The Mortgage Bankers Association is concerned that this fee undermines Federal Reserve policy and the administration’s commitment to homeowners.
Freddie Mac and Fannie Mae have implemented an Adverse Market Refinance Fee. They are implementing a new market condition credit fee in price for refinance mortgages. This is a result of risk management and loss forecasting precipitated by continued economic and market uncertainty. They will begin assessing a 50 bps credit fee in price for no cash out and cash-out refinance mortgages with settlement dates on or after September 1, 2020. For Freddie Mac, Exhibit 19, Credit Fees in Price, has been updated to reflect the new fee. The applicable sections of the Single-Family Seller/Servicer Guide (Guide) will be updated with a future Selling Bulletin. The announcement is in Guide Bulletin 2020-32, including the exclusions and the application of the fee to pricing caps. For Fannie Mae, the announcement is in Lender Letter LL-2020-12 and you can view the updated Loan-Level Price Adjustment Matrix. The after-hours announcements drew a strong rebuke from the Mortgage Bankers Association. MBA President and CEO Robert Broeksmit, who said the directive undermines both Federal Reserve policy to keep rates low and the administration’s recently announced directives to support homeowners and urged FHFA to withdraw the “ill-timed, misguided directive.” Broeksmit added, “Requiring Fannie Mae and Freddie Mac to charge a 0.5% fee on refinance loans they purchase will raise interest rates on families trying to make ends meet in these challenging times. This means the average consumer will be paying $1,400 more than they otherwise would have paid. Even worse, 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.
Sources: MBA, Fannie Mae, Freddie Mac