Industry groups continue to object to a new Fannie and Freddie fee aimed at some riskier borrowers as a burden on lenders and consumers.
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Fannie Mae and Freddie Mac’s federal regulator says it will wait until after the spring homebuying season is over to implement a new fee aimed at some riskier borrowers who take out loans that might stretch their finances.
That’s welcome news to real estate industry trade groups that objected to the increase, but some would also like to see fees associated with the borrower’s debt-to-income (DTI) ratio done away with altogether.
The new upfront fee targeting borrowers taking out mortgages with debt-to-income ratios exceeding 40 percent was scheduled to take effect on May 1.
But in response to complaints from some lenders that implementing the new fee will pose operational challenges, the Federal Housing Finance Agency (FHFA) announced this week that it’s delaying rollout of the fee to Aug. 1, “to ensure a level playing field for all lenders to have sufficient time to deploy the fee.”
The new DTI ratio-based fee was one aspect of changes announced in January to the pricing matrices that are used to calculate upfront fees, known as loan level price adjustments (LLPAs), for mortgages slated to be sold to Fannie and Freddie.
While the FHFA has ordered Fannie and Freddie to waive upfront fees for first-time homebuyers of limited means, it’s making up at least some of the difference by charging higher fees for some borrowers who are better off — particularly those taking out loans with moderate down payments and higher debt-to-income ratios.
If they don’t qualify for a waiver, most homebuyers whose DTI ratio exceeds 40 percent will be subject to a 0.375 percent upfront fee, adding nearly $1,200 to the cost…