FHFA Update

Welcome to The Sun Life Blog!

​Miami is a flourishing and ever-growing city. A fast-paced environment that demands companies to follow its growth. Here, at Sun Life Title, we plan to keep you up to date on what’s happening around our community from the latest trends in the industry to upcoming events in South Florida. The goal is to help build a network for like-minded individuals to grow better together. We intend to keep you ahead of any market updates such as the FHFA’S announcement to increase upfront fees and to help inform you about the latest news when it comes to the title industry. With that said, welcome to Sun Life Title’s blog.

Earlier this year, the Federal Housing Finance Agency (FHFA) announced targeted increases to Fannie Mae and Freddie Mac’s upfront fees for certain high-balance loans and all second home loans; these loans only apply to government sponsored enterprises. A high-balance mortgage loan is defined as a conventional mortgage where the original loan amount exceeds the conforming loan limits published yearly by the FHFA but does not exceed the loan limit for the high-cost area in which the mortgaged property is located. The 2022 conforming loan limit for one-unit properties will be $647,200, while the loan limit for a high-cost area is $970,800.

The new fees will go into effect starting April 1st, 2022. The upfront fees for high balance loans will increase between 0.25 percent and 0.75 percent depending on the buyer’s loan-to-value ratio (LTV). Mortgage lenders use LTV to determine the risk of a loan: The higher your down payment, the lower your LTV ratio. For second home loans, upfront fees will increase between 1.125 percent and 3.875 percent.  Keep in mind, that upfront fees are typically reflected in the interest rate.

Most high-balance loans will be impacted unless they are part of certain protected programs— such as HomeReady, Home Possible, HFA Preferred, and HFA Advantage. First-time homebuyers in high-cost areas with incomes at or below 100% of the area median income will also be exempt from the new high-balance upfront fees.

At Sun Life Title, we plan to keep you ahead of the game through our newsletter and blog posts. Please reach out to us at [email protected] if you’d like to learn more about this month’s blog or if you’d like us to cover a specific subject with next month’s newsletter. Your feedback helps us cater to your needs.

Bibliography:
FHFA Announces Targeted Increases to Enterprise Pricing Framework | Federal Housing Finance Agency, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Targeted-Increases-to-Enterprise-Pricing-Framework.aspx.

FHFA Announces Conforming Loan Limits for 2022 | Federal Housing Finance Agency, https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Conforming-Loan-Limits-for-2022.aspx.

“What Is a Loan-to-Value Ratio and How Does It Relate to My Costs?” Consumer Financial Protection Bureau, https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-to-value-ratio-and-how-does-it-relate-to-my-costs-en-121/#:~:text=The%20loan%2Dto%2Dvalue%20(,will%20require%20private%20mortgage%20insurance.