When and why were negative market fees applied?
An adverse market refinancing fee has been charged to offset losses from patience Assumptions that were expected to occur during a pandemic. Government-sponsored companies (GSEs) Fannie Mae and Freddie Mac have estimated that losses related to the pandemic will exceed 6 billion dollars.
The fee was originally set to take effect on September 1, 2020, but after receiving massive opposition from lenders, lawmakers and others in the industry, the FHFA revised the implementation date to December 1, 2020.
In an effort to compromise, the FHFA has excluded several types of loans and excluded loans less than a certain amount.
The opposite market refinance fee applies only to matching mortgages – those that meet the criteria of Fannie Mae and Freddie Mac. Most homeowners in the United States have a matching mortgage, even if they are not aware of it. Your home loan may have been sold to Fannie Mae or Freddie Mac after closing.
Many industry professionals have criticized the FHFA because both Fannie Mae and Freddie Mac have reported solid earnings this year. Fannie Mae reported net income of $7.2 billion, an increase of 44% over the previous year. Freddie Mac posted an impressive 107% year over year increase, posting $3.7 billion in net income. Both companies have benefited from rising home prices and bouts of refinancing from the continued decline in mortgage rates.
How much were the additional fees?
The counter market refinancing fee was 0.5% of the loan balance. For every $100,000 borrowed, the negative market fee will add about $500 to your total costs. Loans under $125,000 have been exempted from fees, as well as countless other types of loans.
Few of the mortgage lenders have charged fees up front. Most of them simply charge higher refinancing rates, rather than requiring homeowners to pay more at closing.