On June 22, 2016, NAR led a letter along with 24 other organizations to FHFA Director Mel Watt urging him to reduce loan level price adjustments (LLPAs) by Fannie Mae and Freddie Mac. This was an outstanding joint effort by consumer and industry groups, many of whom continue to collaborate on broader housing finance reform. In it, the coalition raises concerns with the GSEs double-charging consumers for assumed credit losses and capital levels that are already being assumed by existing g-fees and private mortgage insurance coverage.
Some additional points:
- G-fees have increased sharply since 2009. When combined with LLPAs, GSE income has increased substantially but without achieving broad access to credit.
- No borrower should face arbitrarily high prices for mortgage credit, especially when the burden is felt particularly by low- and moderate-income and first-time homebuyers.
- Policymakers will continue to debate larger issues related to the future of the GSEs, but there is no scenario where LLPAs are needed to cover risk that is already covered by g-fees and other forms of risk sharing.