August 5, 2021

MP Now News

Mortgage News

Adverse Market Fee About to be History

It’s nice to end the week with good news, so here it is: The Federal Housing Finance Agency (FHFA) just announced it
Eliminate the Adverse Market Refinancing Fee that the GSEs charged Fannie Mae and Freddie Mac. The change comes into effect for loan deliveries from 01.08.2021.

The 50 basis point fee is designed to cover losses projected due to the COVID-19 pandemic. However, the agency says the success of the policies it and the GSEs implemented in response to the crisis were effective enough to warrant an early termination of the fee. The FHFA expects the lenders who billed the borrowers the fee to return the cost savings to them.

“The COVID-19 pandemic has exacerbated America’s affordable housing crisis financially. Abolition of the adverse market refinancing fee helps families to take advantage of the low interest rate environment to save more money,“said Executive Director Sandra L. Thompson.” Today’s action supports the FHFA’s priority of supporting affordable housing while protecting the safety and health of businesses. “

As weekly reports from both the Mortgage Bankers Association (MBA) and Black Knight have shown, the number of deferred loans has steadily declined. The decline was fastest in loans serviced for the GSEs. According to the FHFA, around 2 percent of GSEs’ loans were in deferral in April, up from a peak of around 5 percent in May 2020.

MBA President and CEO Bob Broeksmit made the following statement following the FHFA announcement.

“The MBA welcomes Acting Director Sandra Thompson’s decision to abolish the Adverse Market Refinance fee. We have asked the FHFA to override this policy and appreciate that they reviewed the data and responded to our request. Less than 2 percent of GSE loans in forbearance and continued rise in home prices, resulting in significant borrower equity
the fee is not required.