WASHINGTON D.C. – The Federal Housing Finance Agency (FHFA) announced on Wednesday that they have rescinded the upfront fees for loans acquired by Fannie Mae and Freddie Mac that are based on borrowers’ debt-to-income (DTI) ratios, a decision that was considered by many as a major win for the mortgage industry.
FHFA had previously noted in March that it would delay implementing the controversial fees in order to hear and attempt to better understand the concerns of stakeholders in the industry; according to a statement released this week by FHFA Director Sandra L. Thompson, it would appear that the industry had successfully pleaded its case to the agency.
“I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee,” she said. “To continue this valuable dialogue, FHFA will provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue.”
Mortgage industry lobbyists and practitioners had argued that a loan level price adjustment based on the borrower’s debt-to-income ratio would have been “unworkable for lenders and confusing for borrowers.”
Under the FHFA’s aborted plan, a loan-level pricing adjustment (LLPA) Would have been implemented for conventional borrowers with debt-to-income (DTI) levels at or above 40 percent. The FHFA, which regulates Fannie Mae and Freddie Mac, had previously pushed back the DTI LLPA from May 1, 2023 to August 1, 2023 following an outcry from stakeholders in the mortgage industry, including the Mortgage Bankers Association (MBA).
At the time, MBA President Robert Broeksmit vented his frustrations with the FHFA after they announced the delay in the implementation of the DTI LLPA until August 1, saying that no amount of delays would make the plan workable for the industry.
The FHFA has also asked for opinions from the mortgage industry on other new fees the agency is proposing, including ones governing borrowers with higher credit scores and moderate down payments.
“While we appreciate the delay, we are disappointed that FHFA’s statement did not recognize the need to consider alternatives to using a debt-to-income pricing adjustment,” Broeksmit said at the time. “From the beginning, MBA has emphasized to FHFA that DTI-based loan level price adjustments simply are not workable for lenders and borrowers alike.”Florida Gulf Residential specializes in the areas of Sarasota, Siesta Key, Bradenton, Lakewood Ranch, Longboat Key, Venice, Palmer Ranch, Osprey, Anna Maria Island and other Gulf Coast communities. Feel free to give us a call at (941) 304-1975 so we can answer any questions you may have.
Christopher Boyle is an investigative journalist for SEARCHEN NETWORKS® and reports for independent news and media organizations in the United States. Christopher helps keep a keen-eye on what’s happening on the West Coast of Florida on behalf of FLORIDA GULF RESIDENTIAL – Your Real Estate Expert for Sarasota and Surrounding Areas.