Uncertainty caused by regulations and the complexity of calculating income and debt make DTI a poor metric to use in pricing a loan without the risk of lenders having to eat a new fee.
Despite FHFA’s decision to require that lenders provide both a VantageScore 4.0 and a FICO 10T credit score, it may be years before the market can implement the new scores.
NYCB closes Flagstar’s non-bank branches; FHA offers new incentives for servicers; home prices decline again in November; MBA writes to FHFA on the cost of doing business with the GSEs; new products aimed at newly-constructed homes; MISMO offers loan limit tool.
The TILA-RESPA Integrated Disclosure rules require mortgage lenders to disclose prices within three days of an application. But to do so they have to rely on frequently faulty income and debt information.
By targeting price cuts at low-FICO score and high-LTV borrowers, the new pricing grids of Fannie Mae and Freddie Mac could increase market overlap with FHA.
Upfront fees will decline for most low-income borrowers, but will increase for some middle-income homebuyers. The result is more cross-subsidy for the GSEs’ mission-based activities.
The new pricing matrices for Fannie and Freddie may create modest net increases in the cost of a mortgage, but FHFA says that will support more lending for low-income borrowers.