Friday, April 7, marked a day for celebration. After four years of Congress’s padyatra Veteran’s Administration (VA) So-called “Bluewater Navy” mortgage loan fees As an offset to paying for other important veterans’ benefits, Congress finally allowed those exorbitant VA mortgage loan fees to expire.
Thank you for reading this post, don't forget to subscribe!This is good news for homebuyers FHA Action in late February to cut annual premiums on FHA loans by 30 basis points, from 0.85% to 0.55%, starting last March 20 saved most households about $800. FHFA to cut fannie mae And Freddie Mac LLPA charges for first time home buyers.
What does the reduction in VA loan fees mean for veterans and active-duty families who use their no-down-payment mortgage “earned benefits” thanks to their uniformed service to the nation? That means first-time buyers using VA loans will see a 15-basis-point drop in the guarantee fee, from 2.30% to 2.15%, and other buyers will see a 30-basis-point improvement, from 3.60% to 3.30%. For these families, starting this week the savings range from $600 to $1,200.
The end of the higher VA mortgage fees was not a sure thing and should not be taken for granted going forward. last november, the Community Home Lenders of America (CHLA) wrote Letter to top members of Congress Asking Congress to eliminate these fees.
Why was CHLA concerned? Because just a year ago in November 2021, Congress, in its continuing hunt for “offset” to pay for other federal spending, increased fees on Fannie Mae and Freddie Mac loans by $21 billion over 10 years to cover part of the cost. Get help with paying. Completely unrelated $1 billion infrastructure bill. And technical budget offset concerns played a large role in delaying the FHA’s action in cutting FHA premiums.
Meanwhile, Congress and the President are bracing for a spending cut battle in the wake of raising the debt ceiling. Any source of revenue that has been used in the past can be a target. But at least for now, seasoned homebuyers and homeowners are the clear winners.
Charging more than necessary for insurance purposes has prevented some deserving households on the margin from being able to avoid rapidly rising rents from income. Given that the VA (and FHA) loan programs cater to a high proportion of first-time buyers and low-FICO Compared to traditional loans to score buyers, reducing these costs helps address wealth disparities over time.
To be clear: These loan fee reductions are not some giveaway to families who shouldn’t be buying homes – the deductions address the issue of artificially high fees by keeping eligible families from buying homes. CHLA supports actuarial-based insurance fees to ensure the program is solvent and fair insurance pricing that maintains balance both risk and opportunity, Mortgage loan fees should not exceed what is necessary to safely operate government-backed lending.
So, thank you to the FHA for making FHA mortgage loans more affordable, thank you to the FHFA for making GSE mortgage loans more affordable, and thank you to the Republicans and Democrats in Congress for making VA mortgage loans more affordable.
The year is still young, but the mortgage news so far has been positive for young families. CHLA stands ready to work with Washington stakeholders to bring good news.
Rob Zimmer is the Director of External Affairs for Community Home Lenders of America (CHLA).
This column does not necessarily reflect the views of HousingWire’s editorial department and its owners.
To contact the author of this story:
on Rob Zimmer [email protected]
To contact the editor responsible for this story:
at Sarah Wheeler [email protected]
