Homepoint raises its conventional loan cap ahead of regulators

Traditionally in November, the FHFA adjusts CLLs to reflect changes in the housing market to help ensure homebuyers are able to secure a conventional mortgage – particularly during times when housing costs increase. This year certainly qualifies, in abundance. A confluence of forces – supply chain backlogs, limited housing stock, inflation, and others – have contributed to yield an average home price of a home in the US to $428,700 (with a median of $329,000), according to the Federal Reserve Bank of St. Louis.

Consequently, raising CLLs is a move guided less by altruism and more as a business decision to help spur future home purchases in spite of current challenges. Shoemaker acknowledged as much: “Optionality is always a big differentiator for mortgage brokers over their retail competition, whether it’s pricing, loan products, or other factors,” he told MPA. “We’re making sure our loan originator partners are best positioned to compete and win deals, which will naturally grow our business as well.”

The FHFA last year announced raising its 2022 CLLs for mortgages to be acquired by Fannie Mae and Freddie Mac to $647,200 – an increase of $98,950 from $548,200 in 2021. The agency explained the move in a statement: “The Housing and Economic Recovery Act (HERA) requires that the baseline CLL for the Enterprises be adjusted each year to reflect the change in the average US home price,” officials wrote.

According to the nominal, seasonally adjusted, expanded-data FHFA HPI at the time, house prices increased 18.05%, on average, between the third quarters of 2020 and 2021. As a result, the baseline CLL in 2022 was increased by the same percentage.