A fee charged on refinancing loans sold to Fannie Mae and Freddie Mac will be removed on August 1, 2021. The “Adverse Market Refinance Fee” was imposed on December 1, 2020, to help the agencies recover losses projected due to forbearance policies resulting from the pandemic.
The agencies directly charged lenders the fee, 50 basis points of the loan balance, or $500 for every $100,000 refinanced, when buying loans. Lenders typically passed the fee on to borrowers as an additional closing cost or through a higher mortgage rate. The fee did not apply to refinance loans of $125,000 or less.
The latest data show that in April, about 2% of single-family mortgages guaranteed by the agencies were in forbearance, down from a high of about 5% in May 2020.
Meanwhile, mortgage rates have fallen over the last several weeks, with the average rate on 30-year fixed-rate mortgages slipping to 2.88% during the week ending July 15, its lowest level since February. In June, the rate averaged 2.98%.
Sources:
Information sent by mortgage partner Neal Aryamane of Wells Fargo.
“FHFA Eliminates Adverse Market Refinance Fee,” Federal Housing Finance Agency, July 16, 2021.
www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Eliminates-Adverse-Market-Refinance-Fee.aspx.
“Primary Mortgage Market Survey,” Freddie Mac, July 8, 2021. www.freddiemac.com/pmms/.
Arielle Dixon 