FHFA hikes fees for high-balance and second-home loans

N

nguyener

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https://www.housingwire.com/articles/fhfa-hikes-fees-for-high-balance-and-second-home-loans/

FHFA hikes fees for high-balance and second-home loans.
The Federal Housing Finance Agency introduced new upfront fees on Wednesday for some high-balance and second-home loans sold to Fannie Mae and Freddie Mac.

Upfront fees for high balance loans will increase between 0.25% and 0.75%, tiered by loan-to-value ratio. For second home loans, the upfront fees will increase between 1.125% and 3.875%, also tiered by loan-to-value ratio.

The new pricing framework will take effect April 1, 2022, to ?minimize market and pipeline disruption,? the agency said in a press release.

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Assuming the buyer meets the qualifications for jumbo, isn't that a better alternative in this case? Rates are lower with jumbo too.
 
Most buyers will fit within a banks Jumbo Portfolio lending parameters when their loan falls between standard Conforming ($647,200) and High Balance Conforming ($970 800) There are cases where these price hikes still may be a problem of significance. Example: Many banks are funding 89.9 jumbo for example, but with very high and restrictive cash reserve policies. Most will not allow ratios beyond 43%. A high balance conforming allows for even less down (5%) and for now accept ratios as high as 49.99 if the buyer is strong. Cash reserves for high balance are 2-3 months of PITIHOA (depending on lenders overlays) versus 12-24 months for jumbo lenders.

A jumbo loan is currently priced in the low 3's. With this LLPA change, I'd be surprised if we don't see a 4.0% handle soon for a high balance Conforming.
Some lenders at the end of January are going to price their new originations with the new LLPA's. Other lenders are holding off until the first week of March. If you have to fund your purchase with a High Balance Conforming due to ratios, cash reserves, or down payment issues, it may be wise to get a long term lock in place before these LLPA's hit, or brace yourself for a possible 4ish handle on your new loan.

My .02c
 
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