The Federal Housing Finance Agency (FHFA) announced targeted changes to the Fannie Mae and Freddie Mac's guarantee fee pricing by eliminating upfront fees for certain borrowers and affordable mortgage products, while implementing targeted increases to the upfront fees for most cash-out refinance loans.
As part of the changes, FHFA is eliminating upfront fees for first-time home buyers at or below 100% of area median income (AMI) in most of the United States and below 120% of AMI in high-cost areas. Additionally, upfront fees will be removed for HomeReady and Home Possible affordable mortgage program loans, HFA Advantage and HFA Preferred loans, and single-family loans supporting the Duty to Serve program.
"FHFA is eliminating upfront fees for certain first-time home buyers, low-income borrowers, and underserved communities to promote sustainable and equitable access to affordable housing," says director Sandra L. Thompson. "[This] announcement will result in savings for approximately 1 in 5 borrowers of the enterprises' recent mortgage acquisitions."
Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA), says the pricing framework adjustments are “well-timed” and “will improve access to credit for low- and moderate-income households, first-time buyers, and minority buyers.”
The FHFA says the new fee reductions will go into effect as soon as possible, while the implementation of new fees for cash-out refinance loans will begin Feb. 1, 2023.