Mortgage, Housing Groups Assail FHFA Fee
A coalition of housing, banking and public interest groups on Thursday strongly condemned the Federal Housing Finance Agency for implementing an “adverse market fee” on Fannie Mae and Freddie Mac mortgage refinances.
The fee is designed to protect Fannie and Freddie from risk associated with the pandemic. It charges 0.5 percent of the loan amount to the borrower, or nearly $1,500 on the typical mortgage in the United States.
The American Bankers Association, Mortgage Bankers Association, National Association of Realtors and 17 other organizations called the fee an “ill-timed, misguided” surprise.
“Wednesday night’s surprise announcement by Fannie Mae and Freddie Mac (the GSEs) conflicts with the Administration’s recent executive actions urging federal agencies to take all measures within their authority to support struggling homeowners,” the organizations said. “The additional 0.5 percent fee on Fannie Mae and Freddie Mac refinance mortgages will raise costs for families trying to make ends meet in these challenging times. In addition, the September 1 effective date means that thousands of borrowers who did not lock in their rates could face unanticipated cost increases just days from closing.
The groups said that the fee threatens the mortgage market, one of the few bright spots in the economy during the pandemic.
“In spite of the fragility of the national economic recovery, the mortgage market has been able to withstand many of the most severe effects of the COVID-19 pandemic. The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the GSEs and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency mortgage-backed securities per month to help reduce the cost of buying or refinancing a home and stimulate the broader economy, this action by the GSEs raises those costs, contradicting and undermining Fed policy.
“The pricing increase is particularly harmful for our nation’s low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy. The undersigned organizations strongly urge the Federal Housing Finance Agency, which had to approve this policy, to withdraw this ill-timed, misguided directive.”
In addition to the American Bankers Association, Mortgage Bankers Association and the National Association of Realtors, the letter was signed by the American Land Title Association, Center for Responsible Lending, Community Housing Lenders Association, Credit Union National Association, Housing Policy Council, Independent Community Bankers of America, Manufactured Housing Institute, National Association of Affordable Housing Lenders, National Association of Federally-Insured Credit Unions, National Association of Hispanic Real Estate Professionals, National Association of Home Builders, National Association of Real Estate Brokers, National Community Stabilization Trust, National Council of State Housing Agencies, National Fair Housing Alliance, National Housing Conference, and Real Estate Services Providers Council.