FHFA Announces the Delay of the Adverse Market Refinance Fee
Recently, The Federal Housing Finance Agency (FHFA) announced its intention to delay implementing the “Adverse Market Refinance Fee” until December 1st of this year. The FHFA originally planned for this fee to go into effect on September 1st, 2020, but the current pandemic has decided to push back the date. The new cost will prove cumbersome to homeowners as it now adds 0.5% of the total loan amount on a refinanced mortgage. Freddie Mac and Fannie Mae have also announced they will delay implementation to coincide with the Federal House Finance Agency.
Since the beginning of the COVID pandemic, Freddie Mac and Fannie Mae have offered assistance to their customers totaling to about $6 Billion in aid. Some of the service provided has helped with Loan Forbearances, Mortgage Payment Modification, and Providing Protection for property owners with loans in forbearance, so they did not lose their homes. The fee will help Freddie Mac and Fannie Mae recoup some of the revenue they have lost since the pandemic. Refinancing has seen a massive increase in banks and lenders’ business due to the current record-low mortgage rates. The impending new fee structure will come with limits. Home loans with a balance below $125,000 will be exempt from paying this fee. Programs such as Fannie Mae’s HomeReady and Freddie Mac’s Home Possible will also become exempt to the expense. These programs usually target low-income or first-time home buyers.
The new fee has not gone over particularly well in some markets of the housing industry. The Mortgage Bankers Association has been a vocal opponent to the measure. Their stance is that the new fee will make it difficult for families already living paycheck to paycheck. With the rate going into effect on December 1st current borrowers without a locked-in rate will see an increase of cost within days of closing. The National Associate of Mortgage Brokers has also been a vocal opponent urging citizens to write to their Congressman. Their efforts garnered almost 17,000 signatures, with the new fee’s implantation approaching as we close out the year. It would be interesting to see how long the FHFA will take to either reduce or eliminate the fee after receiving much scrutiny from consumers.
