Allegheny County

Expert breaks down new complicated federal policy for mortgage borrowers

PITTSBURGH — If you’re in the market to buy a house and you have a good credit score — you could face higher mortgage fees.

It’s because of a new federal rule that takes effect May 1.

John Amrhein is president of West Penn Financial, which is a licensed mortgage lender. He said the new federal rule is the first of its kind and will overhaul the loan-level price adjustment.

“This came through the Biden administration through the federal finance housing agency,” said Amrhein. “And they believe this will make home ownership fair and equitable to all parties and it will open up more homeowner opportunities to borrowers that had credit challenges and locked out of the home buying process in the past.”

For those riskier borrowers, under the new rule, their fees would be reduced with a lower interest rate.

“The actual price adjustments are an eight-page document,” Amrhein explained.

But for home buyers with a good credit score of 680 and above, who are typically rewarded, it’s not the case.

Instead, they will see fee increases.

For example, a mortgage of $400,000 at a 6% interest rate would result in a fee of $40 a month.

“A borrower is not going to see the actual price adjustment. It’s going to be in their interest rate through these loan-level price adjustments that are very complicated,” Amrhein explained.

11 News asked a homeowner what he thought of the new rule.

“I don’t really think it’s too fair,” said Ted Kiefer. “But basically the situation is if it’ll help the people with lower credit scores, that’ll be great.”

Download the FREE WPXI News app for breaking news alerts.

Follow Channel 11 News on Facebook and Twitter. | Watch WPXI NOW