New mortgage fees won't penalize borrowers with good credit scores, federal agency says
BOSTON - There's been lots of talk lately about credit scores and how it could impact new mortgage fees. We first did a story last week that had a lot of people trying to get a better understanding of what is happening and how it will truly impact you.
Borrowers with good credit scores would pay higher fees and borrowers with lower scores would get a discount.
Since then, there's been a lot of confusion.
WBZ-TV went straight to the source of the pricing changes to help separate fact from fiction.
We spoke to Michael Shemi, the Principal Advisor of the Federal Housing Finance Agency (FHFA)'s Division of Housing and Mission Goals, and asked him to explain what people are people missing with the new changes in fees.
"The main piece of misinformation that we would want to clear up is that under this updated pricing, that Fannie Mae and Freddie Mac will somehow penalize borrowers with good credit scores and subsidize borrowers with bad credit scores," he told WBZ.
However, Shemi told WBZ he could not outright deny that some borrowers with higher credit scores, could also experience higher fees.
"I want to be clear, different borrowers, will experience this differently. There are certain borrowers who will experience modest increases. There are certain borrowers who will experience modest decreases," Shemi said.
Here's an example, using data from The Urban Institute, a non-profit research organization.
If you look at a $500,000 mortgage:
Homeowner A with a 740 credit score will now pay $127 more per month than they would have paid before the recent changes.
Homeowner B with a 640 credit score will now pay $127 less per month than they would have paid before the recent changes.
Shemi describes the changes as modest, but mortgage loan officer Al Bingham said some high credit score borrowers are going to see significant increases.
"That's exactly what's happening here and to have them say that's not happening, they're not being honest. They're not being realistic," Bingham told WBZ.
One thing Bingham and Shemi did agree on - if you're in the market for a second home loan or a cash out refinance, you're definitely going to see an increase in fees. That money is being used to decrease costs for borrowers with limited wealth and income.
