Is There Really a New, Unfair Mortgage Tax on Those With High Credit?

Seemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better deal. Before you stop paying your bills in the hope of cashing in, let's separate fact from fiction. First and most importantly, you will absolutely NOT get a better deal on a mortgage rate if your credit score is lower, even if your nephew just texted you a screenshot of a news headline saying "620 FICO SCORE GETS A 1.75% FEE DISCOUNT" and "740 FICO SCORE PAYS 1% FEE." So why would your nephew make such a claim? This all has to do with changes to Loan Level Price Adjustments (LLPAs) imposed by Fannie Mae and Freddie Mac (the "agencies"), the two entities that guaranty a vast majority of new mortgages. LLPAs are based on loan features such as your credit score and the loan-to-value ratio among other things. They've been changed several times over the years and a fairly substantial change was announced in January of this year. Wait... This news is from JANUARY?! Why are people talking about it now? Yes, in fact, we already told you about it. People are confused because they don't understand how "delivery dates" work when it comes to Fannie and Freddie. Changes that impact fees and guidelines are almost always implemented based on the date the loan in question is "delivered" to Fannie/Freddie. "Delivery," in this context, typically occurs a matter of weeks AFTER the loan is closed, although it can be more than a month.

April 21, 2023 Download our Mobile App: Download our Mobile App: Mortgage Rate Watch Is There Really a New, Unfair Mortgage Tax on Those With High Credit? Seemingly overnight, the internet is awash with news regarding a "new," unfair tax on mortgage borrowers with higher credit scores. Some have gone so far as to suggest that someone could intentionally lower their credit score in order to get a better... (read more) MBS Commentary Even Second Tier Data is Having an Impact Bonds began the day in roughly unchanged territory and made some gains early. The 9:45am PMI data was the only item on the calendar and we'd consider that to be 2nd tier, at best. It's telling, then, to see the immediacy of the reaction g... (read more) Rob Chrisman Correspondent, MSR Financing, Marketing Tools; Black Knight's Mortgage Report; Credit Report Policies California, home of nearly 25 percent of home loans, is doing some interesting things, utility-wise. Last year came AB 205 which instructs the state’s utility commission to base the residential fixed charge on a customer’s household income level, wit... (read more) Mortgage Rates 30 Yr. Fixed Rate 6.66% -0.01% Rate Change Points Mortgage News Daily 30 Yr. Fixed 6.66% -0.01 0.00 15 Yr. Fixed 6.04% -0.01 0.00 30 Yr. FHA 6.25% 0.00 0.00 30 Yr. Jumbo 6.20% 0.00 0.00 5/1 ARM 6.82% +0.02 0.00 30 Yr. VA 6.25% +0.01 0.00 Updates Daily - Last Update: 4/21 15 Yr. Fixed Rate 6.04% -0.01% Rate Change Points Freddie Mac 30 Yr. Fixed 6.39% +0.12 0.00 15 Yr. Fixed 5.76% +0.22 0.00 Updates Weekly - Last Update: 4/20 Rate Change Points Mortgage Bankers Assoc. 30 Yr. Fixed 6.43% +0.13 0.63 15 Yr. Fixed 5.89% +0.11 0.65 30 Yr. Jumbo 6.28% +0.02 0.51 Updates Weekly - Last Update: 4/19 MBS / Treasuries UMBS 30YR 5.0 99.09 -0.09 Price / Yield Change MBS UMBS 5.0 99.09 -0.09 UMBS 5.5 100.55 -0.02 GNMA 5.0 99.39 -0.11 GNMA 5.5 100.59 -0.03 Pricing as of: 4/21 5:31PM EST 10 Year US Treasury 3.5756 +0.0396 Price / Yield Change US Treasury 2 YR Treasury 4.186 +0.035 5 YR Treasury 3.667 +0.037 7 YR Treasury 3.622 +0.038 10 YR Treasury 3.576 +0.040 30 YR Treasury 3.779 +0.035 Pricing as of: 4/21 5:31PM EST Latest Video A look at the overall housing market Tight lending standards will impact credit availability, says Nationwide's ... Employment data next week could spell where the market moves, says New York... First-quarter GDP could be quite strong: BNY Mellon's Meskin Around the Web MBA FHFA Needs a Better Plan on Loan Level Pricing Fees CNBC Treasury proposes new process to spot risks after SVB, Signature Bank failures Black Knight Black Knights First Look at March 2023 Mortgage Data Calculated Risk Blog Why Measures of Existing Home Inventory appear Different wells fargo And the Bottom Drops Out: LEI Digs Even Deeper CNBC Savings account interest rates just hit a 15-year high, but fewer Americans are benefitting CNBC Treasury yields continue to fall on signs of economic contraction CNBC Home sales fell in March amid volatility in mortgage rates Calculated Risk Blog Q1 GDP Tracking: Around 2% Calculated Risk Blog Black Knight: "Mortgage Delinquencies Hit Record Low in March" Calculated Risk Blog Realtor.com Reports Weekly Active Inventory Up 49% YoY; New Listings Down 5% YoY Reuters Euro zone bond yields dip after hitting one-month high CNBC Europe stocks set for mixed open, with earnings season off to volatile start

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