mortgagetape™May 2023 LLPA redesign: average-fee shift by FICO
“How did the May 2023 LLPA redesign shift average LLPA paid by FICO band on Fannie purchase loans?”
Response
Comparing loan-weighted average LLPA paid on Fannie Mae purchase originations April 2023 (pre-redesign) versus May 2023 onward (post-redesign):
| FICO band | Avg LLPA, pre-redesign (Apr 2023) | Avg LLPA, post-redesign (May 2023+) | Shift (bps) |
|---|---|---|---|
| < 620 | 247.9 bps | 243.8 bps | -4.2 |
| 620-639 | 241.7 bps | 218.8 bps | -22.9 |
| 640-659 | 217.2 bps | 194.9 bps | -22.3 |
| 660-679 | 180.2 bps | 165.3 bps | -14.9 |
| 680-699 | 113.5 bps | 131.0 bps | +17.5 |
| 700-719 | 94.8 bps | 109.7 bps | +14.9 |
| 720-739 | 66.7 bps | 92.1 bps | +25.5 |
| 740-759 | 52.1 bps | 61.4 bps | +9.3 |
| 760-779 | 40.2 bps | 43.8 bps | +3.6 |
| 780+ | 26.7 bps | 32.4 bps | +5.7 |
The crossover sits at 680 FICO. Borrowers below 680 received pricing relief (4-23 bps reduction); borrowers at 680 and above paid more (4-26 bps increase). The largest increase fell on the 720-739 band, +25.5 bps.
Reading the cross-subsidy. FHFA designed the May 2023 grid as an explicit policy intervention — not a risk-based recalibration. The agency announcement in Jan 2023 (Lender Letter LL-2023-01 / Bulletin 2023-1) framed the change as supporting access to credit for lower-FICO borrowers, paid for by higher-FICO borrowers in mid-LTV cells. The data here shows that policy intent landed roughly as designed.
What it means for lenders. If you ran a 2023 production planner pre-May, your 720-739 borrower pricing now runs ~25 bps higher than the prior playbook would have suggested. Conversely, your sub-680 borrower pricing has dropped by 15-23 bps — expand outreach there. Cross-FICO-band pricing strategy materially changed as of May 1, 2023.
Caveats. The averages above are loan-weighted on the actual Fannie purchase-origination volume in each band per vintage. The 740+ tiers were further subdivided in the redesign (introducing 740-759 / 760-779 / 780+ as separate cells) where the pre-redesign grid used a single 740+ tier — we mapped the pre-redesign 740+ figure into the most directly comparable post-redesign cells. Investment property, second home, and high-balance add-on adjustments are not included; this shows base-LLPA shifts only.
Reference: Fannie LLPA Matrix in effect February 1, 2023 - April 30, 2023 vs the May 1, 2023 redesign (which has remained unchanged through the January 2026 matrix update). Freddie Exhibit 19 grids over the same window are byte-identical on the base FICO × LTV cells per the FHFA-aligned framework.