On March 15, 2023, the Federal Housing Finance Agency (“FHFA”) announced that the effective date for new loan level price adjustment (“LLPA”) fees charged by Fannie Mae and Freddie Mac for certain borrowers with debt-to-income (“DTI”) ratios above 40% has been delayed for three months. The effective date has been moved from May 1, 2023 to August 1, 2023.
In January 2023, the FHFA announced changes to LLPA fees as part of a larger set of changes announced for the overall single-family pricing framework, with a focus on upfront fees. FHFA provided a redesigned LLPA fee matrix with grids based on loan purpose, including separate grids for purchase loans, limited cash-out refinance loans, and cash-out refinance loans. Based on the redesigned grids, the LLPA fee is reduced or eliminated for first-time homebuyers. Borrowers with low and moderate credit scores will generally pay less in LLPA fees than borrowers with the highest tiers of credit scores
Since the January announcement, FHFA received feedback from mortgage industry stakeholders about challenges in implementing the new LLPA fee. FHFA Director Sandra Thompson said, “FHFA has decided to delay the effective date of the DTI ratio-based fee by three months to August 1, 2023, to ensure a level playing field for all lenders to have sufficient time to deploy the fee. In addition, lenders will not be subject to post-purchase price adjustments related to this DTI ratio-based fee for loans acquired by the Enterprises between August 1, 2023 and December 31, 2023.”
The announcement states that FHFA, along with Fannie Mae and Freddie Mac, will continue to engage with mortgage industry stakeholders over implementation concerns.
