FHFA Delays Effective Date of GSE DTI Ratio-Based Fee to Aug. 1

The Federal Housing Finance Agency on Wednesday announced a 90-day delay in the effective date of the new Loan Level Price Adjustments for certain borrowers with debt-to-income ratios above 40 percent. The new effective date will be for deliveries on or after August 1.

In January, FHFA announced redesigned and recalibrated grids for upfront fees in addition to a new upfront fee for certain borrowers with a debt-to-income ratio above 40 percent. These updated pricing grids include the upfront fee eliminations announced in October 2022 to increase pricing support for purchase borrowers limited by income or by wealth.​

“Since the January 2023 announcement, FHFA has received feedback from mortgage industry stakeholders about the operational challenges of implementing the DTI ratio-based fee,” said FHFA Director Sandra Thompson in a statement, “FHFA has decided to delay the effective date of the DTI ratio-based fee by three months to August 1, 2023, to ensure a level playing field for all lenders to have sufficient time to deploy the fee.”

Mortgage Bankers Association President & CEO Robert Broeksmit, CMB, issued the following statement after the FHFA announcement:

“While we appreciate the delay, we are disappointed that FHFA’s statement did not recognize the need to consider alternatives to using a debt-to-income pricing adjustment. From the beginning, MBA has emphasized to FHFA that DTI-based loan level price adjustments simply are not workable for lenders and borrowers alike.  DTI can fluctuate throughout the mortgage application and underwriting process, and FHFA’s new fees will inevitably lead to borrowers’ costs changing between application and closing, requiring multiple redisclosures that will increase compliance costs and confuse borrowers. We will use the extra time offered by the change in the effective date to continue working with FHFA to explore alternatives that will not pose undue hardships on borrowers and lenders.”    

In addition, FHFA said lenders would not be subject to post-purchase price adjustments related to this DTI ratio-based fee for loans acquired by the Enterprises between August 1, 2023, and December 31, 2023.

“This temporary price adjustment exception will not alter any other quality control review decisions by the Enterprises,” FHFA said. “During this time, FHFA and the Enterprises will continue to engage with industry stakeholders to address operational concerns.”