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Best-execution: where do Fannie and Freddie LLPA grids actually diverge today?

Prompt

“On a $400,000 conventional purchase loan — FICO 720, LTV 80%, owner-occupied single-family, fixed-rate — do Fannie and Freddie price the upfront LLPA the same today? Show me where the post-May-2023 grids diverge across the broader FICO × LTV cell space.”

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Response

For the specific loan profile you described — Fannie Mae and Freddie Mac base-grid LLPA at FICO 720 / 80% LTV / Purchase is currently identical:

GSEBase grid cellLLPA rateLLPA $ on $400K
FanniePurchase, 720-739 FICO, 75-80% LTV0.875%$3,500
FreddiePurchase, 720-739 Indicator Score, >75% & ≤80% LTV0.875%$3,500
Best-ex difference0 bps$0

Post-May-2023 base grid: 100% cell-for-cell aligned. Across all 81 purchase base cells (9 FICO buckets × 9 LTV buckets), Fannie and Freddie agree to the basis point — a direct consequence of FHFA's January 2023 announcement of an aligned pricing framework (Fannie LL-2023-01, Freddie Bulletin 2023-1). Same for the No-Cash-out Refi base grid (81 cells) and the Cash-out base grid (45 cells). Total: 207 base cells, zero divergence.

Where the two GSEs still diverge post-May-2023:

DivergenceDirectionAffects
Alt FICO adderFreddie +25 bps; no Fannie equivalentLoans where the Indicator Score uses a non-standard method (middle-lower-then-lowest)
Cap labeling: HomeReady (Fannie) vs Home Possible (Freddie)Same net effect, different program namesAffordable products only
Credit roster differs slightlyFannie: Housing Counseling, HomeStyle Energy, RefiNow, HomePath, HomeReady VLIP FTHB. Freddie: GreenCHOICE, Refi Possible without ACE, Home Possible VLIPNiche credits, not base-grid relevant
Pre-May-2023 vintagesGrids diverged by 12.5-25 bps in many cells pre-May-2023Any loan originated before May 1, 2023 — for retrospective best-ex analysis

Practical best-execution implication for current production:

  • For vanilla owner-occupied conforming purchase / LCOR loans on the standard FICO/LTV grid, the GSE choice is a wash on LLPA. Best-ex defaults to the desk's pre-existing factors — net g-fee, settlement-tier preference, channel arrangements, post-purchase quality-control regime, MSR retention rules.
  • For loans where Indicator Score methodology might trigger Freddie's Alt FICO adder, Fannie execution avoids the 25 bps surcharge.
  • For loans qualifying for HomeReady but not Home Possible (or vice versa), check the program-specific cap rules — same effect on the LLPA grid, but eligibility-driven differences in which loans qualify.

For pre-May-2023 vintages (retrospective best-ex / pool review work), the grids ARE materially different — pre-Apr-2022 Freddie Super Conforming charged 25 bps flat while Fannie High-Balance charged the same 25 bps but with different LTV-bucket boundaries. The post-LL-2022-01 / post-Bulletin-2022-1 reprice (effective April 2022) aligned the two on the high-balance grid first, then May 2023 aligned the rest. The vintage-aware matrix captures all of these intermediate states.

Reference: Fannie LLPA Matrix and Freddie Exhibit 19, current versions in force from May 1, 2023 through January 2026 update. Aligned-pricing framework codified in FHFA News Release of January 19, 2023 and implemented via Fannie LL-2023-01 / Freddie Bulletin 2023-1.

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