NAR president tells House Subcommittee fees are unnecessary and confusing
The National Association of Realtors (NAR), along with other industry players, is not looking favorably at the Federal Housing Finance Agency’s (FHFA) new pricing policies for Fannie Mae and Freddie Mac.
The loan level pricing adjustments (LLPA) fee overhaul, which took effect May 1, eliminated upfront fees for some borrowers with lower credit scores and smaller down payments and increased costs for some buyers with good credit scores and larger down payments.
NAR president Kenny Parcell testified against the fee changes before the House Committee on Financial Services Subcommittee on Housing and Insurance on Wednesday, expressing concern that the fees were unnecessary, confusing, and hurt affordability.
Parcell asserted that the fee increase on some borrowers is another hurdle to owning a home. “But the biggest impediment remains the lack of housing affordability and supply,” he said in a statement. “Without addressing this issue, housing will remain out of reach for many. Possible solutions to supply include incentives to transfer commercial office buildings into residential units, mobilizing private funds to revitalize affordable homes, or incentivizing more owners to sell their homes by increasing the maximum amount of capital gains a homeowner can exclude on the sale of a principal residence.
Read more: Today’s LLPA fix is not the first
“The average American homebuyer faces more barriers to achieving homeownership than ever before. Uncertainty in the US economy, rising inflation, increasing mortgage rates, and lack of affordable inventory continue to devastate buyer confidence. This year, US home purchase mortgage applications dropped to a 28-year-low as rates jumped. First-time homebuyers historically made up around 40% of the market, but that has dropped to 26%, the lowest on record. The best way to build wealth is through real estate.”
Parcell praised the FHFA for rescinding another proposed LLPA fee that would impact borrowers with debt-to-income (DTI) ratios greater than 40%.
“This is a huge victory for consumers as we opposed the DTI fee and believe public comment and further research from the industry, analysts, and concerned consumers will help the FHFA reconsider the pricing changes in hopes of lowering fees on all borrowers,” he said.
Representatives from the Housing Policy Council (HPC), the Robert H. Smith School of Business at the University of Maryland, and the Urban Institute’s Housing Finance Policy Center Urban Institute were also present for the hearing.
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