Newsroom

June 23, 2016

NAFCU, 24 others urge reduced GSE loan-level price adjustments

NAFCU, with 24 other trades, urged Federal Housing Finance Agency Director Mel Watt to further reduce or eliminate loan-level price adjustments charged by Fannie Mae and Freddie Mac, as these costs are often passed along to consumers through higher mortgage credit prices.

The letter, sent Wednesday, noted that guarantee fees, or g-fees, have increased sharply since 2009, and when combined with loan-level price adjustments, the government-sponsored enterprises' income has increased substantially but without achieving broad access to credit for borrowers.

"No borrower should face arbitrarily high prices for mortgage credit, especially when the burden is felt particularly hard by low- and moderate-income and first-time homebuyers," the trades wrote. "We therefore request that FHFA direct the GSEs to reduce or eliminate LLPAs going forward."

The groups added that through the adjustments, the GSEs are double-charging consumers for risk that is already being assumed by existing g-fees. "Eight years after the financial crisis, mortgage credit quality has improved dramatically and regulations have improved the industries risk management practices," the letter concluded. "We believe these changes justify eliminating LLPAs."