The latest financial requirements proposed by Fannie Mae and Freddie Mac for private mortgage insurers could boost costs for low- and middle-income borrowers, insurers warn. The rules, according to Radian Group spokesperson Emily Riley, "could raise prices, particularly for the most vulnerable future home buyers with lower credit scores and less money for down payment."
The Federal Housing Finance Agency (FHFA), which regulates Fannie and Freddie, wants carriers to hold different amounts of capital based on the risk level in their loan portfolios -- which could prove burdensome for older mortgage insurers still handling loans from before the 2008 financial crisis. Comments are due on Sept. 8; and the FHFA says that once the rules are finalized and published, they would take effect within 180 days and insurers would have two years to comply.
Center for Responsible Lending President Mike Calhoun said his organization plans to take a close look at the new requirements to ensure that they will not "unnecessarily exclude some borrowers from homeownership."