BAM Key Details: 

  • On Wednesday, the FHFA announced it would rescind its DTI LLPA fee for conventional borrowers. 
  • The decision comes after the FHFA announced a delayed implementation to better understand the concerns of industry stakeholders.
  • Non-DTI LLPA fees officially went into effect on May 1, but in most markets, it has been in effect since March. 

Industry professionals are rejoicing after the Federal Housing Finance Agency (FHFA) announced that it has rescinded upfront fees based on borrowers’ DTI ratio for loans acquired by Fannie Mae and Freddie Mac. 

DTI loan-level pricing adjustments (LLPAs) were one of many changes the FHFA announced in January in a Loan-Level Price Adjustment Matrix. And while there have been a lot of false headlines—including claims that borrowers with good credit would pay fees for those with low credit—the DTI LLPA fee sparked more controversy than any of the other changes. Industry stakeholders immediately began pushback on the change, which led to yesterday’s rescission. 

To be clear, non-DTI LLPAs are still in effect, as of May 1, 2023.

FHFA’s Decision to Rescind DTI LLPA

The FHFA first opted to delay implementation for the DTI LLPA from May 1, 2023, to August 1, 2023. 

But after industry stakeholders, including the Mortgage Bankers Association (MBA) and the National Association of REALTORS® (NAR), pushed back about the fee, the decision to rescind DTI LLPA was announced. 

I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee. To continue this valuable dialogue, FHFA will provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue.

Sandra L. Thompson

Director, Federal Housing Finance Agency

Industry Reactions

It’s clear the industry is thrilled with the FHFA’s decision, with statements from both the MBA and NAR showing approval.

The proposed fee was unworkable for lenders and would have confused borrowers and undermined the customer experience.  We are pleased that FHFA engaged with industry stakeholders, recognized the negative impacts of the fee, and decided to rescind its implementation.

Bob Broeksmit

President and CEO, Mortgage Bankers Association

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.

Kenny Parcell

President, National Association of REALTORS®