Good-Credit Homebuyers Subsidize Risky Mortgages

FINANCIAL FREEDOM COUNTDOWN

The Federal Housing Finance Agency (FHFA) has updated the loan fee  structure of mortgages leading to cries of unfair fees imposed on  borrowers with excellent credit scores to subsidize the ones with lower  credit scores.

The FHFA revamped and adjusted the upfront fee matrices for purchase,  rate-term refinance, and cash-out refinance loans to ensure that  borrowers with lower income or net worth can still afford single-family homes.

Good-Credit Homebuyers Subsidize Risky Mortgages

Arrow

The fees or costs refer to the Loan Level Price Adjustments (LLPAs) that  Fannie Mae and Freddie Mac impose. These entities guarantee the  majority of new mortgages.

While the changes seem positive for individuals with lower credit  scores, things got worse for borrowers with higher credit scores.

What Loans Will Be Impacted?

Arrow

The new pricing structure applies to all loans that Fannie Mae and  Freddie Mac guarantee, no matter which lender provides the loan. This  means that almost all loans, except for FHA, VA

Swipe Up for full Blog Post