February 22, 2023

The Honorable Sandra Thompson
Federal Housing Finance Agency
400 7th Street, SW
Washington, DC 20219
[email protected]

Dear Director Thompson,

The Oregon Mortgage Bankers Association (OMBA) is writing to you to express our serious concerns with the changes by the Federal Housing Finance Agency (FHFA) to the loan level pricing adjustments (LLPAs) announced on January 19, 2023.

We commend you and FHFA staff for the October 2022 announced changes to the pricing framework for Fannie Mae and Freddie Mac (GSEs). These first two policy changes will support the mission to facilitate equitable and sustainable access to homeownership. Increases to LLPAs for certain second homes and high balance loans and LLPA waivers for certain first-time homebuyers, Home Ready and Home Possible loans, HFA Advantage and HFA Preferred loans, and single-family loans supporting the Duty to Serve program will help more first-time borrowers achieve homeownership.

However, the third announcement in January will raise costs for borrowers in the heart of the GSEs traditional market and also includes an additional LLPA for loans with a debt-to-income ratio (DTI) greater than forty percent, which is most concerning. Many mid-to-low income Oregonians are finding themselves exceeding this limit, particularly with the median home price increasing nearly 20% since January 2020 (current median home price in Oregon is $463,500 – This new LLPA will likely mean multiple changes to a borrower’s pricing throughout the loan application process, which could cause operational and system issues, compliance implications related to TILA-RESPA Integrated Disclosures (TRID), compromised borrower trust, and challenges during post-closing quality control activities. We believe
that this DTI-based LLPA is unworkable and should be removed.

Moreover, the implementation date for these new fees in the heart of the homebuying season could not come at a worse moment for consumers and the real estate finance industry. These changes will raise costs for borrowers amidst existing stresses in the housing market. We believe there are alternative approaches available to the GSEs to mitigate their exposure to high DTI ratios that do not pose hardships to both lenders and borrowers. Our views were very well expressed in a February 3, 2023, letter by our national partner, the Mortgage Bankers Association (MBA), which I have also attached and reiterates our position on the issue.

Again, we strongly encourage you eliminate the DTI-based LLPA. We understand the GSEs need to manage their risk appropriately, however we believe a more appropriate solution exists and we ask that FHFA consult with MBA on any possible alternative solutions.


Crystal Rustad
Oregon Mortgage Bankers Association
[email protected] | 503.839.0993

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