Starting May 1, FHFA will incorporate new credit fees into Fannie Mae and Freddie Mac’s price grids. The new fee matrices consist of three base grids by loan purpose for purchase, rate-term refinance, and cash-out refinance loans, recalibrated to new credit score and loan-to-value ratio categories, along with associated loan attributes for each.
However, the initial review of the Mortgage Bankers Association showed that the new framework results in a modest net increase in overall pricing, which is a concern given ongoing affordability challenges and the higher interest rate environment, according to MBA head Bob Broeksmit.
“With the peak homebuying season coinciding with these changes, FHFA should consider additional program changes to improve affordability, including raising the area median income threshold for the GSEs’ low down payment products,” Broeksmit said. “This move would expand eligibility for borrowers who can meet the monthly obligation of a mortgage payment but do not have significant savings to make a large down payment.”
The National Association of Realtors also expressed its concerns. NAR president Kenny Parcell said that while the association supports most of the changes made to LLPAs this past fall, the new modifications raised “fees on some borrowers with good credit scores and moderate down payments, hitting middle-wealth homebuyers. Furthermore, FHFA included new fees for borrowers with higher debt-to-income scores.
“In the wake of a three-percentage point increase in mortgage rates, now is not the time to raise fees on homebuyers. Furthermore, the FHFA needs to address its recent increase in fees on homebuyers in high-cost markets as well as guarantee fees that impact all homebuyers. Homebuyers are hurting, and these changes are overdue.”