Redistribute high-risk loan costs to homeowners with good credit
So, by now you may have heard of the new FNMA and Freddie Mac rules that aim to redistribute high-risk loan costs to homeowners with good credit. And I’m getting the same question from many of you, “Is it true, or just a hit piece?” So on the surface, yes, it is true, this will be happening to many buyers that have great credit, good income, good job stability and even have been previous home owners….. Based on the current home values in the Phoenix metro area, there will be many borrowers that will most likely have to payer a higher interest rate than someone with a low/lower credit score, but it isn’t just about score…… it’s about income! And this is about REDISTRIBUTION.
Borrowers who fall under the 80% AMI for a certain area will not face any LLPA’s, ( Loan Level Price Adjustments ). Instead, those that make more than 80% of the median AMI for a given area will have to pay those LLPA’s and not just the regular LLPA’s that we have always had, these will be increasing to make up for the LLPA’s that will no longer be charged to those whose income fall under the 80% AMI threshold.
Sharifa A. Anderson is Fannie Mae’s Senior Vice President and Chief Diversity and Inclusion (D&I) Officer. She leads a function that works collaboratively across the company to advance diversity, equity and inclusion. At FHLBank Pittsburgh her focused on driving diversity, equity and inclusion and supporting housing finance and community investment. As well as the Pennsylvania Bankers Association, where she has served on the Board of Directors and the association’s Diversity, Equity, and Inclusion Advisory Group. https://www.fanniemae.com/about-us/fannie-mae-leadership-team/sharifa-anderson
The term, Equality, “equality” in housing, “equality” in lending has basically been erased and replaced with the term Equity. It’s now about Equity in home ownership, its about those that “have”, paying for others. It’s unfortunate, but both FNMA and Freddie Mac are fully focused on this.
Is it fair? NO, no its not. Is iit’sight? Nope! Is it going to help those that need it most? Nope, won’t do that either. What it will do is make it more expensive for many to purchase while they supplement the buyer power of others. There is a word for this: Redistribution.
This all starts May 1st.
