Even the White House has "serious concerns" about the new fee, which could make refis much more expensive
More industry groups – and even the White House – have joined the chorus of condemnation following the FHFA’s surprise announcement last week that Fannie Mae and Freddie Mac will begin charging a 50-basis-point fee on most refinances.
The GSEs’ “Adverse Market Refinance Fee” (AMRF) will be applied to cash-out and no-cash-out refinances, with the exception of some types of construction conversion mortgages, effective Sept. 1.
The new fee will cost the average refinance customer an additional $1,400, according to an estimate by the Mortgage Bankers Association. In a letter to its lenders, Fannie Mae cited “market and economic uncertainty resulting in higher risks and costs” as justification for the AMRF.
Industry groups, however, aren’t having it. MBA President and CEO Bob Broeksmit immediately condemned the move, saying it “flies in the face” of the Trump administration’s recent executive orders “urging federal agencies to take all measures within their authorities to support struggling homeowners.”
Other industry groups soon piled on. The Independent Community Bankers of America (ICBA) called the decision “the wrong action at precisely the wrong time.”
“this decision made by Fannie Mae and Freddie Mac will unnecessarily raise the cost of mortgage credit for community banking customers and will negatively impact the sectors of the US economy that have thus far weathered the steepest economic downturn in modern history,” the ICBA said in a statement. “This decision is contrary to recent legislative, regulatory, and administrative actions of Congress, the Administration, the Federal Reserve and the US Treasury to support consumers, and the economy.”
The ICBA called on the FHFA “to rescind this destructive and unnecessary tax on homeowners immediately.”
Vince Malta, president of the National Association of Realtors, also blasted the fee.
“This is very disappointing, and the absolute wrong policy at the wrong time,” Malta said. “This fee could cost homeowners thousands of dollars, which will destabilize the market and take away opportunity. It also directly contravenes the administration’s own directives for federal agencies to do no harm to homeowners during the coronavirus crisis.”
Malta said the fee was “especially troubling” since Fannie and Freddie use profits from refinances “to support home buyers in underserved markets – meaning those communities already suffering the most will be harmed the most by this action.”
“We should do everything we can to lower costs for households during this crisis, not make homeownership more expensive,” Malta said.
The National Association of Federally-Insured Credit Unions (NAFCU) also decried the move.
“Policymakers should be working to help credit unions and their members, not strapping them with additional fees that they will have to absorb or build into the cost of the refinance,” said Carrie Hunt, NAFCU executive vice president of government affairs and general counsel. “We would ask the FHFA to reverse this policy immediately to better help America’s struggling homeowners during this uncertain time.”
Even the Trump administration isn’t sanguine about the new fees.
“The White House has serious concerns with this action, and is reviewing it,” the administration said in a statement to The Wall Street Journal.
