New FHFA Fees for Mortgage Refinance
You may have heard that FHFA plans to add a refinance fee of .5% to all refinances starting December 1st. Most lenders have already begun adding this to their rate sheet. We have a few lenders that will not add this fee until the first week of October. Please contact us immediately if you wish to get a refinance closed before December 1st and avoid this fee.
You May Be Facing A Market Refinance Fee
The two government-sponsored loan enterprises just announced that they will be charging lenders, who in turn can charge homeowners who need to refinance their mortgage loans a 0.5% fee for both cash-out and no-cash-out refinances. The fee, however, does not apply to purchase mortgage loans. If you have a sell date before December 1, 2020, and your refinance is already locked and can’t be adjusted, your lender will be saddled with the fee. However, if your sell date is after December 1, 2020, your lender can pass the fee onto you.
Fannie Mae’s New Loan-Level Price Adjustment
According to the powers that be over at Fannie Mae, they are doing this due to the economy. Fannie Mae stated the following in a letter: “In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment.”
Freddie Mac’s New Market Condition Credit Fee
The Freddie Mac team put out a bulletin that cited the COVID-19 pandemic as the cause of this new fee. Their official statement is as follows: “As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee.”
The Federal Housing Finance Agency
Housingwire actually reached out to the Federal Housing Finance Agency, which is the agency that regulates both Fannie Mae and Freddie Mac, to get to the bottom of why this is even happening. They were met with this response: “Based on their projected COVID-related losses, Fannie Mae and Freddie Mac (the Enterprises) requested, and were granted, permission from FHFA to place an adverse market fee on mortgage refinance acquisitions.”
Crunching The Numbers
Housingwire gave a great example of how much this could potentially cost homeowners. They took the median home price in the second quarter, which is $291,300. When you add a 0.5% fee to that, you get an extra charge of $1,456. That’s quite a chunk of change, especially now when many people are out of work and struggling financially.
The Mortgage Bankers Association
The Mortgage Bankers Association (MBA), is completely against this new fee, and actually issued a statement that said: “Requiring Fannie Mae and Freddie Mac to charge a 0.5% fee on refinance mortgages they purchase will raise interest rates on families trying to make ends meet in these challenging times”
The MBA went on to say that this fee will “result in consumers who have loans already in process being faced with unexpected costs.”
The MBA has actually called on the FHFA to reverse the decision. Only time will tell if they will.
The Time To Refinance Is Now
When it comes to refinancing your home mortgage, don’t sit on the fence, especially if your mortgage loan was sold to Fannie Mae or Freddie Mac. Because come September, you will be facing a 0.5% market refinance fee.
The truth is, we are facing uncertain times, and frankly, we just don’t know where rates will go in the coming months. Right now, rates are dropping, but this won’t continue forever. If a refinance makes sense for you, take advantage of the opportunity now and let Colorado Mortgage Group help you get the best rate possible.