"Habib described the plan he sent to Pulte as suggestions informed by a tremendous amount of research, including conversations with top lenders that sell to Fannie Mae to pinpoint where their pain points are. He said two areas stood out across the industry the pricing hits on non-owner-occupied second homes and the costs associated with cash-out refinances. They seem to be most concerned in these two areas, Habib said."
"LLPAs can be paid upfront or built into the interest rate. But with mortgage rates already elevated, there's often no room to add it there, so the cost has to be borne by the borrower out of pocket. And that can derail transactions. The Biden administration proposed to revamp the LLPA matrix in 2023, but the revisions increased fees for some borrowers and introduced a controversial new LLPA tied to a debt-to-income ratio above 40%."
Pulte assigned Barry Habib to review the LLPA structure and propose options to ease borrower costs. Habib based suggestions on research and lender conversations with firms that sell to Fannie Mae. Industry-wide pain points include steep pricing on non-owner-occupied second homes and high costs for cash-out refinances. LLPAs can be paid upfront or folded into rates, but elevated mortgage rates often force borrowers to pay LLPAs out of pocket, risking transactions. A 2023 proposal to revamp the LLPA matrix raised fees and added a DTI-linked charge above 40%, which was later rolled back after pushback.
Read at www.housingwire.com
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