FHFA Delays Fee Requirement; CFPB Seeks Regulation Z Input
Written By: Joel Palmer, Op-Ed Writer
The Federal Housing Finance Agency (FHFA) announced last week that it is delaying the implementation of a new upfront fee for certain borrowers with a debt-to-income ratio above 40 percent.
FHFA said the decision to delay was made because of feedback from the mortgage industry about operational challenges of implementing the ratio-based fee.
In January, FHFA announced redesigned and recalibrated upfront fee matrices for purchase, rate-term refinance, and cash-out refinance loans for the GSEs’ single-family pricing framework.
The new fee matrices for Fannie and Freddie will consist of three base grids by loan purpose for purchase, rate-term refinance, and cash-out refinance loans—recalibrated to new credit score and loan-to-value ratio categories—along with associated loan attributes for each.
The updated fees were scheduled to take effect for deliveries and acquisitions beginning May 1, 2023. The effective date will now be August 1, 2023 “to ensure a level playing field for all lenders to have sufficient time to deploy the fee,” said FHFA Director Sandra L. Thompson.
Thompson said lenders will not be subject to post-purchase price adjustments related to the DTI ratio-based fee for loans acquired by the enterprises between August 1, 2023, and December 31, 2023.
“This temporary price adjustment exception will not alter any other quality control review decisions by the enterprises,” Thompson said. “During this time, FHFA and the enterprises will continue to engage with industry stakeholders to address operational concerns.”
FHFA said the pricing changes built on upfront fee changes announced by FHFA in January and October 2022, which have been integrated into the new grids.
The changes are designed to “increase support for borrowers historically underserved by the housing finance market while ensuring a level playing field for small and large lenders, fostering capital accumulation, and achieving viable returns on capital.”
“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 Thompson in January. “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.”
In other regulatory news this month, The Consumer Financial Protection Bureau is seeking public comment as it conducts a review of Regulation Z’s Mortgage Loan Originator Rules.
Regulation Z implements the Truth in Lending Act (TILA). It imposes certain requirements on:
Loan originator compensation
Qualification of, and registration or licensing of, loan originators
Compliance procedures for depository institutions
Mandatory arbitration
The financing of single premium credit insurance
“As part of this review, the Bureau is seeking comment on the economic impact of the Loan Originator Rules on small entities,” the bureau stated in the notice. “These comments may assist the bureau in determining whether the Loan Originator Rules should be continued without change or amended or rescinded to minimize any significant economic impact of the rules upon a substantial number of such small entities, consistent with the stated objectives of applicable Federal statutes.”
Comments are due May 1, 2023. You can submit comments to the Federal eRulemaking Portal at www.regulations.gov, or via email at 2023-Notice-RFAReviewLoanOriginator@cfpb.gov. Include Docket No. CFPB-2023-0017 in the subject line of the message.
About the Author
As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.
