When mortgages began to sour last Fall, Fannie Mae and Freddie Mac instituted “loan-level pricing adjustments”.

The concept is basic: For mortgage applicants with less-than-ideal credit profiles, mortgage pricing is adjusted to compensate for the added risks. 

It’s still a conforming loan, but with adjustments.

Effective March 6, though, Fannie and Freddie’s definition of “high-risk” changed and the adjustments got much more expensive.

Some of the more impactful changes include:

• Regardless of credit score, cash out refinances above 75% loan-to-value are subject to price adjustments
  
• All LTVs greater than 60% are subject to price adjustments
  
• All 2-units will be adjusted by 0.500%, regardless of LTV
  
• All 3- and 4-units will be adjusted by 1.000%, regardless of LTV

If your mortgage application is a conforming loan destined for Fannie Mae or Freddie Mac, these adjustments may already be on your loan officer’s rate sheets but be sure to ask. 

If the adjustments are built-in yet, consider whether your should lock your mortgage rate right away.

So, even though mortgage rates fell Wednesday, new Loan-Level Pricing Adjustments pushed the underlying payment higher for a lot of Americans.

Related posts:

• Mandatory Loan Fees Keep Borrowers From Getting Their Absolute Lowest Rate
• Simple Real Estate Definitions : Loan-Level Pricing Adjustments
• Loan Costs Increasing April 1, 2011
• Loan Fees Set To Rise For Conforming Mortgage Applicants
• Fannie Mae’s Loan Quality Initiative : Repulling Your Credit Just Before Closing

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