#mortgage-affordability

#mortgage-affordability

Introduced in 2008, LLPAs compensate the government-sponsored enterprises (GSEs) for differences in borrowers' credit risk, including factors such as loan-to-value (LTV) ratio and credit score. Before that, the GSEs charged a flat guarantee fee that did not vary by borrower risk factors. LLPAs can be paid upfront or built into the interest rate. But with mortgage rates already high, there's often little or no room to absorb them, forcing borrowers to pay out of pocket. And that can derail transactions.

First of all, we're working hard to use the word assistance less often. Saying assistance means that down payment programs are just a lifeline for people who can't afford to buy a home otherwise. These programs have, indeed, helped many otherwise eligible borrowers who lack funds for their down payment or cash to close to qualify. But in fact, down payment programs aren't only for cash-strapped, first-time or underserved buyers.