NAR submitted comments to the Federal Housing Finance Agency (FHFA) regarding its request for input (RFI) on how it should set the upfront fees charged by Fannie Mae and Freddie Mac, also referred to as loan level pricing adjustments (LLPAs).
In the comment letter, NAR argues that:
- The government-sponsored enterprises (GSEs) are finally achieving utility returns, but for the wrong reasons.
- The capital rule imposed on the GSEs is too high and not related to risk.
- The GSEs should not set prices but a floor and ceiling for investor returns and allow the companies to set prices.
- This exercise should be extended to create a price-setting framework that will work outside of conservatorship and analyze the impact of an explicit government guarantee.