Two For Tuesday | April 25, 2023

While interviewing Tracy Montross, we discovered some amazing facts about her, and the impact this pivotal airport and airline has on the health of our entire region.  For instance, did you know that at one point during the pandemic our own Charlotte Douglas International Airport (CLT) was the busiest terminal in the world?  It’s a testament to the airline that has helped put us on the world map in terms of attracting, maintaining, and growing business opportunities around the greater Piedmont region.

Charlotte, (or CLT which represents 5% of the entire GDP for the state of North Carolina) is fortunate to serve as American’s second largest hub, connecting us to the world with an average of 560 daily flights, more than 170 destinations, and 23 countries, serving more than 42 million travelers in 2022.  Its regional impact on our economy, huge employment figures, and the way it supports our ability to attract world businesses; this is truly a subject REBIC wants you to know about!

2.  New Biden Administration Rule Penalizes Borrowers for Good Credit Scores

Mortgage borrowers with good credit may face higher costs under a new plan from federal mortgage associations Fannie Mae and Freddie Mac.  The firms have released a new Loan–Level Price Adjustment (LLPA) Matrix for loans sold to them after May 1, 2023.  Under the new matrix, borrowers with high credit scores will face higher mortgage fees than before and those with lower credit scores will face lower fees.

• Under the new rules, high-credit buyers with scores ranging from 680 to above 780 will see a spike in their mortgage costs – with applicants who place 15% to 20% down payment experiencing the biggest increase in fees.
• LLPAs are upfront fees based on factors such as a borrower’s credit score and the size of their down payment.  The fees are typically converted into percentage points that alter the buyer’s mortgage rate.
• Under the revised LLPA pricing structure, a home buyer with a 740 FICO credit score and a 15% to 20% down payment will face a 1% surcharge – an increase of 0.750% compared to the old fee of just 0.250%.
• Meanwhile, buyers with credit scores of 679 or lower will have their fees slashed, resulting in more favorable mortgage rates.  For example, a buyer with a 620 FICO credit score with a down payment of 5% or less gets a 1.75% fee discount – a decrease from the old fee rate of 3.50% for that bracket.

We strongly support housing affordability and are on record promoting six specific strategies aimed at achieving just that, but the approach summarized above is misguided and not likely to achieve its intended purpose.

Rob Nanfelt
Executive Director, REBIC