FHFA Announces Credit Scoring, Upfront Fee Changes

The Federal Housing Finance Agency has made significant changes meant to improve lending access to low-income and first-time homebuyers. At the Mortgage Bankers Association’s 2022 Annual Convention & Expo, FHFA Director Sandra L. Thompson announced that the agency had validated and approved the FICO 10T credit score model and the VantageScore 4.0 credit score model for use by Fannie Mae and Freddie Mac. The two models will replace the Classic FICO, which the GSEs have used for two decades. Thompson said the models will take multiple years and significant effort to introduce to the industry. But will the end result will be “improved accuracy and a more inclusive approach to evaluating borrowers.” The new models improve accuracy by accounting for…

CHLA: FHFA Updated Seller Standards Could Have “Negative Real-World Consequences”

The Community Home Lenders Association (CHLA) sent a letter to the Federal Housing Finance Agency (FHFA) commenting on its proposed increases in financial requirements for Fannie and Freddie. In February, the FHFA proposed updated standards that mortgage lenders would have to meet in order to sell loans to or service loans on behalf of Fannie Mae and Freddie Mac. The standards were set in 2015 and have remained with little modification since then. The update is meant to strengthen required capital and liquidity for seller/servicers with different business models, as well as provide for more transparency and consistency, “by incorporating cost and risk assumptions that were not previously considered and re-evaluating modeling assumptions and inputs, given changes in the servicing…

CHLA Says FHA Should Cut Premiums, End Life Of Loan

In its budget proposal this week, the Biden Administration allotted a 34% budget increase for the Department of Housing and Urban Development of $11.6 billion over the fiscal year of 2022. This proposed budget includes $32 billion for the Housing Choice Voucher Program and almost $2 billion for the HOME Investment Partnership, aimed at affordable housing strategies. The industry has so far applauded the budget for its investments in housing as affordability dwindles and many Americans struggle to find housing within their budget. “A president’s budget is a wish list of policy goals and ambitions,” Shannon McGahn, the National Association of Realtor’s chief advocacy officer, said. “Many changes will be made to this plan, but it is good news that…

CHLA Asks FHFA To Delay April Fee Hikes

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…

Industry Responds To Thompson Nomination

President Biden will nominate Sandra Thompson to become the permanent director of the Federal Housing Finance Agency (FHFA), the White House announced in a statement on Tuesday. Thompson is the current acting head of the FHFA, having taken over the position in June when Biden replaced Mark Calabria. She would serve a five-year term after her approval by the Senate. Though Thompson has held the position since June, her nomination was at one point in question. Biden faced criticism in September when rumors spread that he was considering nominating Center for Responsible Lending President Michael Calhoun. Thompson maintained support among Democratic politicians focused on housing, especially House Financial Services Chair Maxine Waters, which may have solidified her position. “We will…