FHFA delays nettlesome pricing change for mortgages
The Federal Housing Finance Agency has pushed back the implementation date of some of the adjusted fees set to apply to mortgages purchased by Fannie Mae and Freddie Mac on May 1.
Specifically, higher fees charged for mortgages with debt-to-income ratios above 40% will instead become effective Aug. 1, with no post-purchase adjustments applied through Dec. 31, 2023.
Mortgage bankers have shown particular concern about the DTI-based fees because the variable is one that’s particularly likely to change during the origination process.
The DTI-based fees were part of a larger change to the two government-sponsored enterprises’ pricing grids that raised lender fees for some mortgages with the intent of making other loans more accessible to a broader range of lower-income borrowers.
“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,” the agency said in a statement attributed to Director Sandra Thompson which acknowledges industry concerns.
The statement was greeted with mixed reactions given some lenders have already begun working to implement the new pricing ahead of the deadline. MBA President Robert Broeksmit recently said a delay alone would not be sufficient to address all concerns about the grids.
The Community Home Lenders of America, a group that represents smaller and mid-sized lenders, said it welcomed the move but would still like to see the FHFA go a step further and rollback the change entirely.
“CHLA very much appreciates this three-month delay by FHFA in pricing changes for GSE borrowers with higher debt-to-income ratios,” Executive Director Scott Olson said in an emailed statement. “This delay will give IMBs more time to adjust to the complications created by this DTI pricing differential, and we continue to call on FHFA to reconsider this fee hike.”
The FHFA said it, Fannie and Freddie “will continue to engage with industry stakeholders to address operational concerns.”
Although a temporary exception regarding the DTI-based post-purchase will be in place between Aug. 1 and Dec. 31, the agency warned that it “will not alter any other quality control review decisions by the enterprises.”