FHFA Hiked Fees For High Balance And Second-Home Loans Sold To Fannie Mae And Freddie Mac
The new upfront fees for high balance loans will increase between 0.25% and 0.75%. FHFA says the new fee increases will be based on loan-to-value ratio. The upfront fees will increase between 1.125% and 3.875% for second loan homes. Fee increases are also based on loan-to-value ratio.
Loans in some affordable programs will not be subject to the new fees. First-time buyers in high-cost areas with incomes below 100% ay be exempt from fees. However, only a small number of those borrowers seek second homes and high-balance loans.
FHFA Acting Director Sandra Thompson said the fee increases are to strengthen the GSE’s safety and soundness. The agency also wants to ensure access to credit for first-time homebuyers and low and moderate income borrowers.
The new fees on high-balance and second homes will also function similarly to the now-suspended limits on investor and second homes. Ironically, mortgage industry stakeholders welcomed Thompson’s decision.
FHFA formally signaled its intent to update the GSE pricing framework in its 2022 Scorecard for Fannie Mae and Freddie Mac. In additon, FHFA wants to update Common Securitization Solutions. The regulator also directed the regulated entities to increase support for core mission borrowers. They also want to foster capital accumulation. Thus, achieving viable returns and ensuring a level playing field for small and large sellers.
FHFA Hiked Fees Are First In A Bigger Plan
During her tenure so far as FHFA acting director, Thompson has made affordability a top priority. In August, FHFA proposed new affordability benchmarks for the GSEs, setting goals for purchase loans in low-income and minority communities, and substantially increasing the low-income refinance goal.
Those actions have elicited praise from the affordable housing community. But some of the same groups have also argued there is still ample room for improvement. In October, a coalition of twenty affordable housing groups called on the regulator to reject the Duty to Serve plans the GSEs proposed in May for 2022 to 2024.
Affordable housing groups said those plans did not meet the “spirit or the letter” of the regulation. They argue it’s because the plans would eliminate programs to purchase manufactured housing loans titled as personal property. The plans would also reduce loan targets for manufactured housing, affordable housing preservation and rural housing.
Some have also questioned whether FHFA’s decision to back mortgage loans of nearly $1 million aligns with the GSEs’ mission, and have asked for more clarity on the government’s role in the housing finance system.
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