Mortgage originators in the United States typically sell off their loans in the secondary market, where the main buyers are the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. These agencies levy surcharges called loan level price adjustments (LLPAs), which affect the eventual prices paid by home buyers. The surcharges depend on a number of factors, including the borrower’s credit rating and the mortgage loan-to-value ratio. Generally speaking, lower credit ratings and higher loan-to-value ratios correspond to riskier mortgages, which have historically been associated with higher fees.
Do you have a sense for how many loans are in each section? I would imagine that the negatively impacted areas align with the majority of loans today, while the positively impacted areas represent, no pun intended, the minority.
Also, the administration has been vocal about equity goals, so why not simply talk plainly about the motivation of redistributing from those who take on less risk to those who take on more?
Sounds to me as though the new rules will lead us down the path to more defaults as people with better credit make bigger down payments and people with worse credit borrow more than they can afford. A different path back to 2008. Or am I reading this wrong?
Do you have a sense for how many loans are in each section? I would imagine that the negatively impacted areas align with the majority of loans today, while the positively impacted areas represent, no pun intended, the minority.
Also, the administration has been vocal about equity goals, so why not simply talk plainly about the motivation of redistributing from those who take on less risk to those who take on more?
Sounds to me as though the new rules will lead us down the path to more defaults as people with better credit make bigger down payments and people with worse credit borrow more than they can afford. A different path back to 2008. Or am I reading this wrong?