On December 23, 2010, Fannie Mae announced an increase to its mortgage pricing structure. This new pricing is effective with mortgage loans with purchase and mortgage backed securities delivery dates after April 1, 2011. You can expect to see all mortgage lenders implement these pricing changes in February or March in anticipation of the April 1st deadline.
With this change, even 740+ borrowers will see the cost of their mortgage rates rise. Currently, Fannie Mae views 740+ as the top tier and does not have any credit score pricing add-ons for those borrowers. Those borrowers will soon see a .25% pricing hit for all LTV's above 75.0
1%.
Even for 720-739 borrowers, an impact to the interest rate currently only occurs with a 75.01-80.00% LTV. Soon, borrowers with 680-739 credit scores will see their costs rise by an additional .25% for LTV's of 70.01%-80.00%. Borrowers with scores from 620-739 above 80.01% will see a .500% increase across the board from the current adjustments that are in effect today.
Borrowers below 680+ will not really be impacted since Fannie Mae loans above 80% LTV require mortgage insurance. Currently most MI companies have at least a 680+ minimum credit score to be able to issue an MI policy for a mortgage approval.
First mortgage loans origination where subordinate financing exists will see pricing add-ons as well. Soon, all LTV's where subordinate financing exists will see an additional .25%-.75% pricing increase for CLTV's of 80.01%-95.00%.
Fannie Mae typically only makes adjustments to account for increased risk within an area (i.e credit score, LTV, purpose, etc). This can lead to speculation that the loans with the above criteria are still not performing as well as they should be. It is important to note that these adjustments are all to the pricing of the loan and not directly to the interest rate itself. The actual impact to a borrower's interest rate will change daily as pricing in the mortgage market moves.
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