Tiered Loan-to-Value (LTV) Ratio Increases
January 5, 2022– The Federal Housing Finance Agency (FHFA) has released an announcement stating it will increase fees for certain high-balance loans and second home loans that are sold to Fannie Mae and Freddie Mac.
This is part of the FHFA’s goal to improve their regulatory capital positions over time and facilitate equity and sustainable access to homeownership, according to acting director Sandra L. Thompson.
The fee increases will begin on April 1 in order to minimize the pipeline disruption and market impact. The fees will only affect mortgages that are originated above the baseline conforming loan limit in designated areas.
High balance loan upfront fees will increase between 0.25% and 0.75%, tiered by loan-to-value ratio. These loans are referred to as high balance loans and super conforming loans, respectively. For second home loans, the upfront fees will increase between 1.125% and 3.875%, tiered by loan-to-value ratio.
First time homebuyers in high areas cost areas with incomes that are or below 100 percent of the median income will not be affected by the fee increases. In addition to first time homebuyers not being affected, some affordable housing programs that have beneficial pricing will not be altered.