What is Agency Risk-Based Pricing? More importantly, how will it affect you? FNMA (FannieMae) has decided that the only way they can stay afloat is to charge extra. If they could charge a little more on each loan, they would. The Industry will not allow this. So, FNMA picked a few loan types, changed the guidelines and now is charging a little extra on those. The Lenders, of course, have to charge the borrowers, and are blaming FNMA, which is true.

     Which loans? Pretty much, across the board. The loans that now have premium pricing are: loan to values over 70% with credit scores under 680. Based on averages, that is pretty much ALL loans. I do not have many borrowers that can put down 30% on a house or have credit scores over 680. I am sure not many of your friends can either.

     What is the long term affect of this? The loans will be more expensive for average qualified borrowers. There will be higher housing expenses due to the increased interest rates and therefore less borrowing power. Less people to qualify and buy houses. How can this help? Although FNMA and the lenders say this is a necessary and short term situation, it will have a long term affect on this block of borrowers. How long? Why, 30 years to be exact!

– Dale Siegel