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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 64 J O U R N A L June 2023 FHFA RESCINDS GSE UPFRONT FEES BASED ON DTI RATIOS T he Federal Housing Finance Agency (FHFA) has announced that it has rescinded the upfront fees based on borrowers' DTI ratios for loans acquired by Fannie Mae and Freddie Mac (GSEs). FHFA an- nounced in March it would delay implementa- tion in order to engage with industry stakehold- ers and better understand their concerns. "I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee," FHFA Director Sandra L. Thompson said. "To contin- ue this valuable dialogue, FHFA will provide additional transparency on the process for setting the Enterprises' single-family guarantee fees and will request public input on this issue." Consistent with the Enterprise Regula- tory Capital Framework finalized in 2020, appropriately capitalizing each GSE is criti- cal to ensuring that they are well-positioned to meet their mandate of providing liquidity and stability to the secondary mortgage market and supporting access to affordable mortgage credit throughout the nation. "We have strongly opposed FHFA's planned debt-to-income loan level pric- ing adjustment since it was announced in January and have led advocacy efforts calling for its removal," Mortgage Bankers Associ- ation (MBA) President and CEO Robert D. Broeksmit, CMB, said. "The proposed fee was unworkable for lenders and would have confused borrowers and undermined the customer experience. We are pleased that FHFA engaged with industry stakeholders, recognized the negative impacts of the fee, and decided to rescind its implementation." The FHFA adopted a final rule that establishes risk-based and leverage capital requirements for the GSEs. The final rule also makes conforming amendments to definitions in FHFA's regulations govern- ing assessments and minimum capital and removes the Office of Federal Housing Enterprise Oversight's (OFHEO) regulation on capital for the Enterprises. "MBA urges FHFA to continue its engage- ment to improve clarity and transparency regarding the GSEs' pricing framework," Broeksmit added. "We will continue our work with the agency, the GSEs, lawmakers, and the Biden administration on policies and actions that lower costs and advance sustainable access to homeownership while protecting taxpayers." National Association of Realtors (NAR) President Kenny Parcell added, "Likewise, the FHFA's decision to release a request for information on the other changes is a great example of good governance. NAR has worked with the FHFA to shape the LLPAs since their inception in 2008. We look for- ward to a thoughtful and deliberate process for the public, industry, and the regulators to clarify misconceptions and to arrive at the best policy for home buyers and the market. NAR previously wrote the FHFA urging it to require factors such as higher credit scores or larger down payments to offset this risk in lieu of higher fees that would only raise the borrower's risk of default. The FHFA also announced that it will conduct a request for information on other new fees, such as those imposed on borrowers with higher credit scores and moderate down payments." CFPB ISSUES PROTECTIONS FOR HOMEOWNERS SEEKING CLEAN ENERGY FINANCING T he Consumer Financial Protection Bureau (CFPB) proposed a rule to implement a Congressional man- date to establish consumer protections for residential Property Assessed Clean Energy (PACE) loans. PACE loans, secured by a property tax lien on the borrower's home, are often promoted as a way to finance clean energy improvements such as solar panels. The pro- posed rule would require lenders to assess a borrower's ability to repay a PACE loan and would provide a framework for how these loans will be treated under the Truth-in- Lending Act (TILA). In addition to the proposed rule, the CFPB also published a report on residential PACE loans, which found that the loans cause an increase in borrowers falling behind on their mortgage payments, along with other negative credit outcomes. "When unscrupulous companies bait Government