An Overview of New FHFA Mortgage Rules

The Federal Housing Finance Agency created new mortgage fee rules, which take effect May 1st. Here’s how the new rules apply to borrowers.

Mortgages backed by Fannie Mae and Freddie Mac will have new upfront fees applied to mortgages. The new fees will “increase (the average borrower’s mortgage) by about 0.04 percentage points, or $10 a month.” says Sandra L. Thompson, a Director at the FHFA.

New Mortgage Rule Examples:

1. A borrower with a 640 credit score makes a 20% down payment and gets a mortgage for 80% percent of home value. That borrower now pays a 2.25% fee for the loan instead of 3%.

2. A borrower with a 740 credit score makes a 20% down payment and gets a mortgage for 80% percent of home value. That borrower now pays a 0.88% fee for the loan instead of 0.5%.

3. Under the new rules, if the 740 and the 640 borrowers only put down a 3% down payment, taking a mortgage of 97% home value. Both borrowers would get a lower rate than under the previous rules. The 740 borrower would pay 0.5% instead of 0.75% and the 640 borrower would pay 1.5% instead of 2.75%.

To verify if Fannie Mae or Freddie Mac backs your mortgage, you can contact your bank, or you can verify on either of these websites below -

Fannie Mae

Freddie Mac

Sandra L. Thompson’s note on new rules to the WSJ

VERIFY’s short video examples for new rules