The Community Home Lenders Association (CHLA) sent a letter to FHFA Acting Director Sandra Thompson asking for adjustments to upcoming Fannie Mae and Freddie Mac fee increases.
On January 5, the Federal Housing Finance Agency (FHFA) announced “targeted increases” on upfront fees for certain high balance loans and second home loans, to go into effect April 1. Its stated goal is to “minimize market and pipeline disruption.”
“These targeted pricing changes will allow the Enterprises to better achieve their mission of facilitating equitable and sustainable access to homeownership, while improving their regulatory capital position over time,” Thompson said in a press release. “Today’s action represents another step FHFA is taking to strengthen the Enterprises’ safety and soundness and to ensure access to credit for first-time homebuyers and low- and moderate-income borrowers.”
CHLA’s letter commends FHFA’s desire to focus on core loans and underserved borrowers but says adjustments are necessary to protect middle-income homebuyers and middle-income communities.
“[These fee increases] do seem consistent with a broader strategy to focus on core loans and underserved borrowers. Therefore, CHLA hopes that these fee hikes will at least in part be used to fund LLPA reductions for underserved borrowers,” it reads.
“However, we also believe that (1) fee increases being imposed on second home loans are excessive, and (2) fee increases on high balance loans are applied too broadly, adversely affecting middle-income borrowers and middle price range homes.”
The letter made the following recommendations:
- Delay the effective date of the fee hikes from April 1 to July 1, in order to give sufficient time for the FHFA to solicit and consider public comments on the proposed fee increases.
- Significantly reduce the level of fee increases being imposed on second home loans, at least for low and middle-income borrowers and for non-high-cost loans.
- High balance loan fee hikes: (1) Apply the fee hikes only to loans above 120% of the conventional loan limit, and (2) Exempt 1st-time homebuyers up to 150% of median income.
“CHLA wanted to explain our position in issues like the Fannie/Freddie footprint and appropriate pricing policies,” CHLA Executive Director Scott Olson told The Mortgage Note.
“But also specifically, we believe where they drew the lines on fee hikes adversely affected too many middle-income borrowers. For example, the letter went into much detail about how, while we understand that a $950k loan seems pretty high – a $650k loan does not, particularly in high-cost areas. So we proposed boosting the cutoff to $776,640 (120% of the conventional loan limit).”
CHLA is not the only housing group to oppose the fee increases. The National Association of Homebuilders denounced the move in a blog post.
“With the nation in the midst of a housing affordability crisis and many more workers electing to telework, this is exactly the wrong time for federal regulators to be raising fees on homeownership and second homes,” said NAHB Chairman Chuck Fowke.
“If FHFA is truly interested in promoting housing affordability, the agency would not be taxing homebuyers to pad the capital positions for Fannie Mae and Freddie Mac.”