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Thursday, January 19, 2023

"Some BIG Changes to Mortgage Costs Were Just Announced"

by Calculated Risk on 1/19/2023 03:30:00 PM

From Matthew Graham at Mortgage News Daily: Some BIG Changes to Mortgage Costs Were Just Announced

In a single moment, the fees for a vast majority of new mortgages in the US have changed. In some cases, the changes are drastic, both for better and worse. Let's break it down.

What do you mean by "fees/costs?"

This refers to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score, the loan-to-value ratio, occupancy (owner vs non-owner occupied homes), and most recently, your debt-to-income ratio

What lenders/loans does this apply to?

Any loan guaranteed by one of the agencies regardless of the lender. This is MOST loans in the US. Examples of loans that wouldn't be affected would be FHA/VA as well as certain jumbo and specialty products. "Non-conforming" loans are not impacted by this as they are not guaranteed by the agencies. A common example of a non-conforming loan would be a jumbo loan from a retail bank or credit union.

When does this take effect?

This applies to loans that are guaranteed by the agencies starting May 1st, 2023. That means many lenders will begin to implement the changes in March/April.
See Matt's article for a breakdown of what changed.

Here is the announcement from the FHFA: FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework. The changes are here.