On Wednesday, May 10, after significant urging from the National Association of REALTORS® (NAR), the Federal Housing Finance Agency (FHFA) canceled the proposed loan level pricing adjustment (LLPA) upfront fee on borrowers with a debt-to-income ratio greater that 40 percent. This increase was scheduled to go into effect on August 1st.
NAR had previously worked with the FHFA to help shape the LLPAs since they were created in 2008, and approved of many of the upcoming changes that were proposed to LLPAs in 2023. In a statement from NAR President Kenny Parcell back on January 19 when the changes were first announced, “NAR and our members were supportive of most of the changes made to LLPAs this past fall, and we will continue to advocate for LLPA reform as the housing market continues to struggle with the sharpest blow to affordability in decades.”
Though NAR approved of many of the proposed changes brought forth to the LLPAs, not all the changes brought forward seemed in the best interest of homebuyers as Parcell continued, “Furthermore, these changes include significant reduced fees for many borrowers with lower credit scores, but strong down payments. However, fees are raised on some borrowers with good credit scores and moderate down payments, hitting middle-wealth homebuyers. Furthermore, FHFA included new fees on borrowers with higher debt-to-income scores. NAR will review other changes in the new LLPA structure and share our concerns with the FHFA.”
As the process continued, NAR continued to work tirelessly with the FHFA to work on the proposed changes to LLPAs. In April 2023, NAR updated its membership on the work being done to remove the proposed upfront fees on LLPAs, including the steps taken so far such as:
- NAR has spoken and met with FHFA staff about this issue numerous times in an effort to raise concerns about the fee increases.
- NAR has also reached out to industry partners to raise awareness of the problem.
- NAR has spoken to leaders on both sides of the Senate Banking Committee as well as the White House on this issue.
- NAR sent a letter to FHFA reiterating its stance and urging the removal of the fee increases.
As a part of Wednesday’s announcement, NAR issued a statement saying in part: “We are pleased that our advocacy efforts on behalf of our 1.5 million members and their clients were successful. We applaud the FHFA for listening to the industry’s concerns by choosing to drop this fee on borrowers with higher debt-to-income ratios. It would have imposed a cost on borrowers at a time in the market when affordability is already stretched and only made them riskier.”
GMAR stands with NAR in our approval of this rate increase removal, and helping low- to middle-income families achieve the goal of home ownership. This advocacy also shows the benefit of RPAC and how your donations help work for you and your clients. To learn more about the work RPAC has done, or how to get involved, visit gmaronline.com/rpac.