940 - Will Investors With High Credit Scores Pay More Now? What The New Mortgage Rules Actually Mean by Andrew Syrios
BiggerPockets Daily
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The 2008 Financial Crisis Makes More Sinners
The LLPA is meant to cover some of this added risk, but it would appear that even the old LLPA's were a bit generous. Similar results were found in another study by the SEC of mortgages taken out between 97 and 2009. The average loss of a bank takes on a mortgage that gets foreclosed on is something like 40%. Reducing the LLPA for risky borrowers is likely going to increase the costs to Fannie and Freddie even more so.
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