The Federal Housing Finance Agency today announced that it will eliminate a widely panned “adverse market refinance fee” of 50 basis points for no-cash-out and cash-out refinance mortgages for loan deliveries effective Aug. 1. The fee was originally put in place to help cover losses at Fannie Mae and Freddie Mac due to the coronavirus pandemic.
ABA and several advocacy groups strongly criticized the fee when it was announced last year and urged that it be withdrawn. Several lawmakers also raised concerns about the fee and the added cost it would impose on homeowners.
“The elimination of this fee will improve the affordability and availability of credit for borrowers, and ultimately help those seeking to refinance into lower rate loans and improve their financial condition as the country continues to recover from the COVID-19 pandemic,” said ABA President and CEO Rob Nichols. “ABA and its members appreciate FHFA’s willingness to hear the concerns raised by ABA and others and to take action which will greatly benefit our nation’s struggling homeowners.”
In a statement announcing the withdrawal of the fee, FHFA noted that “the success of FHFA and the Enterprises’ COVID-19 policies reduced the impact of the pandemic and were effective enough to warrant an early conclusion of the Adverse Market Refinance Fee,” and added that “FHFA’s expectation is that those lenders who were charging borrowers the fee will pass cost savings back to borrowers.”