Tags: fannie | freddie | loans | fhfa | housing

Fannie-Freddie New Fee on Loan Refinances Delayed 3 Months

Fannie-Freddie New Fee on Loan Refinances Delayed 3 Months

In this June 8, 2018, photo a for sale sign stands in front of a house, in Jenkintown, Pa. On Thursday, July 12, Freddie Mac reports on the week’s average U.S. mortgage rates. (AP Photo/Matt Rourke)

Tuesday, 25 August 2020 06:05 PM

Fannie Mae and Freddie Mac’s regulator delayed for three months a controversial new fee on most mortgage refinances that could raise costs for borrowers.

The 0.5% charge will take effect Dec. 1, not Sept. 1 as initially planned, the Federal Housing Finance Agency said in a Tuesday statement. The FHFA also said that loans with balances of less than $125,000 will be exempt from the fee, meaning it won’t impact many consumers with lower incomes.

Lawmakers and industry groups have criticized the fee, arguing that it’s inappropriate to make it more expensive to refinance loans during the coronavirus pandemic. The added charge could also hurt consumers who are eager to take advantage of historically low borrowing rates.

In its statement, the FHFA defended the fee, saying its necessary to cover pandemic-fueled losses for Fannie and Freddie that are projected to reach at least $6 billion. The companies, which have been under the government’s control since the 2008 financial crisis, have pursued several costly actions during the economic slowdown to keep renters and homeowners in their residences, the FHFA said.

Fannie and Freddie don’t make loans. They buy them from lenders, wrap them into securities and guarantee the repayment of principal and interest to investors. Such lenders could decide to absorb some of the costs themselves rather than pass them on to consumers.

The Mortgage Bankers Association, a trade group for lenders, has estimated that the fee would raise costs for the typical borrower by $1,400. MBA President Bob Broeksmit said in an Aug. 12 statement that the announcement “flies in the face of the administration’s recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners.”

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Fannie Mae and Freddie Mac's regulator delayed for three months a controversial new fee on most mortgage refinances that could raise costs for borrowers.
fannie, freddie, loans, fhfa, housing
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2020-05-25
Tuesday, 25 August 2020 06:05 PM
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