Homepoint latest lender to raise compliant lending limits
Mortgage lender based in Ann Arbor, Michigan Attachment point increased conforming loan limits before the Federal Housing Finance Agency(FHFA) decision expected in November. The decision follows that of the competitors Rocket Mortgage, United Wholesale Mortgage, Pennymac and finance of america.
The company on Wednesday agreed to a compliant treaty limit of $715,000 for one-unit properties, up 10.5% from the current level of $647,200. The cap increases to $916,000 for two units, $1,107,000 for three units and $1,376,000 for four units.
In Alaska and Hawaii, high-cost areas, the business limit has increased to $1,072,500 for single-unit properties, from the current cap of $970,800. The expansion will remain in effect until FHFA 2023-compliant loan limits are implemented in December.
These loans would today be classified as jumbos. They are too big to be bought by Fannie Mae and Freddie Macrequire higher down payments and the borrower needs additional documents to apply.
When a lender raises the cap before the FHFA decision, it has the potential to attract more buyers with improved lending terms, which could unlock business in a shrinking origination landscape.
“With a significant drop in demand for home purchases, every loan opportunity is incredibly valuable to loan originators,” Phil Shoemaker, president of originations at Homepoint, said in a statement. “We ensure that our loan origination partners are best equipped to maximize every customer touchpoint they have, whether today, next week or in the months to come.”
Lenders began raising the limit in early September, with Rocket Pro TPO and United Wholesale Mortgage like the first movers. They were followed by Pennymac and finance of america.
Lenders were still expected to increase loan limits ahead of the FHFA’s November announcement, although the lenders’ decision came earlier this year. In 2021, when rates were still in the low 3% range, they only raised anticipated conventional lending limits in early October.
The Housing and Economic Recovery Act established in 2008 determined a formula to increase conforming loan limits for Fannie Mae and Freddie Mac. The law said the baseline could only rise after house prices returned to pre-recession levels.
That condition was met eight years later in 2016 when the FHFA raised compliance limits for the first time in a decade.