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Rates Are Getting Worse (No, For Real)
Rates Are Getting Worse (warning, this is a rant, albeit an informational one, I hope)
 
     Back in April Fannie Mae & Freddie Mac, the nation's 2 mortgage giants, announced that changes would be forthcoming to LLPA (loan level pricing adjustment) charges, better known as "risk based pricing", and those "changes" aka "things getting more expensive", are finally here.  When risk based pricing came into existence, it made quite a bit of sense - investors should receive a higher return for riskier investments, right?
 
     For example, prior to risk based pricing on conventional loans, a borrower with a 620 FICO and a 5% down payment was getting similar rates and pricing to a borrower with a 720 FICO and a 25% down payment.  Risk based pricing changed all that with Fannie & Freddie applying pricing adjustments, or LLPAs incrementally to each new risk "basket" that they came up with - most of these baskets were on a sliding scale based on FICO scores and LTV's.  With this action, low FICO/low down payment mortgages were still offered, but at significantly higher rates than high FICO/high down payment loans.
 
 
Makes sense, right?
 
 
     Well now Fannie & Freddie are piling on with increased adjustments across the ... more

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