NEW FANNIE MAE & FREDDIE MAC MORTGAGE RULES

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New Mortgage Rules announced by FHFA on 1/19/23 go into effect on May1.  FHFA Announces Updates to the Enterprises’ Single-Family Pricing Framework FOR IMMEDIATE RELEASE 1/19/2023 ​​​​​​​​​​Washington, D.C. – The Federal Housing Finance Agency (FHFA) today announced further changes to Fannie Mae’s and Freddie Mac’s (the Enterprises) single-family pricing framework by introducing redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans. “These changes to upfront fees will strengthen the safety and soundness of the Enterprises by enhancing their ability to improve their capital position over time,” said Director Sandra L. Thompson. “By locking in the upfront fee eliminations announced last October, FHFA is taking another step to ensure that the Enterprises advance their mission of facilitating equitable and sustainable access to homeownership.”​​ READ MORE     With new mortgage rules for Fannie Mae and Freddie Mac conventional loans going into effect May 1, many are wondering if the changes will lead to a housing crisis similar to the 2008 subprime mortgage crisis that led to an unprecedented number of foreclosures in the years that followed.  Sources vary (see some below) on their take on the new mortgage rules that penalize people with good credit and favor those with poorer credit.  It will take a while before we can assess the actual results of the changes, but the concerns that come with these new rules will undoubtedly continue for some time.

National Association of REALTORS®: NAR Advocates for FHFA to Maintain Affordability for All Homebuyers Mortgage News Daily:  Some BIG Changes to Mortgage Costs Were Just Announced   Business Insider:  New fee structure on May 1 will make mortgages cheaper for some and pricier for others.   RISMedia:  New Federal Mortgage Rule Aims to Benefit the Less Affluent, but Good Credit Borrowers Will Pay More   CBS News:  Mortgage fee structure for some homebuyers is changing this month. Here's how. U.S. Representative Ralph Norman (SC-5):

According to the Wall Street Journal and numerous other outlets, if you’re a new homebuyer with good credit (above 680), and you apply for a mortgage backed by Fannie Mae or Freddie Mac – which guarantee the vast majority of all mortgages – then you’re likely to pay hundreds of dollars more in fees known as “loan-level price adjustments.” These fees will be even higher for those who put at least 20% down on their homes!

There are four things I believe this new policy does:

• It penalizes those who have made the choices necessary to achieve good credit, while rewarding those who have not.
• It’ll make home ownership even less affordable for those who have demonstrated their ability to live within their means and pay their debts on time.
• Using other people's money to subsidize loans for lower creditworthy borrowers adds tremendous risk and dysfunction to the housing market.
• And on top of everything else, it disincentivizes people to save for a larger down payment.