Hello, LOs!
This week, the Federal Housing Finance Agency made waves when it announced that it would raise upfront fees for some loans sold to Fannie Mae and Freddie Mac.
Upfront fees for high balance loans will increase between 0.25% and 0.75%, based on loan-to-value ratio, and for second home loans, the upfront fees will increase between 1.125% and 3.875%, also depending on the loan-to-value ratio.
Lenders have until April 1, 2022 to prepare for the changes which the mortgage industry cheered, in contrast with the mad scramble that last year's abrupt caps on such loans set off.
One mortgage hedge advisory firm for independent lenders, banks and credit unions said they much preferred FHFA's gradual approach. The firm foresees the change creating a demand for specified pools of second home mortgages.
This is likely not the end of pricing changes at the GSEs. There's strong evidence to suggest that this is only the beginning of a holistic review of Fannie Mae and Freddie Mac's pricing. FHFA Acting Director Sandra Thompson said back in October that doing so was long overdue.
David Dworkin, president of the National Housing Conference, said he hoped the FHFA's decision to raise fees for high-balance and second home mortgages is the beginning of a multi-pronged approach that, eventually, leads to the elimination of loan-level price adjustments.
LLPAs have "had the effect of significantly reducing the GSEs' ability to serve their affordable housing mission," Dworkin said.
He contends that the collapse of the GSEs and placement into conservatorship was not because they were engaged in affordable housing lending, but because their practices were unsafe and unsound.
"There are two central missions [Thompson] has to balance: Safety and soundness and the duty to provide liquidity for affordable housing," Dworkin said. "These are not in conflict, if the affordable housing investments are made safely."
LOs, what are you hearing? How are lenders taking the news of the new fees? How much of a boost will this give to the non-QM market?
Georgia Kromrei
Senior Mortgage Reporter, HousingWire
.png?width=1116&upscale=true&name=755887448_SLD_-_Brand_Campaign_Momentum_Reframed_-_HousingWire_Retargeting_Ads-R2-970x250-A%20(1).png)
EmoticonEmoticon