The Federal Housing Finance Agency (FHFA) said Wednesday it has rescinded the upfront fees based on borrowers' debt-to-income (DTI) ratios for loans acquired by Fannie Mae and Freddie Mac.
FHFA announced in March it would delay implementing the fees in order to engage with industry stakeholders and better understand their concerns.
"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," Director Sandra L. Thompson 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."
Consistent with the Enterprise Regulatory Capital Framework finalized in 2020, appropriately capitalizing each government-sponsored enterprise (GSE) is critical to ensuring that they are well positioned to meet their mandate of providing liquidity and stability to the secondary mortgage market and supporting access to affordable mortgage credit throughout the nation, the FHFA said.
In addition, FHFA said additional details about the upcoming Request for Input (RFI) on the single-family guarantee fee pricing framework would be released shortly.
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Bob Broeksmit, CMB, president & CEO of the Mortgage Bankers Association, issued the following statement after the FHFA announcement to rescind implementation of DTI-based LLPAs.
“We have strongly opposed FHFA’s planned debt-to-income loan-level pricing adjustment since it was announced in January, and have led advocacy efforts calling for its removal,” he said. “The proposed fee was unworkable for lenders and would have confused borrowers and undermined the customer experience. We are pleased that FHFA engaged with industry stakeholders, recognized the negative impacts of the fee, and decided to rescind its implementation.
Broeksmit added that the MBA “urges FHFA to continue its engagement to improve clarity and transparency regarding the GSEs’ pricing framework. We will continue our work with the agency, the GSEs, lawmakers, and the Biden administration on policies and actions that lower costs and advance sustainable access to homeownership while protecting taxpayers.”