Dustin Owen

An LLPA is a hit to pricing and not rate. Meaning, if 6% was a par rate but the LLPA is 50bps due to a lower FICO then now the borrower must pay .5% to obtain a 6% rate OR the 50bps needs to be priced into the rate which could increase the rate by .125% – .250%. The same applies in reverse when the LLPA is a credit back to the borrower. (i.e. 60 LTV instead of 80 LTV)

If the borrower is a first time buyer who’s AMI is at or under 100% of their local market AMI when Fannie does not access the negative LLPA’s. Lender’s have the choice to pass that savings back to the borrower or keep that as additional gross revenue to go towards the money they need for operating income.

By the way…we recorded an episode for Friday, 1/27, about LLPA’s. Thank you. 🙂