Her UMortgage colleague, Nate Fein, echoed the sentiment: “This is a win for consumers and loan officers,” he told MPA. Between the rising rates, inflation and property values, affordability has been a huge issue. This move would have made mortgages less affordable for a huge chunk of the population. It also would have been a step in the wrong direction when it comes to making the mortgage process more streamlined.”
Like Richardson, Fein zeroed in on the rate lock part of the process where the fee would have figured prominently – the point that isn’t always the final income amount that is used at closing. “Between overtime, bonuses, commissions and self-employment income, the income lenders use can change slightly throughout the process,” Fein explained. “Under this proposition, changes in income could have possibly resulted in a change of rate or closing costs in the middle of the process.”
Industry trade associations had long called for a revamp to the debt-to-income pricing adjustment. The president of the Mortgage Bankers Association, Robert Broeksmit, went public with his frustrations earlier this year when the FHFA said it would delay implementing the fees that were supposed to take effect on August 1.
“While we appreciate the delay, we are disappointed that FHFA’s statement did not recognize the need to consider alternatives to using a debt-to-income pricing adjustment,” Broeksmit said at the time. “From the beginning, MBA has emphasized to FHFA that DTI-based loan level price adjustments simply are not workable for lenders and borrowers alike.”
Broeksmit went on to explain how DTI can fluctuate throughout the mortgage application and underwriting process, potentially leading to borrowers’ costs changing between application and closing – requiring multiple disclosures that would have increased compliance cost and confused borrowers.