Just over a week ago I posted that Fannie and Freddie G-fees (the government fees also called Loan Level Pricing Adjustment) would be increasing.
Hours ago I found out that through the work of groups including Dave Stevens and the MBA... the FHFA's Mel Watt has decided to delay the increase in LLPA's (Loan Level Pricing Adjustments).
This is excellent news for Realtors, Lenders and borrowers!
From the Wall Street Journal article:
"Rep. Mel Watt (D., N.C.), the incoming director of the regulatory agency that oversees Fannie Mae and Freddie Mac, said Friday night he would delay an increase in mortgage fees charged by the housing-finance giants, which was announced earlier this month by that agency. Mr. Watt was confirmed by the Senate to head the Federal Housing Finance Agency on Dec. 10 and is set to be sworn in on Jan. 6, he said in an email on Friday.
Upon being sworn in, "I intend to announce that the FHFA will delay implementation" of the loan-fee increases "until such time as I have had the opportunity to evaluate fully the rationale for the plan," he said in a statement. The FHFA signaled that it would increase certain fees charged by Fannie and Freddie that are typically passed on to mortgage borrowers on Dec. 9, on the eve of Mr. Watt's Senate confirmation. Earlier this week, Fannie and Freddie unveiled additional specifics about those increases, which would sharply raise certain fees charged to borrowers who don't have perfect credit scores or substantial down payments. Fannie and Freddie issued the directives at the instruction of the FHFA.
Find out what's happening in Woodburywith free, real-time updates from Patch.
In updates posted to their websites on Monday, Fannie and Freddie showed that fees will rise sharply for many borrowers who don't have down payments of at least 20% and who have credit scores of 680 to 760. (Under a system devised by Fair Isaac Corp., credit scores range from 300 to a top of 850.)
Find out what's happening in Woodburywith free, real-time updates from Patch.
Executives at Fannie and Freddie said last month that the fees they have been charging are enough to cover expected losses. But the FHFA, under the leadership of Acting Director Edward DeMarco, has said that those fees should rise in order to allow private investors, which target a higher rate of return, to compete. An FHFA official Tuesday said that even with the latest changes, Fannie's and Freddie's fees would be considered low relative to private firms'.
In a statement emailed to reporters on Friday night, Mr. Watt said he wanted to study the plan's "likely impact on the [companies'] risk exposure, the cost and availability of credit and how the plan would interface" with forthcoming Dodd-Frank mortgage regulations set to take effect next month.
Mr. Watt said he didn't plan to elaborate further until after he is sworn in but that "it was important to announce my intentions now" because lenders could begin to implement the fee increases in the coming weeks. The fee increases take effect in March.
