#Fake News - LLPA Adjustments Were NOT Abandoned

Mortgage and Lending with Mortgages in AZ, CA, CO, DE, FL, GA, IN, MD, MN, MT, NC, NJ, NV, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI NMLS #138061 MMCD #1141

Ok, last blog about the recent changes to LLPAs (loan level pricing adjustments)- I hope.  But in the spirit of working to force FHFA to get it right, I'm finding it necessary to highlight the topic again.

A LOT of people believe that the May 1 LLPA changes were cancelled, abandoned, or pulled back.  They, in fact, were not.

The adjustments to conventional loan financing on all conventional loans delivered to Fannie Mae & Freddie Mac  (82% of the financed home purchase market nationwide!) as of May 1 are still in effect.  The chart below is reflective of pricing adjustments that are live as of today.

And yes, this means that loans were made more expensive for borrowers with great credit and a good down payment (the largest negative adjustments were to the 720-759 FICO score borrower with between 15-20% down).  While overall, when getting a conventional loan, having good credit is still cheaper than the alternative, conventional loans were made more expensive to lower risk borrowers.

Why the confusion?

At the time these LLPA adjustments were announced by FHFA, it was also announced that an additional pricing adjustment was going to be implemented - one based on a borrowers debt-to-income ratio (DTI).  So if a borrower used more than 40% of their gross income each month to pay their bills, they'd see higher rates or fees on their mortgage.  This was problematic for many reasons.  This (and only this) part of the original FHFA announcement was pushed back to August, then due to industry pushback, was cancelled altogether.

With the DTI adjustment being cancelled, and being part of the original FHFA announcement, many people mistakenly believe that the LLPA adjustments were also cancelled - they were not.  A consumer buying a house with conventional financing and a loan amount of $400,000 is being charged $3,000 more today than they were in the beginning of the year if they have a FICO score between 720-759 and are putting 15-19.99% down.

Why does this matter?

The pricing adjustment due to DTI was cancelled because of outrage and pushback.  But with people believing the LLPA pricing changes were also cancelled, many have gone silent on the fact that FHFA (an unelected bureaucracy only in existence thanks to taxpayer bailout) made conventional financing substantially more expensive for borrowers with excellent credit and higher down payments - basically the lowest risk customers in their portfolio.  At the same time, they reduced the cost for borrowers with lower FICOs and less money down - a riskier group of loans.  

This action flies in the face of sound lending, where cost is based on risk.  It also sets a terribly dangerous precedent, where unelected bureaucrats can raise costs to fund everchanging social equity goals.  If it's allowed to stand this once, you can all but rest assured it won't be the last time it happens.  

Americans are struggling with high interest rates and record high home prices, and FHFA provided a further gut punch with these pricing increases, charging excessive fees to their customers with the lowest risk of default.


It's not right.  It should not stand.  But it will, unless people continue to be vocal, contact their representatives, and take a stand for affordable housing with borrowing based on risk.  And if you're in the mortgage or real estate industry, PAY ATTENTION.  Stop reading headlines and making assumptions.  Worst of all, STOP SPREADING FAKE NEWS.   LLPA pricing adjustments are still in place, and aren't going anywhere unless we continue to fight them as a group.  


Posted by

John Meussner
NMLS ID #138061

It's more than a house - it's home.  So we offer a wide range of mortgage products at competitive prices to help our clients achieve financial security at home.  While we get great feedback on our prices and products, many clients say their favorite part of working with John Meussner & MasonMac is the level of service provided along the way.

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Comments (16)

Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

I have always thought that it was grossly unfair to blame lender for the debacle of '08 when the politicians who pushed everyone into subprime lending got a pass on responsibility 

May 22, 2023 07:42 PM
John Meussner

Oh gosh we can point to politics for so many of the reasons the market crashed - Clinton's repeal of the glass-steagall act was one of the driving factors of the subprime boom & bust, the mentality that home ownership is for everyone, and we can even trace some of the crash back to Roe V Wade in terms of birth-death rates and population that builders were building for - congress does a great job of creating crisis then patting themselves on the back for battling their own creations.

