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FHFA hikes fees for high-balance and second-home loans

FHFA hikes fees for high-balance and second-home loans
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the Federal Housing Finance Agency It introduced new upfront fees Wednesday for some high-balance loans and second home loans that were sold Fannie Mae And Freddy Mac.

The initial fee for high-balance loans will rise between 0.25% and 0.75%, graded by the loan-to-value ratio. For second home loans, the upfront fee will increase between 1.125% and 3.875%, also graded by the loan-to-value ratio.

The agency said in a press release that the new pricing framework will come into effect on April 1, 2022, to “reduce market and pipeline disruption.”

Loans in some affordable programs — including HomeReady, Home Possible, HFA Preferred, and HFA Advantage — will not be subject to the new fee. First-time homebuyers in high-cost areas with incomes below 100% of the area’s median income will also be exempt from the new high-balance advance fees, although only a few of these borrowers are seeking a second home and high-balance loans. .

In a statement, Sandra Thompson, acting director of the FHFA, said the fee increases are another step the FHFA is taking to strengthen the safety and security of government-sponsored institutions, and ensure access to credit for first-time homebuyers and low- and middle-income borrowers. .



“These targeted price changes will allow organizations to better achieve their mission of facilitating equitable and sustainable access to home ownership, while improving the regulatory capital position over time,” Thompson said.

While the new fees on high-balance and second homes will operate similarly to the limits now pending on investors and second homes, stakeholders in the mortgage industry welcomed Thompson’s decision.

Mortgage Bankers Association President Bob Broxsmith said he estimates the new fee will be delivered in April, giving lenders more than 90 days to adjust their rate schedules appropriately.

He also said he expects the announcement not to be the last word on pricing adjustments, and that it paves the way for lower loan-level rate adjustments for first-time borrowers, and those facing higher fees due to loan-to-value. percentage or their credit score.

“To the extent that they recognize better margins on these loans, we expect mutual support to flow to mission-centric borrowers,” Broeksmit said.

In an October interview with National Housing Conference President David Dworkin, Thompson said a broader review of GSE pricing was on his “to-do list”.

“One of the things we committed to doing was look at the rates, and we didn’t do a thorough review of Fannie and Freddy’s pricing analysis, overhead fees and everything that includes fees and pricing for corporate loans,” Thompson said.

FHFA has also formally indicated its intent to update the pricing framework for GSEs in its 2022 scorecard Fannie MaeAnd Freddy Macand their jointly owned securitization platform, Shared Securitization Solutions. The regulator directed the regulated entities to “increase support to borrowers from essential tasks, while promoting capital accumulation, achieving meaningful returns and ensuring a level playing field for sellers small and large.”

During her tenure thus far as acting director of the FHFA, Thompson has made affordability a top priority. In August, the FHFA proposed new affordability standards for public education institutions, setting targets for purchase loans in low-income and minority communities, and significantly increasing the low-income refinancing target.

These measures have drawn praise from the affordable housing community. But some of the same groups have also argued that there is still much room for improvement. In October, a coalition of twenty affordable housing groups called for the regulator to reject duty-of-service plans proposed by GSEs in May from 2022 to 2024.

Affordable housing groups said the plans were inconsistent with the “spirit or letter” of the regulation, because the plans would eliminate home loan purchase programs manufactured in the name of personal property. The plans will also reduce loan targets for manufactured housing, affordable housing preservation, and rural housing.

Some have also questioned whether the FHFA’s decision to support about $1 million in mortgage loans is in line with the GSEs’ mission, and have called for more clarity about the government’s role in the housing finance system.

Said Ed DeMarco, President Housing Policy Council and Acting Director of the FHFA from 2009 to 2014, in an interview in December with HousingWire.

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