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Volume 7 - Number 1

January 3, 2014

LLPAs Raise Fear of FHA Comeback

Recent announcements of revised loan-level price adjustments for the government-sponsored enterprises and risk-based pricing are fueling fears of FHA resurgence in the market. Consistent with the Federal Housing Finance Agency’s stated intent to raise the GSE guaranty fees by about 11 basis points, Fannie Mae and Freddie Mac released revised loan-level price adjustments (LLPAs) on Dec. 16. The upfront fee hike takes mortgage rates for affected borrowers close to FHA pricing levels, according to industry analysts.

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With rates higher this year, there has been talk of lenders liberalizing their underwriting standards in an effort to increase volume and make up for lower refis.

Do you think your shop will loosen standards over the coming three months?

Yes, but not by much.
Yes, by a lot.
Yes and, heck, we may even do non-QM lending.
No, not at all.
No and we may even tighten credit.

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