The Rising Debate over Mortgage Pricing Rules

Last January, the Federal Housing Finance Agency announced its plan to help low-credit buyers by adjusting its pricing based critical indicators such as loan-to-values, credit scores, occupancy and number of units in a home. The direction signaled great news for marginal buyers, especially with the new Loan-Level Pricing Adjustments (LLPA) that offer pricing adjustments for borrowers with a DTI ratio above 40%.

But in the details of the FHFA’s guidance, comes information the fees may be paid by adding fees to higher income, or high-credit borrowers. It’s this fine print that has raised concerns from the National Association of REALTORS®.

Last January, NAR REALTOR® President Kenny Parcels raised the challenge, writing “These changes make permanent reduced or eliminated fees for first-time homebuyers and those with low or moderate incomes. Furthermore, these changes include significant reduced fees for many borrowers with lower credit scores, but strong down payments. However, fees are raised on some borrowers with good credit scores and moderate down payments, hitting middle-wealth homebuyers.” NAR has also reached out to the Senate Banking, as well as the White House with their concerns. . READ THE LETTER HERE

Now there’s word, the House has introduced entitled the “Responsible Borrower Protection Act of 2023” — that would “cancel certain proposed changes to credit fees charged by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, and for other purposes.” Sponsors contend, if passed, the measure would block the LLPA changes that are “too onerous for mortgage borrowers with good credit.”

NAR’s position has been to keep fighting for the provisions that help riskier buyers, but removing those provisions that appear to punish those with good credit and fiscal responsibility.

This topic, along with a number of key housing concerns will be on the minds of thousands of REALTORS® who will descend on Washington DC for the annual NAR Legislative Meetings.