Fannie Mae has adjusted the maximum points and fees it will allow on subprime and high-cost loans.
The Washington, D.C.-based company won't buy or securitize mortgages where "the total points and fees charged to the borrower exceed the greater of five percent of the mortgage amount or a maximum dollar amount of $1,000," according to an April 14 lender letter.
And while the secondary lender's Selling Guide currently states a mortgage is not eligible for purchase if it subject to requirements of the Home Ownership and Equity Protection Act, Fannie's revised policy says it will not purchase or securitize any mortgage in which the annual percentage rate or points and fees paid by the borrower exceed the maximum thresholds described under HOEPA. Reverse mortgages are the only type of loan excluded from this prohibition.
The policy amendments will become effective June 1, according to the letter.