In January, the Federal Housing Finance Agency (FHFA) announced a new pricing framework for single-family home loans eligible for purchase by Fannie Mae and Freddie Mac (the Enterprises) that will lower mortgage fees for some borrowers and raise fees for others. The revised fees are scheduled to take effect on May 1.
Recent press articles are stating that in many cases borrowers with lower credit scores and higher loan-to-values will pay lower fees than borrowers with high credit scores and low loan-to-values.
This is not accurate. The truth is while the fees for some borrowers with high credit scores will increase, those borrowers still will pay less for their mortgage loans than borrowers with lower credit scores.
Lowering fees for low- to moderate-income borrowers and first-time home owners is a positive step to making homeownership more affordable and attainable for many potential creditworthy home buyers who have been locked out of the market. However, NAHB opposes the changes in the new pricing framework that raise fees on borrowers with higher credit quality.
In response to concerns raised by industry stakeholders, FHFA released a statement to clarify its actions.
According to FHFA, “The updated pricing framework will further the safety and soundness of the Enterprises, which will help them better achieve their mission. They will provide reliable liquidity to the market while also providing more targeted support for creditworthy borrowers limited by income or wealth. And they will do so with a pricing framework that is more accurately aligned to the expected financial performance and risks of the loans they back.”
At a time when housing affordability is creating a significant barrier to homeownership, NAHB believes that FHFA should lower fees to help all home buyers. We will encourage FHFA and the Enterprises to reconsider the rollout of these fees and whether there is a better way to accomplish their goals.