May 1st Adjustments

4.26.2023 – 

The FHFA announced some updates earlier this year that affect their LLPA’s, or Loan Level Pricing Adjustments.  There has been a lot of controversy surrounding these updates and some are even making the claim this is a left wing conspiracy to force more affluent borrowers with better credit scores to subsidize less affluent borrowers with lower credit scores.

The FHFA made some adjustments that positively impact borrowers of all credit scores.  They introduced credit tiers for 760-779 and 780+ which never existed before and result in positive impacts for those borrowers.  This is old news for us in the mortgage industry because these adjustments have been priced in for months.  We’re hearing a lot about it the past week because someone started using it to get clicks, and then a bunch of people jumped on that bandwagon.  Now we’re all talking about it even if we don’t want to.

Nobody is forcing anyone to use a conventional loan; people select it because it’s the best option.  There are other options, and always cash.  It just so happens that conventional loans give a great many borrowers the best terms they can find.  If someone wants to throw away those benefits and take a higher rate to spite the FHFA over these “unfair” adjustments that would be their very expensive choice to make.

The bottom line is that most people shouldn’t care about these adjustments.  Some people will end up paying more(very little in the scheme of things), and others will pay less.  These adjustments are just another factor in determining what the best product is for each individual situation.  If you’re not getting a conventional mortgage then these adjustments wouldn’t even come into play for you.

The story is that there is no story.

Compare for yourself…

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Daniel Hennek

Principal Broker

NMLS 198218