FHFA Pricing Framework Doesn’t Penalize Borrowers with Higher Credit Scores
Posted: May 24 2023
Federal Housing Finance Agency Director Sandra Thompson defended recent actions by the FHFA to adjust its single-family pricing framework. During a House Financial Services Committee oversight hearing, Thompson emphasized that “under the new pricing framework, borrowers with strong credit profiles are not being penalized to benefit borrowers with weaker credit profiles. That is simply not true.”
Thompson said that “the enterprises’ capital requirements include recognition for loans with [mortgage insurance] to reflect lower exposure to unexpected losses. This dynamic is also reflected in the enterprises’ pricing framework. MI costs must be added to the guarantee fees charged by the enterprises to fully understand the costs borne by the borrower. Factoring in MI costs and risk transfer is critical to the fee calculation.”
FHFA earlier this year introduced redesigned and recalibrated upfront fee matrixes for purchase, rate-term refinance and cash-out refinance loans. Recently the agency rescinded a controversial debt-to-income ratio-based fee, an upfront fee that was part of the broader changes. FHFA has also put out a request for information on GSE pricing.
In a statement submitted for the hearing record, the association also articulated principles for reform of the government-sponsored enterprises, the comprehensive review of the Federal Home Loan Banks that FHFA is currently undertaking, and addressing issues regarding appraisals and valuations and loss mitigation and loan servicing.