May 23, 2023 08:56 AM
Anna Banana Kruchten Phoenix Broker
HomeSmart Real Estate - Phoenix, AZ

Featured in BananaTude!  Thanks John!


May 22, 2023 09:11 PM
Edward Gilmartin
CRE - Boston, MA

With homes at record high prices largely due to a decade of historically low interest rates and large corporate investors like Blackstone, now may not be the best time to make buying easier for struggling folks

May 23, 2023 03:14 AM
Dennis J. Zisa & Associates, Inc.
Dennis J. Zisa & Associates, Inc. - Camden, NJ
31 years in So. Jersey and the Greater Camden area

Thank you for this!!!

May 23, 2023 04:11 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Good morning, John... it would be very helpful if you could draft a letter we could all send to our legislators.

May 23, 2023 04:41 AM
John Meussner

I'll see what I can come up with : )

May 23, 2023 08:53 AM
Nina Hollander, Broker

John Meussner that would be super!

May 23, 2023 12:55 PM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

Thank you for the clarification and I like Nina Hollander, Broker 's suggestion! It would indeed be helpful.

May 23, 2023 05:07 AM
Dorie Dillard Austin TX
Coldwell Banker Realty ~ 512.750.6899 - Austin, TX
NW Austin ~ Canyon Creek and Spicewood/Balcones

Good morning John,

Of course it was too good to be true! Thank you so much for the update and I agree with Nina Hollander, Broker it would be awesome if you could draft a letter we could send to all our legislators. It would be so helpful!


May 23, 2023 05:11 AM
John Meussner

Not a bad idea - I'll see if I can come up with something : )

May 23, 2023 08:53 AM
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

It sure doesn't sound like the FHFA is doing a very good job.  We certainly live in an upside-down world right now.

May 23, 2023 06:40 AM
John Meussner

They have a tough task, but being a bureaucracy led by what I'd argue is incompetent leadership has certainly led to some terrible policy 

May 23, 2023 08:53 AM
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Selling the Main Line & Chester County

I had written to the White House but got a generic letter back about housing which did not in any way address the issues I had written about. I think we need to be consistent and say the right things.

May 23, 2023 07:23 AM
John Meussner

I'd agree, Nick Vandekar, 610-203-4543 - it drives me crazy to put a well thought out letter together, only to get a templated reply from representatives - but we need to keep the volume turned up.  Good on you for taking the time to write!

May 23, 2023 08:51 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

Ugh, it needs to be completely abandoned. Thank you for putting out the truth.

May 23, 2023 08:26 AM
John Meussner

thanks for stopping by and commenting : )

May 23, 2023 08:50 AM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

It's another case of the people that don't know, not wanting to be confused with the facts. It's too bad they cannot held accountable down the road for the loan failures that will ultimately happen.

May 23, 2023 10:50 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you for always being the voice of information and reason for lending!  I appreciate seeing this and will share it with my clients should I come across a buyer needing financing!

May 23, 2023 06:57 PM
Sharon Parisi
United Real Estate Dallas - Dallas, TX
Dallas Homes

Thank you for clarifying. There has definitely been some clever reporting that implied that the price changes were cancelled. 

May 23, 2023 08:42 PM
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

An excellent post and well deserving of the feature. Bottom line our culture is penalizing performance and awarding non-performance which is the real issue.

May 24, 2023 08:55 AM
John Juarez
The Medford Real Estate Team - Fremont, CA

Ah, yes..."I am from the Government and I am here to help."

Yet more fake news!

May 24, 2023 10:02 AM
Paddy Deighan MBA JD PhD
http://irstaxdebt.pro - Vail, CO
Paddy Deighan J.D. Ph.D

I was one of the misinformed that believed they were canceled and I am angry to read that they were not!!!

May 25, 2023 12:01 AM
John Meussner

WE should all be angry over this topic, glad to know you're now in the know! : )

May 25, 2023 09:48 AM