Mortgage giants Fannie Mae and Freddie Mac “will eliminate the adverse market refinance fee for loan deliveries effective August 1, 2021,” the Federal Housing Finance Agency notes. That means that if you refinance your mortgage now, you won’t be paying that fee, which will likely save you money, experts say. Here’s what you need to know if you want to refinance now.
What was the adverse market refinance fee?
The adverse market refinance fee was a 50-basis point fee that Fannie Mae and Freddie Mac were charging to lenders when they delivered the refinanced mortgages to the two mortgage companies; the fee then often got passed along to borrowers. The fee was instituted because: “When the pandemic brought high unemployment, regulators feared that a foreclosure crisis would follow. The FHFA added a fee on refinances to boost Fannie Mae’s and Freddie Mac’s rainy-day funds so they could afford an increase in foreclosures,” explains NerdWallet’s home and mortgage expert, Holden Lewis.
But a foreclosure crisis didn’t happen: “Just 2% of Fannie Mae and Freddie Mac loans are in forbearance with that number dropping constantly,” explains Greg McBride, chief financial analyst at Bankrate. And now, Frannie and Freddie have revoked the fee, which the FHFA says will “help families reduce their housing costs.”
To learn more about a major refinance fee that disappeared and the home buying process, visit the SCOOP! Blog