NAR: Fannie and Freddie’s new bills will hit the middle class

Federal mortgage regulators are capping down payments for first-time homebuyers at limited amounts, but some will increase borrowers are better.

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A move by Fannie Mae and Freddie Mac’s federal regulator to eliminate upfront fees for first-time homebuyers is all well and good, but raising fees on middle-of-the-road buyers is not the way to go. To do so, the National Association of Realtors (NAR) maintains.

Tracking price changes announced last year, the Federal Housing Finance Agency (FHFA) on Thursday introduce new cost matrices for determining upfront fees, called loan level price adjustments (LLPAs), for mortgages planned to be sold to Fannie and Freddie.

Of the updated paymentwhich goes into effect May 1, drew mixed reviews from the Mortgage Bankers Association, which urged the FHFA to give lenders more time to merge the updated matrices into their values.

The down payments that Fannie and Freddie charge their borrowers can add thousands of dollars to costs for home buyers – especially those with Credit cards reduce payments.

Rising home prices have pushed up Fannie and Freddie’s lending limits past $1 million In many high-income markets, the FHFA is using LLPAs as a tool to help more low-income Americans become home buyers and to help people who grants to bridge the gap.

Last spring, FHFA order Fannie and Freddie raise fees for second homes and “conforming jumbo” loans above the statutory down payment limit (which is $726,200). In October FHFA promotion it requires Fannie and Freddie to eliminate upfront fees for first-time home buyers, low-income borrowers and underserved communities “to encourage affordability and equitable access to affordable housing.”

These policy changes have been incorporated into new pricing matrices, which have been restructured into new credit scores and loan-to-value classifications and differentiation between four loans. purchase, rate-and-term refinancing and cash-out refinancing.

Sandra Thompson

“These changes to prepayments will strengthen the safety and soundness of Infrastructure by improving their ability to improve their infrastructure over time,” the FHFA said. Director Sandra Thompson in a statement. “By locking in the termination of the fees announced last October, FHFA has taken another step to ensure that Enterprises advance their mission of facilitating equal access and sustainability to the ownership of houses.”‚Äč

While the NAR said it could be behind the many changes announced last fall, some “middle-income” home buyers with good credit scores are looking to buy homes with “respectable” payments. lower will pay higher fees, as will borrowers with higher debt-to-income scores.

Under the cost matrix is still valid today, for example, a borrower with a 710 credit score who buys a home with 15 percent down will be assessed a 1 percent down payment. Under the price tag effective May 1, the down payment for the same credit and LTV will be 1.5 percent. For a borrower who took out a loan of $315,000 to buy the commercial buildingsthat was an initial salary of $4,725 compared to $3,150 today.

Kenny Parcell

“In the wake of the three-percent hike in mortgage rates, now is not the time to raise fees for home buyers,” said NAR President Kenny Parcell. in a information.

The NAR also opposes the increase in fees for high-end home buyers who take out similar loans, and says Fannie and Freddie have not implemented the reductions in guaranteed fees mandated by the 2017 Tax Cuts and Jobs Act.

“Homebuyers are hurting and these changes are overdue,” Parcell said. “This is the time.”

The President of the MBA Bob Broeksmit said that the “restoration” of cost matrices will take a long time to evaluate, in terms of the overall impact on borrowers and the market.

Bob Brooksmith

“Our initial assessment shows that the new framework provides a low increase on the total cost, which is a concern due to the ongoing cost challenges and the high environmental interest rates,” it said. a Broeksmit in a information.

“With the high cost of purchasing homes in line with these changes, FHFA should consider additional program changes to improve affordability, including raising the minimum income for (Fannie and Freddie’s) low-risk products,” Broeksmit said. “This action will expand the ability for borrowers who can meet the monthly mortgage payment but do not have significant savings to make a very low payment.”

Broeskmit urged the FHFA to be flexible in implementing the new pricing structure if some lenders find it difficult to comply by May 1.

A trade group representing mortgage insurers was more welcoming of the new fee structure, saying it would result in savings and cost reductions for many borrowers Fannie and Freddie require private mortgage insurance because they pay less than the cost. 20 percent.

The trade group, US Mortgage Insurers (USMI), said in a information lauds FHFA’s commitment to reducing the cost to borrowers of loan adjustment,” and applauds the agency for “taking a proactive approach prudence and discretion to identify areas where costs can be adjusted, and for many reduced, while being sustainable. a commitment to proactive risk management.”

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