Changes to Loan Level Price Adjustments Mean Varying Fees

Homebuyers need to be aware of changes to upfront fees for loans backed by Fannie Mae and Freddie Mac that came into effect today, as part of changes in the Loan Level Price Adjustments (LLPAs). The fees vary based on credit scores, down payments, and types of homes.

The entire matrix of fees based on credit score and down payment has been updated, and people with higher credit scores may end up paying more while those with lower credit scores will pay less in some cases.

The penalty for having a lower credit score will be smaller than before May 1. These fees apply to any loan that’s guaranteed by either Fannie Mae or Freddie Mac, regardless of the lender.

The Federal Housing Finance Agency made these changes to provide equitable and sustainable access to homeownership and shore up capital at Fannie Mae and Freddie Mac.

Last October, the Housing Finance Agency eliminated fees for conventional loans for about 20% of homebuyers, which helped boost affordability for many Americans.

Groups that benefited from that change include low- to median-income first-time homebuyers; buyers using the HomeReady (Fannie Mae) or Home Possible (Freddie Mac) low-down-payment mortgage options for low-income buyers; buyers using the HFA Advantage (Freddie Mac) or HFA Preferred (Fannie Mae) loans offered through state and local housing finance agencies; and single-family loans that fall under the Duty to Serve program that helps low- and moderate-income families finance manufactured housing and rural housing purchases.

Gary Fleisher

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Gary Fleisher

Gary Fleisher, “The Mod Coach”, has been entrenched in the offsite construction industry for most of his life. Having started his career in the lumber industry, Gary spent decades working with manufactured and modular home producers and homebuilders. For the past 15 years his blog and LinkedIn postings have introduced thousands to the benefits of factory-built construction and have served as a forum for industry professionals to share insights and perspectives. Gary lives in Hagerstown, MD with his wife, Peg.

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