New mortgage fee canceled

A new mortgage fee that was under review has been rescinded.

5 On Your Side told you in April that the Federal Housing Finance Agency announced new fees on mortgages. Starting May 1, fees went up or down depending on a person’s credit score and the size of their down payment.

There was also a fee based on a person’s debt-to-income ratio that was announced with the others, but its implementation was delayed after receiving criticism.

Following a review, the FHFA announced Wednesday that it was rescinding the debt-to-income ratio fee.

"I appreciate the feedback FHFA has received from the mortgage industry and other market participants about the challenges of implementing the DTI ratio-based fee," said FHFA Director Sandra Thompson. "To continue this valuable dialog, FHFA will provide additional transparency on the process for setting the Enterprises’ single-family guarantee fees and will request public input on this issue."

North Carolina Representative Patrick McHenry is the chairman of the House Financial Services Committee and has opposed this fee. He released a statement after the rule was rescinded.

“I’m glad to see the FHFA rescind its unworkable changes to debt-to-income ratio-based fees,” said McHenry. “Subcommittee Chairman (Warren) Davidson and I have been raising the alarm about the impact misguided changes like this will have on homebuyers, and I appreciate Director Thompson announcing this action in response."

The rule that has been rescinded does not affect the other credit score and down payment-based fees that took effect May 1.

Those rules have also been criticized because people with higher credit scores are generally being asked to pay more while people with lower scores are generally being asked to pay less.

Those rules are still in effect, but McHenry said they should also be rescinded.

"Director Thompson should have done the same with FHFA’s changes to the upfront Loan-Level Pricing Adjustment fees that went into effect on May 1st, but she did not. Instead, Congress will now take action to end this tax on creditworthy borrowers," McHenry said in his statement.