#Fake News - LLPA Adjustments Were NOT Abandoned

Real Estate Agent with The Kellstrom Ray Agency, Inc. (Est. 1948)

Penalizing people with good credit in the housing industry has gotten a LOT of buzz lately, and I believe this recent and passionate blog about what is going on in the industry is well-deserving of a read.  We began talking about this in February and March, and guess what--despite public outrage, it's not going away.  We'll discuss financing, if applicable, and help you find a reputable lender if you need one for your purchase---but this is a great public interest piece.  When it's time to start your Door County home search, star at moredoorcounty.com 

Door County Homes for Sale

Original content by John Meussner 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.  


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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Thank you for reading this Door County real estate blog!  MaryKay Shumway, ABR®, CRS®, Realtor® loves to laugh and her passion is working with people that love the Door Peninsula.  She is a full-time real estate Broker, a mother and a stepmother, loves dogs and serves as a senior Broker Associate at the Kellstrom-Ray Agency, Inc. in beautiful Sister Bay, Wisconsin.  MaryKay represents listings throughout the Door County peninsula and also represents many Buyers annually that want to purchase the perfect property to make Door County a part of their lives.  CONTACT MARYKAY ABOUT YOUR DOOR COUNTY PROPERTY QUESTIONS TODAY.

MaryKay Shumway has been an extremely consistent multi-million dollar MLS producer for over twenty years, as well as the top producing broker for The Kellstrom-Ray Agency, Inc. since she joined the firm in late 2015.  Representing both listing clients and buyer clients and cusomters full time, MaryKay is extremely active in the Door County community with nonprofit groups, the Door County Board of Realtors and in local governmental affairs.  A member of the Door County Board of Realtors Honors Society from 2005-2021 and now recipient of Excellence in Professionalism honors since 2022, she is a former Door County Realtor of the Year, a former member of The Real Estate Group's Chairman's Circle from 2010-2015, and a former member of the Coldwell Banker International Diamond Society for 2014 & 15.  She has served as President and President-Elect of the Door County Board of Realtors.  MaryKay is a top MLS producer and has held the position of top producer at The Kellstrom-Ray Agency, Inc. since 2016.

Contact MaryKay today.  "As a multi-million dollar producer and senior associate at The Kellstrom-Ray Agency selling Door County real estate, I focus my balance on both  featured listings in Door County and representing Buyer Clients looking for the perfect Door County Property.  I turn Door County vacations into Door County traditions by helping you own your own Door County real estate, and I represent exceptional properties in all price points on the Bay of Green Bay, Lake Michigan, and all inland lakes and properties in between. Local experience with GLOBAL connections.  Call, text or e-mail me today."

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