Starts May 1st, 2023. Basically, if your credit is good and you have always paid your bills on time, you will be funding those who have bad credit. Average loss on 30-year loan is 15,000.00. or 100.00 per month. Also, those with bad credit will get a better rate than those with good credit...more money lost. It is a ridiculous law. Research it yourself before committing to any relocation plans.
24 replies (most recent on top)
"those with bad credit will get a better rate than those with good credit"
That's just not true. There's adjustment to even the playing field a little bit, but those with bad credit will still get a worse rate than those with good credit.
You can find the rate matrix here.
https://singlefamily.fanniemae.com/media/9391/display
Researching Loan Level Price Adjustments in multiple articles seem to confirm this thread o.k.
Borrowers with higher credit scores will pay more and borrowers with lower scores will pay less.
Excerpt from that Bankrate article...
For example, if you have a score of 640 to 659 and borrow 75.01 percent to 80 percent of the home’s value — in other words, make a 20 percent to 25 percent down payment —you now pay a fee equal to 2.25 percent of the loan balance. Before these changes, the same borrower paid a 3 percent fee. On a hypothetical $350,000 loan, that’s a savings of $2,813.
A borrower with a higher credit score of 740 to 759 would have paid a fee of 0.5 percent on a loan with an 80 percent loan-to-value (LTV) ratio. Under the new rules, that fee rises to 0.875 percent. On a $350,000 loan, that’s an extra cost of $1,313.P
An explainer of the changes.
https://www.bankrate.com/mortgages/new-mortgage-fee-rules/
Lots of false information in this thread.
Basically the gov is trying to donate my money for years to come to people who do not pay their bills . All this w/o my choice or permission. A realtor's nightmare. Sales of homes will drop.
Realtors are keeping this quiet and hope it does not get out. However, by bargaining off any loss by letting the realtor know up front that due to L.L.P.A. the offer on house will be subject to subtraction of any L.L.P.A amounts and interest lost on lifetime of loan, calculatedly accurately by an accountant.
Get in the driver's seat of the loan; study and have a copy of the new L.L.P.A. rules. Never be robbed of your hard-earned income due to lack of knowledge. Help other potential new homeowners understand the pitfalls of this unfair, unequal ruling.
It is not only 15,000.00 plus interest loss but also the loss on the higher rip off rate given due to larger down payment and interest lost on that high-rate amount till the loans maturity.
It is not a onetime fee but for the life of the mortgage loan. Most loans are 25 or 30 years. Dinged every month for this will in time make one more and more angry thinking about how the money could have been used for your own family. $15,000.00 over 25 or 30 years with interest added could pay for your own kid's college tuition later. Make a cautious choice that protects the ones you love.
Debunk L.L.P.A.s by playing by their own rules:
- let credit score fall to where even hackers would pass on it.
- put down $20.00 as down payment and make sure you have spent or rearranged every other penny that could possibly be tied to your name.
- figure out what their term "underserved community" means and move there physically for 1 or 2 months with that true address change.
- get some legal advice to make sure you have not missed anything.
Responsible people getting punished. So wrong. Why punish someone who didn’t do wrong?
https://singlefamily.fanniemae.com/media/33241/display
*We are implementing additional changes to our LLPA framework that represent the next step in our effort to increase support for borrowers historically underserved by the
housing finance market*
I guess the "overserved" will be no longer overserved.
"Avoid getting a loan backed by Fannie Mae or Freddie Mac."
It's a good point, to be fair. Those of us that know how to manage our finances, are not likely to need these government backed loans. Maybe only the first time buyers, but it should be a temporary inconvenience at most, if you're smart about it.
"With that said, it’s for Freddie/Fannie backed mortgages."
Right. So the feds. From the very handy article linked a few posts down:
"LLPAs were introduced around the time of the 2008 financial crisis to help offset the risks borne by Fannie and Freddie Mac, the federally backed mortgage institutions overseen by the Federal Housing Finance Agency (FHFA)."
And a quick search:
"Sandra L. Thompson – Director
Federal Housing Finance Agency
Sandra L. Thompson was nominated by President Joseph
R. Biden to serve as the Director of the Federal Housing
Finance Agency (FHFA) on December 17, 2021,
confirmed by the U.S. Senate on May 25, 2022, and sworn
in on June 22, 2022"
https://www.fhfa.gov/AboutUs/Documents/2022-Bios/Bio_Sandra-Thompson.pdf
I'll keep my thoughts on everyone's voting patterns to myself.
These is a one time fee charged by Fannie Mae and Freddie Mac at closing. It's not new, they changed the fee amount. The one's that get the lowest fee's have a 780+ credit score and little down payment, but not saving money because the PMI would be high. I would get a higher fee for having 800+ FICO score and 20% down.
Avoid getting a loan backed by Fannie Mae or Freddie Mac.
I didn’t vote for him.
With that said, it’s for Freddie/Fannie backed mortgages.
anyone unaware of L.L.P.A 's now, will see it later on closing mortgage statement and could object and cancel the purchase agreement.
No incentive to a have good credit score anymore. No pay bills ...No pay high interest rate...Plus some fool pays my mortgage. Loan Level Price Adjustments, what a nice name for something so wrong.
A lot of people are downvoting these comments, but have nothing to say in defense of these policies. Because you know it's all true. The people that do the right thing their whole life are being punished. And people that don't take responsibility for their actions are being rewarded and elevated. It's that equity they want. And this is how they will achieve it. You know it affects you negatively too, but you will keep quiet, because you're not allowed to get out of line. Downvote away.
The OP, , like many others, is politicizing the story. Here’s the facts. Read the full article if you care to actually educate yourself and not just blindly believe what any anonymous person says on the internet including me.
https://www.cbsnews.com/news/mortgage-fee-structure-2023-llpa-credit-score-buying-a-home/
So if I don’t pay my mortgage on time it’ll save
Me money?
- 00 per month lost should be bread and milk for my family not people who chose to skip paying their own bills. rewards bad behavior. it is the gov's job to supplement this and not individuals.
Nobody would want to pay the mortgage of someone else basically. Hard enough to pay y our own mortgage.
More woke $hit.
Calling it Loan Level Price Adjustments or L.L.P.A.'s. Sad deal for new mortgages. Doesn't apply for loans before May 1st though.