This VERY controversial policy that the Federal Housing Finance Agency (FHFA) has been reversed. I posted this blog "Mortgage Changes Explained - Clearing up LLPAs and Their Impact on Credit Scores" back on April 29th explaining the changes that were going into effect as of May 1st. Since I disagreed with this policy, this is welcomed news to see it being reversed.
The Federal Housing Finance Agency (FHFA) has reversed its decision to impose upfront fees on borrowers' debt-to-income (DTI) ratios for home loans acquired by Fannie Mae and Freddie Mac. In March, the regulator announced a delay in the implementation of these fees, following criticism. The introduction of loan level price adjustment (LLPA) fees on May 1st further angered opponents of the policy who argued it unfairly penalized borrowers with good credit. The FHFA's recent action rescinding the upfront fees has been seen as a victory for those who opposed the policy.
FHFA Director Sandra L. Thompson valuably acknowledges the feedback provided by the mortgage industry and other market participants concerning the difficulties of implementing the DTI ratio-based fee. To further facilitate this important conversation, FHFA intends to shed more light on the process for establishing the Enterprises’ single-family guarantee fees. Additionally, FHFA will invite public input on this topic to ensure transparency and inclusivity. The regulator is planning on launching a new Request for Input (RFI) regarding the pricing framework of guarantee fees for single-family homes.
The President and CEO of the Mortgage Bankers Association, Robert D. Broeksmit, has expressed his approval of the recent FHFA decision. According to Broeksmit, the proposed fee would have been too difficult for lenders to implement and could have potentially confused borrowers. He has expressed his satisfaction that the FHFA listened to industry feedback and recognized that the fee could have negatively impacted the customer experience, prompting them to ultimately rescind its implementation.
