Changes coming to Fannie Mae and Freddie Mac could be good for first time borrowers, low-income home purchasers and those with less than ideal credit but ....

these changes could feel like a gut punch to those with better credit and who put more money down. Fannie Mae and Freddie Mac announced that as of May 1, 2023, they will level new fees for loan-level price adjustments (LLPAs). Under these proposed changes, buyers with better scores—those 680 and above—will see a bump in their rate and fees. Those borrowers who plan to put down 15% to 20% may be hit with the biggest increase in fees. As an example, a buyer with a credit score over 720 and putting down 20% will face a 1% surcharge now, up from 0.25%. Borrowers with less money down or having lower credit scores receive a waiver of these fees in order to facilitate homeownership.

The agency stated that "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," according FHFA Director Sandra Thompson's statement earlier this year. In their March statement, these changes "represent the next step in our effort 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."

The goal is to help more buyers purchase to own homes. Most buyers with 680 or lower scores normally would not be able to obtain a conventional 3% down payment loan. On one hand, this is a good thing because it opens up more buyers to homeownership and sellers reap the benefit of a larger pool of buyers than we have now. On the other hand, many see this as a Robin Hood move and penalizing those in a better position. Either way, this only affects conventional loans. This will not be a free for all, giving money out like candy to everyone. The buyer still has other qualification requirements. 

Talk to your lender about your specific position and how this may impact you if you are buying or selling a home after May 1st.

Click Here to view the matrix of fees and charges effective May 1, 2023.