State bankers associations from every state sent a letter to Federal Housing Finance Agency Director Mark Calabria, urging him to rescind the “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 who is refinancing, or roughly $1,400 on the typical mortgage in the United States.
“The new fee, referred to as an “adverse market refinance fee,” will harm consumers in urban, rural, and suburban communities across the country,” the associations said in the letter.
“Borrowers have been helped by the historically low interest rates, allowing them to refinance their loans into significantly lower monthly payments and achieve a better financial position during these uncertain times. The impact of the additional charges imposed by Fannie and Freddie will raise a family’s cost to refinance by roughly $1,400 on an average-sized loan, perhaps threatening their ability to qualify for advantageous loans. The augmented prices will have an acute impact on lower-income borrowers, potentially putting such families’ ability to refinance into a lower-rate loan out of their reach entirely.”
The associations urged Calabria to direct Fannie and Freddie to rescind the “ill-advised” fee increase.
“While other federal entities are doing their utmost to keep rates low and the President has issued orders directing agencies to use all powers within their means to assist struggling homeowners in the current economic crisis, it is unfathomable that FHFA would allow Fannie Mae and Freddie Mac to undercut those efforts,” the associations said.