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A Must Read: Important Changes From Fannie Mae and Freddie Mac

Property Manager with PropertyADVANTAGE CA BRE # 01450265


 I felt that it was important to communicate the BIG change coming in the first part of 2008. I didn't see any other posts on this, but as R.E. agents and consumers, you NEED to be aware of these changes as it will have an impact on would be homebuyers and those seeking to refinance.

Fannie Mae and Freddie Mac have announced a tightening in guidelines, with new Loan-Level Price Adjustments. In the first part of 2008, most borrowers who may have decent credit, but have FICO scores below 680, will now be required either to pay more points at closing or incur a higher interest rate.

I want to emphasize that these are NOT broker fees, these are required loan level pricing adjustment fees from Fannie and Freddie based on risk.

Basically what it boils down to is; if a client has a FICO above 680-no adjustments. But, if their FICO falls below 680 here is the breakdown:

Below 620 - 2% delivery fee
620-639 - 1.750% delivery fee
640-659 - 1.250% delivery fee
660-679 - 0.750% delivery fee

The amount a borrower could be forced to pay could be as much as 2% in points or a 1% higher interest rate than the current going rate.  So, for example, if you have a buyer purchasing a $300,000 home, they could have to pay $6,000 just to get a normal market rate. This is BEFORE any other costs assoiciated with the loan.

This is huge!

Now more than ever, clients need to make sure their credit scores are above 680. If they aren't, connect them with someone who can assist them in improving it (this does NOT have to be a credit repair company in some cases).

More importantly, if you know someone who is sitting on the fence regarding purchasing or refinancing, now is the time to share this information on the changes with them.  In addition, at the beginning of this week, rates for 30 yr fixed loans were at their lowest in 25 months. People need to act now to take advantage of these lower  rates before the market changes and the guideline changes come in 2008.



Posted by





Gary Bland R (S) E-Pro, ABR
Hawaii Life Real Estate Brokers - Wailea, HI
I actually have experian notifying me when any change happens to my credit scores.  This helps watch what is happening.
Nov 28, 2007 05:54 PM
Micki OToole
PropertyADVANTAGE - Carlsbad, CA
General Manager


Gary, this is a good idea. Thanks for your comment,


Nov 29, 2007 09:19 AM

Where did you find this information?  I would like to be able to inform people, but I want to make sure I quote correct information.  Thanks



Nov 29, 2007 02:37 PM
Nancy Moeller
Seven Gables Real Estate - Anaheim Hills, CA
Micki - great post as always. This is HUGE and no one is talking about it. Thanks for keeping your ear to the heartbeat of the industry so the REST of us continue to look smarter than we are :)
Nov 30, 2007 08:19 AM
Matt Resnick

Some lenders including Everbank and GN Mortgage have already implemented this.  Does anyone know of any other lenders doing this laready or if any are exempt due to being federally chartered?  Also where can we find more information regarding this?


Dec 03, 2007 01:32 AM
Saxon Mortgage/Morgan Stanley is implementing this as of December 17th, 2007.
Dec 04, 2007 05:04 AM
Alix Pinzon
Open Mortgage, LLC NMLS # 2975 - Downey, CA
Well Micki, It's 2008.  I guess nobody expected things to change so much.  I hope things are great for you.  Please keep me in mind when you order your next appraisal report.  You can check me out at www.yourspeedyappraiser.com  Thanks!
Apr 16, 2008 01:25 PM