned to meet their mandate of providing liquidity and stability to the secondary mortgage market and supporting access to affordable mortgage credit throughout the nation.” The fees support that capitalization.
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