Why mortgage refinancing is getting more expensive
Fannie Mae FNMA, +0.46% and Freddie Mac FMCC, -0.23% said Wednesday that they will start charging a 0.5% “adverse market fee” on all refinances, including both cash-out and non-cash-out refis. The new fee goes into effect Sept. 1.
The Federal Housing Finance Agency, which regulates Fannie and Freddie, said the two government-sponsored enterprises “requested, and were granted, permission from FHFA to place an adverse market fee on mortgage refinance acquisitions.” “ ‘If you had a refi pending and didn’t lock or were just thinking about a refi and hadn’t acted yet, then the consumer pays thousands of dollars as long as this stays in effect.’ ”
A senior White House official told The Wall Street Journal that the Trump administration “has serious concerns with this action” and would review the fee. As of June, it took 48 days on average to close a refinance loan, according to mortgage technology firm Ellie Mae. Therefore, lenders will have many loans already in the pipeline where borrowers have already locked in a rate and are just waiting to finalize the loan.
Broeksmit also called into question the necessity of the fee. Millions of borrowers nationwide have requested forbearance on their mortgages since the pandemic began, but that number has been falling in recent weeks.
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