InfoBytes Blog
Senators question FHFA on adverse market refinance fee
On August 19, a group of Democratic Senators wrote to FHFA Director Mark Calabria expressing concern over the newly announced adverse market refinance fee of 50 basis points, or 0.5 percent, on certain refinance mortgages (covered by InfoBytes here). The letter acknowledges that throughout the Covid-19 pandemic, Fannie Mae and Freddie Mac (GSEs) “have adopted policies to ease purchase and most refinance transactions,” to assist homeowners. However, the new refinance fee “that will be implemented just three weeks after it was announced” was a “surprise to see,” according to the letter. The senators stress that the new fee “will shift more of a financial burden to consumers,” which would contradict the GSEs’ purpose of providing stability in the secondary mortgage market.
The letter follows an August 14 letter from the Chair of the Senate Banking Committee, Mike Crapo (R-ID), which expresses similar concern for consumers but also notes that the short window before the effective date can complicate the refinance process for current buyers and negatively impact community lenders who already have closed loans that cannot be delivered before September 1.
Both letters request Calabria provide more information on the policy change, including details regarding the market conditions that would be addressed by the fee and how the fee amount was determined.