December 17th, 2013 7:19 PM by BILL WILBANKS
We’ll all be watching the FOMC minutes at 2 PM followed by the last Bernanke 2:30 PM news conference tomorrow to see what and when we may see the Fed Tapering begin. As if there isn’t enough going on in the mortgage industry with the preceding and all the new law impacts for QM, ATR and Safe Harbor laws in general becoming effective January 10, 2014, here’s another big impact as announced by Fannie and Freddie (the GSE’s) today showing big bumps on the new pricing adjustments to take effect on loans sent to them in April 2014 and beyond. The last time they did this, many if not most lenders put the pricing changes on their rate sheets far in advance of the effective dates at the time to take an overly cautious position on new loans they’d be selling through. So don’t be surprised if we begin seeing rates go up due to these bumps alone, the taper aside, after the first of the year. Here is a great article and breakdown of the coming LLPAs (Loan Level Price Adjustments), don’t forget to ad the extra 0.25% point to the chart for the “Adverse Market Delivery Charge” (AMDC) which applies to Florida and 3 other states at the moment:
Note: Also be aware many lenders have been talking about bumping their rate after 1/10/2014 rather than continue to charge their current “lender fees” which fees would have to be included in the 3% cap rule taking effect 1/10/2014 to remain in the Safe Harbor QM good graces. Some have said that’s just a tradeoff. Let’s see, a one-time fee at closing vs. a higher rate and payment for the life of the loan? A higher rate adds to the qualifying ratio when the Feds are capping the total ratio at 43% of gross (reducing the number of buyers who qualify at the upper end) as of 1/10/2014 if no changes or delays are made and who expects any? So many ways the Feds are helping us qualify more borrowers today. Thought you’d like to see the chart on the link above.